Legal wrinkle creates debate over ‘debtors’ prisons’ in Illinois

Senior Attorney Sandi Gordon of our Southern Regional Office is quoted extensively in this article.  This piece does a very good job of explaining the process that leads to the arrest of debtors.

By DOUG FINKE (doug.finke@sj-r.com)

The State Journal-Register, Jan 21, 2012

Robin Ebersohl left her job at a Wal-Mart in Montgomery County to drive back to her home in Livingston.

During the trip, she was stopped by police.

“I knew my muffler was bad, but I just kind of chanced it,” Ebersohl said.  “He pulled me over, and I thought I would just get a fix-it ticket or something.”

What Ebersohl didn’t know was that a warrant had been issued against her in Macoupin County for failure to appear in court on a debt collection issue.

“I didn’t know what I was supposed to appear to,” said Ebersohl, who said she never got a notice that she was due in court.

Instead of going home that day, she was taken to jail. Ebersohl said she spent the night in the Montgomery County Jail and then was transferred to Macoupin County, where she spent three more days in jail.

“Until the first of November, when my dad got his pension check,” she said, when she was bailed out.

Ebersohl’s case occurred in 2007, but state officials said they are hearing more often about people with outstanding debts being sent to jail.

Debtors’ prisons outlawed

“In Illinois, in the Constitution, it says you cannot be jailed, put in prison, because you don’t have an ability to pay your debt,” said Attorney General Lisa Madigan. “We outlawed debtors’ prisons in the 1800s.”

Read the entire article at: http://www.sj-r.com/top-stories/x1069934542/Legal-wrinkle-creates-debate-over-debtors-prisons-in-Illinois?zc_p=0

 

MADISON COUNTY RESIDENTIAL FORECLOSURE MEDIATION PROGRAM WORKING

COUNTY: FORECLOSURE PROGRAM WORKING

By SANFORD J. SCHMIDT

January 19, 2012,The Telegraph – EDWARDSVILLE

About 80 percent of those asking to participate in a new Madison County foreclosure mediation program have been accepted, and 19 of them have kept their homes or renegotiated financing, court officials say. People who want to take advantage of the program are referred to attorney Linda Jun, of the Land of Lincoln Legal Services Foundation.

Most of the people who ask for the service do not have lawyers, and Jun’s effort is to bring the defendant and the plaintiff together to work out an agreement.

“This success is greatly owed to Linda Jun, the program administrator and Associate Judge Stephen Stobbs who presides over the docket,” said Circuit Judge Dave Hylla, who oversees the program.

“This program is a win-win for all parties. I am confident that we can continue to bring homeowners and lenders together, outside of court, and help them achieve successful outcomes to their cases,” Stobbs said.

Chief Judge Ann Callis announced in April that homeowners facing foreclosure can take advantage of the program in the wake of an Illinois Supreme Court ruling establishing the mediation program in Madison County.

In some cases, a loan might be restructured, and in others the homeowner might be able to give up the home and move without the necessity of proceeding with the foreclosure suit, Jun said.

Homeowners facing foreclosure receive information about the program with their court papers. To participate, they must submit a request for mediation and meet certain financial eligibility requirements.

The local rule that established the Madison County Residential Foreclosure Mediation Program is the result of months of discussion among lenders and homeowner interests, Callis said.

Callis headed up a committee that was formed in the fall of 2010 to explore the possibilities of forming the service. Homeowners’ attorneys, banks’ attorneys, mediators, Realtors and judges were involved in the discussions.

Read more: http://www.thetelegraph.com/articles/working-64823-county-edwardsville.html#ixzz1k11sZu2W

Debtors Prison: It’s Back and It’s Here

By JIM GALLAGHER • St. Louis Post-Distpatch | Posted: Sunday, January 15, 2012

Robin Ebersohl knew she had a loud muffler. She couldn’t afford to get it fixed. When she saw a police car, she thought she’d chance it and drive by.

It was a mistake bigger than she could have imagined.

She thought she might get a ticket. Instead, she got three days in jail and her father lost $500 in bail money.

Ebersohl, of Livingston in Madison County, wasn’t accused of a crime. She was arrested on a court order issued at the behest of a creditor trying to collect less than $1,000 she owned in medical bills.

Ebersohl, 51, was trapped in the 21st century version of debtor’s prison.

“It was awful. You get deloused. They do this in front of the guard. It was very embarrassing. It was very degrading,” she said. “I’d never been arrested before, never been in any kind of trouble.”

The term “debtors prison” summons up images of Dickensian England and Colonial America. As a formal matter, most states did away with debtors prisons in the early 1800s, along with the whipping post.

But lots of people still go to jail over unpaid debts in America – including Missouri and Illinois. Here’s how it happens:

A creditor goes to court and gets a judgment for an unpaid debt. The debtor is then summoned to court to be questioned by the creditor, who wants to know about assets that could be seized. It’s called a “pay or appear” hearing in Illinois.

