Governor Quinn signs bill to protect from risky home loans and 'debtor’s prison'
July 26, 2012
Illinois has passed new financial protections for its consumers: legislation to help protect families from high-risk mortgages and refund anticipation loans and a measure that establishes guidelines to follow before a borrower can be imprisoned for non-payment of debt. The law clarifies the state's definition of a high-risk home loan to meet federal guidelines and also restricts fees and penalties that may be charged when a loan is issued. Lenders also are prohibited from collecting pre-payment penalties if a loan is paid off before its term ends. The second measure codifies best practices for post-judgment collection of debts. Debt collectors and lenders must provide evidence of unprotected assets available to repay a debt before sending the debtor to jail. The law should help keep Illinois residents from being incarcerated as a result of a payment order they cannot afford or for missing a hearing for which they did not receive notice. The law was developed after research showed that customers of licensed consumer lenders were being jailed for their debt.
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