There are endless ways to enjoy coffee, whether it’s espresso, pour over, or cold brew. Similarly, there are endless ways to collect. So, why not enjoy a fresh cup of java while updating yourself on the most pressing topics impacting the world of consumer collections
Shareholder and the firm’s Chicago office managing attorney, Casey Hicks
, engaged in a casual, yet informative conversation – with coffee, of course – about how creditors based in Illinois and Wisconsin can recover their outstanding debts. With so many changes occurring throughout the last two years of the COVID-19 pandemic, it’s always smart to refresh your knowledge of matters impacting your collection processes.
Here is a quick recap of the key topics discussed during this interactive session:
1. Increase in court-ordered mandatory mediation or early resolution programs
Many court-ordered mediation or early resolution programs have popped up following the start of the pandemic, especially in Illinois, due to CARES Act
funding. The majority of them have been developed in response to mortgage foreclosures.
Within these programs, there’s typically a scheduled mediation date that will be included on the summons the borrower is served with when a foreclosure case is filed. After receiving the summons, the borrower must decide whether they would like to participate in the mediation.
Several counties have specific court-ordered mediation programs for all residential mortgage foreclosures. However, one outlier is Cook County, IL
, which has instituted a mandatory Early Resolution Program (ERP)
for consumer debt cases filed within the municipal division. It applies to all cases with damages of $50,000 or less.
2. How does an ERP program work?
Once your lawsuit is filed and the borrower is served with a court summons, you are given a case management date, which is typically 120-180 days after the filing of the complaint. You cannot move for judgment until the matter goes through ERP. If the consumer appears at the case management date and chooses to participate in the program, they will meet with an ERP case manager and determine if they require the support of pro bono legal counsel. Next, their counsel will reach out to your attorney to discuss a settlement. As of right now, roughly 30-40% of cases are settled through this ERP program.
If the consumer does not appear at the case management date, the case is transferred to a trial room and you can proceed with default judgment or trial.
3. What are my collections options?
If you have a judgment yet you cannot get your consumer to voluntarily pay the balance owed to you, there are a few avenues to pursue. These include:
- Bank citations
The bank must be served and is required to file an answer detailing the property being held. There is no specific deadline for the bank’s answer in Illinois; however, in Wisconsin, the answer is due within 20 days. It’s important to keep in mind that you can only file one bank citation per bank in Illinois.
The debtor has a right to claim certain protections, known as “exemptions,” which may include social security or disability, public assistance, child support, unemployment compensation, veteran benefits, pension, and retirement benefits.
- Wage garnishments
In Illinois, an employer can be served and must file an answer (there is no specific deadline). Often, many companies are not aware of wage garnishment requirements.
A creditor can garnish the lesser of either one of any amount of the borrower’s disposable income that exceeds 45 times the federal or Illinois hourly minimum wage (whichever is higher) OR 15% of gross pay. A wage garnishment is in effect until the debtor is no longer employed (NLE) or judgment is paid in full.
In Wisconsin, the employer can be served and must file an answer within 20 days. A creditor can garnish the lesser of either 20% of disposable earnings OR the amount by which your disposable earnings exceed 30 times the federal minimum wage. Disposable earnings include funds remaining after deducting social security taxes, and federal and state income taxes. If the consumer does not file an answer, the garnishment commences and can last for 13 weeks after the notice. However, this can be extended if both parties are in agreement.
- Liens on real estate property
In Illinois, a memorandum of judgment is recorded in any county in which the debtor owns property. The lien can be attached to any property owned by the debtor in the county. The lien will be in effect for seven years from the date of judgment (unless revived). You have to revive the judgment within seven years, otherwise it will go dormant.
In Wisconsin, liens on real estate are enforced a bit differently than in Illinois. Each clerk of the circuit court maintains a judgment and a lien docket. This serves as a record of all judgments entered and docketed in the county. Judgments are NOT automatically docketed. Typically, a $5 fee must be paid to the circuit clerk to docket your judgment. Once a properly docketed judgment is in effect, it’s on the roster of judgments and you can go ahead and collect on the debtor’s real estate. The judgment is effective for 10 years from the date of entry on the docket.
A docketed judgment is a prerequisite to proceed with further collection efforts that you want to enact in Wisconsin.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.