Two proposals pending in the Illinois General Assembly promise to crack down on the practice of incarcerating indebted consumers with little or no income. Each year, thousands of debt collection cases end up in court, with many borrowers unable to repay claims without dipping into exempt income, such as Social Security or the limited equity in their home or car. A 2008 Woodstock Institute report found that 45 percent of borrowers taking out consumer installment loans in Cook County failed to appear in court, resulting in ex-parte default judgments in favor of the lender.
For indigent borrowers will little or no means to pay high cost loans or other forms of credit, an arrest can mean the loss of a job or an extreme hardship if a bond is required for release. Robin Sanders, who was profiled recently by WBEZ, found herself incarcerated for four days while trying to raise a $500 bond for an unpaid $730 medical debt. She was never notified of the claim against her. Upon release, the bond was turned over to the collection agency.
A similar proposal, HB4695, introduced by Rep. Eddie Lee Jackson (D-East St. Louis), is pending in the House.
Woodstock Institute strongly endorses both the efforts to ensure that borrowers are not needlessly incarcerated and that the courts are not overburdened with collection cases involving defendants with no means to pay