The Illinois Collection Agency Act protects those whose debts are in collection by requiring debt collectors to be licensed and regulating what debt collectors are allowed to do when attempting to collect debts. Under the Act, you may also request that a debt collector validate (check the accuracy) of a debt. The Illinois Collection Agency Act supplements the laws governing debt collectors under the federal Fair Debt Collection Practices Act.
The Fair Debt Collection Practices Act
In Illinois, debt collectors are regulated by both the Fair Debt Collection Practices Act (FDCPA) and the Illinois Collection Agency Act. The FDCPA applies to every state and it protects consumers from unfair and deceptive debt collection practices. The FDCPA also prohibits debt collectors from contacting you at certain times and places.
To learn more about the FDCPA, see our section on Illegal Debt Collection Practices.
The Illinois Collection Agency Act
The Illinois Collection Agency Act (ICAA) requires debt collectors to obtain a license, and it includes provisions limiting the manner in which debt collectors contact you and communicate with you, and detailing what they have to do if you challenge the validity of a debt. This article uses the term "debt collectors," but you the ICAA generally calls debt collectors "collection agencies" or "licensees" (because they have to obtain a license).
Not every company or person who tries to collect a debt from an Illinois resident has to comply with the ICAA, however.
Who Is a Debt Collector Under the Illinois Law?
The ICAA applies to companies who are in the business of collecting debts. If a business is “confined" to something other than running a collection agency, then it does not have to comply with the Act. The following companies and professionals are exempt under the ICAA:
- banks and similar financial institutions such as credit unions or loan companies
- real estate brokers
- retail stores when they collect on their own debts
- homeowners’ associations (called “unit owner’s associations” in the Illinois law), and
- billing companies who just send account notices.
ICAA Does Not Cover Original Creditors
The ICAA says that only debt collectors hired to collect debts need to obtain a license and comply with the ICAA. In addition, the ICAA was recently changed to also include debt collectors who acquire the debt from an original creditor. (For more about the difference between original creditors and debt collectors, visit What Is the Difference Between a Debt Collector and a Creditor.)
Special Rules for Child Support Collectors
The ICAA contains specific rules exempting debt collectors from many of the ICAA regulations when attempting to collect child support debts. For example, they are not limited in how often they contact you, from contacting your employer, or publishing your name in a list of people who owe similar debts. There are other detailed provisions for these types of debt collectors -- consider contacting an attorney if you think a child support collect may have violated the law.
The Illinois Licensing Requirement
Debt collectors who have offices in Illinois must obtain a license before attempting to collect any debts or obtain any clients. If a debt collector fails to get a license, the state can impose a fine of up to $5,000 for each violation or charge the collector with a crime.
If a debt collector is located out of state and is trying to contact you via phone or mail then it does not need an Illinois license so long as it has a license in the state from which it is contacting you.
Prohibited Debt Collection Practices in Illinois
The ICAA limits the methods that debt collectors can use to collect debts and the ways in which they communicate with you or third parties. it also gives you specific rights if you want to challenge the validity of a debt.
Debt collectors are not permitted to use force or violence to harm you, your family, or your property, nor may they threaten to do so. In addition to that somewhat obvious prohibition, there are a number of other acts considered threatening or abusive under the ICAA:
- A debt collector cannot use profane, obscene, or abusive language.
- A debt collector cannot threaten to have you arrested or criminally prosecuted unless it has a basis for a criminal complaint, which is exceedingly rare.
- A debt collector cannot threaten to take your property without mentioning that it needs to obtain a court order first.
- It cannot threaten to publish the fact that you refuse to pay the debt or threaten to tell other people (unless the debt collector has a legitimate business communicating with others).
- A collector cannot use fake legal documents, wear any clothing intended to look like it is connected with the government, or pretend to be an attorney.
- A debt collector cannot threaten to add fees or charges to the original debt unless your contract with the original creditor allows it to do so and the fees are reasonable.
