J.B. Pritzker, the governor of Illinois, yesterday signed a bill into law that will reduce the amount of time and the amount of interest that can be collected on judgments, in an attempt to “give real relief” to individuals trying to pay down their debts, the governor said.
The new law, called the Consumer Fairness Act, goes into effect on Jan. 1, 2020. Advocates say the new law will bridge a racial gap that exists as it pertains to having debts in collections. Individuals living in communities where the majority of individuals are minorities have twice as many debts in collections as communities that are described as being “predominantly white,” according to a report from The Heartland Institute.
The law lowers the post-judgment interest rate on unpaid debts in Illinois to 5%, from 9% currently. As well, judgment holders would have 17 years to collect on a debt, instead of the 26 years they currently have. The interest rate applies to judgments of $25,000 or less.
“Consumer debt is at an all-time high across the United States, and there are millions of people, including too many Illinois families, who are struggling under unconscionable circumstances,” Pritzker said in a published report. “Today, here in Illinois, we are giving real relief to those who are simply trying to pay off their liabilities so that they can end the cycle of debt that they are trapped in.”
The changes apply to what the law defines as “consumer debts,” meaning “money or property, or the equivalent, due or owing, or alleged to be due or owing, from a natural person by reason of a transaction in which property, services, or money is acquired by that natural person primarily for personal, family, or household purposes.”