If the debtor doesn’t show up, the creditor asks the judge for an arrest order. In Illinois, that’s called a “body attachment.”

Creditors and their lawyers say it’s necessary tool to make sure that debtors obey the courts.

“If we can’t enforce our contracts, and use the law to do that, what will we become?” asked William Asa, a creditors attorney in Metro East.

Consumer advocates say its used unfairly to squeeze money out of jailed defendants and coerce others with the threat of imprisonment.

Police generally don’t go hunting for debtors. But if they’re stopped for a traffic violation or some other reason, the warrant shows up on computer records and off to jail the debtor goes.

Creditors like body attachments because they make money on them, as Ebersohl can testify. She sat in jail until her father’s pension check arrived, and he paid her $500 bail.

Then the court released the bail to her creditor, the Credit Bureau of Macoupin County. Her father was out the money.

“It’s considered the property of the defendant,” says Brent Cain, who represented the Credit Bureau. After all, the Credit Bureau had a judgement against Ebersohl and thus could take her property.

That’s common practice, says Beverly Yang, attorney at Land of Lincoln Legal Assistance, which provides free legal representation for the poor.

“This process is THE method of collection,” she said.

Arrests of debtors are common today in Southern Illinois, according to Yang. She said Madison County courts issued 65 such arrest orders from April to December of last year. Ebersohl’s arrest was in October 2007 on an order issued in Macoupin County.

Read more: http://www.stltoday.com/business/columns/jim-gallagher/debtors-prison-it-s-back-and-it-s-here/article_4683672a-3be5-11e1-a381-001a4bcf6878.html#ixzz1jjIemBuX

Debtors Share Frightening Tales in Marion

This article describes the second hearing held by the Illinois Department of Financial and Professional Regulation in Marion on Wednesday.   Senior Staff Attorney Sandi Gordon from our Southern Regional Office spoke at the hearing and is quoted in the article.

DEBTORS SHARE FRIGHTENING TALES

BY STEPHEN RICKERL, The Southern

Thursday, January 12, 2012

MARION – When troopers from the Illinois State Police knocked on the door of Lisa Lindsay’s Herrin home last spring, she immediately thought something had happened to one of her children. Police departments generally do not deliver good news at 11 p.m.

Lindsay, a breast cancer survivor, quickly learned the troopers were there to take her to jail because of an unpaid medical bill.

On limited income, Lindsay said she was having difficulty paying off her $280 medical bill. She even took a second job to help pay it, but the creditor filed a complaint and she was given notice to appear in court.

Although Lindsay appeared for the hearing, the creditor’s attorney did not and the hearing was rescheduled. Lindsay didn’t know she missed the rescheduled hearing until state troopers showed up at her door.

“I see a lot of crime happen all the time. You see a lot things happen. And you’re always wondering if everything is justified,” she said. “Then you get arrested for a medical bill, for having cancer and you go to jail. It’s just crazy. In this day and age and in this state and county, I don’t think that should happen.”

‘Debtors’ prison’

Lindsay’s case is not unique, a resurgence of so-called “debtors’ prison” has become such an alarming trend that it has grabbed the attention of some of the state’s top officials.

The Illinois Department of Financial and Professional Regulation conducted a hearing Wednesday in Marion to examine the issue and take testimony from members of the public, such as Lindsay, who have been affected by aggressive debt collection practices.

During an interview Wednesday with The Southern Illinoisan’s editorial board, Brent E. Adams, secretary of the Illinois Department of Financial and Professional Regulation, said consumers are being sued for debt owed to creditors and finding themselves in county jails on the basis of failure to appear in court.

Often, Adams said, those debtors are not even aware they are being sued.

In some cases public resources, which cost taxpayer money, are being used to the creditors’ advantage to collect their private debt.

Several people testified the amount of their bond matched their debt, and that the bond amounts were forfeited to the creditor, neatly solving the problem in favor of the creditor.

Adams said the department began examining the issue in October when it met with lenders and creditors. The department will take testimony from Wednesday’s hearing, and a similar hearing Monday in Alton, to work on possible legislation to find a balance for creditors and debtors. Officials hope to have a first draft of legislation by the end of the month.

Safeguards needed

Sandi Gordon, senior staff attorney at Land of Lincoln Legal Assistance Foundation in Carbondale, said her office serves 23 counties in Southern Illinois. She said one of the biggest issues she sees with debtors’ prison is that people don’t understand their rights and get pressured into agreements they can’t afford.

“Procedural safeguards need to be in place to protect these debtors,” she said.

Gordon said about 30 to 40 percent of the debt that people go to jail for is less than $1,000 and the least amount she’s seen someone go to jail for is $210.

Gordon recommended a number of solutions, including the personal service of all citations to ensure that a debtor receives notice and plain language in citations to ensure a debtor understands their obligations and rights.

