CHICAGO (Fox 32 News) - Gov. Pritzker signed a new law Monday substantially reducing the amount of interest collection agencies can charge on some old debts.
A big reason the General Assembly voted unanimously for the new law signed by Gov. Pritzker is this kind of horror story, involving a disabled woman who said she had heard nothing for 20 years about a 1996 car loan.
“It wasn't until 2019 that they tried again to collect by freezing her bank account and by blocking access to necessary funds,” said Avani Kamdar, Chicago Legal Clinic.
Worse of all, because of compounding interest, the balance due had grown enormously.
“What had been a judgment of $4,000 had now almost tripled to almost $11,000 due to the statutory interest rate,” said Kamdar.
Effective Jan. 1, the new law will reduce that statutory interest rate from nine percent a year to five percent on judgments of $25,000 or less. In addition, collectors will have 17 years to get their money, rather than the current 26 years.
“Consumer debt is at an all-time high across the United States,” said Gov. Pritzker. “And there are millions of people, including too many Illinois families, who are struggling under unconscionable circumstances.”
The signing of the new law prompted the Better Business Bureau of Chicago to remind local consumers about one of the most persistent phone scams: callers who claim to be collecting an old debt, and when they sense a naive victim, become abusive.
“A lot of consumers get scared,” said Steve Bernas, Better Business Bureau of Chicago. “They threaten them. They might belittle them in some way or tell them they might go to jail. So they get scared. Consumers need to ask for documentation and make certain it is their debt.
The Heartland Institute estimates one-third of Illinois families currently face calls from debt collectors seeking payment for old bills.