Restrictions When Contacting a Debtor
The Illinois Department of Financial and Professional Regulation requires debt collectors to clearly identify themselves to you, using only their licensed agency name. They must keep careful records of all their communications with you and your payments. In addition, the ICAA requires debt collectors to comply with the following rules:
Disclosures at the time of first contact. Within five days of its first contact with you, the debt collector must give you the following information:
- how much you owe
- who the original creditor is, and
- a notice that you can dispute the debt.
No harassment by frequent contacts. There is no set limit on the number of contacts that constitute harassment under the ICAA. However, the ICAA does say that if the debt collector contacts you or a member of your family at an inconvenient time or place, then it’s a harassing contact (except that it can assume that 8:00 a.m. to 9:00 p.m. is convenient). In addition, a collector cannot harass you by making your phone ring or frequently calling with the intent to annoy, abuse, or harass you. Finally, if the debt collector knows that your employer does not allow you to receive personal calls, then it may not contact you at work.
Protect your privacy in communication with others. A debt collector is allowed to contact a third party to locate you, but it cannot reveal its employer to the third party (unless the party expressly asks for that information). A collector cannot tell another person that you owe a debt nor can it communicate with someone more than once. When it mails you information, it cannot use a postcard or use any markings on an envelope to indicate that it is a debt collector or that it is in the debt collection business.
If you are represented by an attorney, the collector may only communicate with your attorney. The only exception to this is if your attorney fails to communicate with the collector for at least 30 days.
Stop contact upon request. If you notify the debt collector in writing that you refuse to pay the debt or that you want it to stop contacting you, then the collector must cease all communication with you. It may be able to pursue its debt collection by suing you, however, and it can send you one last notification informing you what it will do.
How to Challenge or Validate the Debt
The ICAA gives you two methods to challenge or validate the debt before the debt collector can continue collection efforts.
If you think you don’t owe the debt or owe a lesser amount. Recall that the debt collector must give you notice of the amount of the debt and your right to dispute the debt. You then have thirty days to dispute the amount of the debt or to dispute that you owe anything. The debt collector must then stop any collection efforts until it verifies with the original creditor that you actually owe the debt. It must mail you a written verification.
If you are a victim of identity theft. Debt collectors must stop collection efforts after you give them proper notice that you were a victim of identity theft. You will have to provide the debt collector with a police report, a completed Federal Trade Commission Affidavit of Identity Theft (available at www.ftc.gov), or an Illinois Attorney General ID Theft Affidavit (available at www.illinoisattorneygeneral.gov). Alternatively, you can write your own statement that you were the victim of identity theft. If you chose to write your own statement, you will need to include the following:
- a copy of your driver’s license
- any documentation that proves you were the victim of identity theft
- as many specific facts as possible to explain
- proof of your residence at the time of the identity theft (such as a utility bill with your name), and
- a way for the debt collector to contact you.
The debt collector is required to review the information you give it and make a good faith determination that you are still liable for the debt before it can resume collection efforts. It must give you a written explanation of the basis for its decision.
Remedies If a Debt Collector Violates Illinois Law
If you think a debt collector violated the Illinois Collection Agency Act, you can do the following:
File a Complaint. If you believe a debt collector has violated the ICAA, contact the Illinois Department of Financial and Professional Regulation. You can file a complaint online as well as check the license status of a debt collector. You can also file a complaint with the Illinois Attorney General at www.illinoisattorneygeneral.gov.
Contact the FTC. Federal Trade Commission (FTC) enforces the FDCPA. You can contact the FTC online at FTC Complaint Assistant.
Sue the debt collector. Even though the ICAA does not explicitly allow you to sue the debt collector directly, some courts in Illinois have ruled that you do have the right to sue a debt collector. You may be able to recover actual damages and possibly punitive damages.
Getting More Information
You can find the full text of the ICAA under Chapter 225, Act 425 of the Illinois Statutes. (To learn how to find state statutes, visit Nolo’s Legal Research Center.)