Read more: http://thesouthern.com/news/local/debtors-share-frightening-tales/article_86b36afa-3cdc-11e1-8d76-001871e3ce6c.html?mode=story#ixzz1jGuLpnVm

Panel Hears Concerns About Debt Collections

Below is an article from the Telegraph covering yesterday’s hearing in Alton about debt collections.  Staff Attorney Beverly Yang from our Western Regional Office was a member of the panel.  Another public hearing will be held in Marion on Wednesday, January 11, 2012.  Senior Attorney Sandi Gordon from our Southern Regional Office will be a member of the panel at Wednesday’s hearing.

PANEL HEARS CONCERNS ABOUT DEBT COLLECTIONS

By LINDA N. WELLER

The Telegraph, January 10, 2012

State officials seeking ways to make debt-collecting more fair heard a woman testify Monday that her unpaid medical bills landed her in jail for four days.

“The police had a warrant for my arrest, I knew nothing about it,” said Robin Ebersohl, 51, of Livingston. “I didn’t know I had a court date. I was very aggravated with the situation. I missed one day of work. It was embarrassing. People getting off work driving by saw me in handcuffs.”

Police in Montgomery County pulled Ebersohl’s vehicle over because her muffler was loud, discovering the warrant for failure to appear in court from Macoupin County. She said she had to stay in jail until her father received his pension check and came up with the $530 needed to bail her out in November 2007.

Ebersohl had been dealing with Credit Bureau of Macoupin County, a collection agency trying to recoup money she owed Community Memorial Hospital in Staunton and Staunton Family Practice. She said she last worked with the collectors in May 2007 and never received notice of a court date.

Ebersohl said she had cancer surgery in 2002, then was diagnosed with diabetes, which caused her to lose her job as a truck driver. She went to work for Walmart a year later but had to quit because of knee problems.

“It would be nice if something can be done,” she said. “There are instances when people lose their income or their income is reduced. People shouldn’t have to go to jail.”

The panel included state Sen. William Haine, D-Alton; Brent Adams, secretary; Emanuel Flores, director of banking; Roxanne Nava, director of financial institutions; and Jay Stewart, director of professional regulation – all from the Illinois Department of Financial and Professional Regulation.

The officials were trying to discover areas that result in what they said are abuses of the judicial system, so it cannot be used as an arm of some collection agencies.

“It is a problem that emanates from our courts,” Haine said. “The essence of free enterprise is the inviolability and enforceability of contracts. There should be fair play for debtors and creditors. You do not scoop people up in civil matters and then throw them in jail with criminals. This system is fraught with random orders, then clothed with contempt powers. Let’s rein this process in.”

The 90-minute hearing in Alton City Council Chambers, 101 E. Third St., was the first of two information-gathering sessions that may lead to legislation intended to fix problems in the state’s legal system related to debt collection. A department spokeswoman previously said the issues only have arisen in the southern part of the state; the second of two such sessions will be held Wednesday in Marion.

On the collection side, attorney William Asa, of Taliana, Buckley and Asa in Edwardsville, said a problem is getting debtors to show up for court in the preliminary stage to even establish whether they have means to pay their debts.

“I see this as an issue with the courts, not so much with creditors,” Asa said. “Judges have the power to hold them in contempt. It doesn’t help me collect a debt if they are in jail or lose their jobs. The court probably needs those powers as a last resort. If we can’t enforce contracts or use the laws, what have we become? Banks and creditors don’t want people to go to jail; they want people to come to court and participate in the process.”

What several people agreed on was that in some cases, courts mailed notices by regular mail when they should be served in person. Attorney Beverly Yang, of Land of Lincoln Legal Assistance Foundation Inc. of Alton, said sometimes debtors have moved or otherwise never get the notices. Yang said Land of Lincoln attorneys have identified “several disturbing trends in debt collection.”

In written testimony, Yang said a court sent one client notices for two “pay or appear” hearings, neither of which she received. The first time, the client was found in contempt, jailed for three days and paid $500 bail, which went to the creditor. The second time, the woman had moved and ended up having a bench warrant issued against her.

She paid the plaintiff $400. Twice later, “the creditor wrote a letter to the court, and without setting the case for hearing on the debtor’s ability to pay, a bench warrant was issued and bond set at $750,” Yang wrote.

Yang suggested all citations be served personally; the citation to discover assets procedure should be explained in plain language, including exemptions and consequences of failing to appear; and debtors should not keep being called back to court to answer whether they can pay or why they missed a payment, even though there is no change in their financial situation; and appearance bonds should be returned to the debtor, not given to the creditor, once he or she appears in court.

Yang said in Madison County, from April through December 2011, 65 bench warrants were issued for debt collection.

Read more: http://www.thetelegraph.com/articles/court-64335-people-jail.html#ixzz1j4Pa3D8B

Public Hearings to Address Debtor Arrests to be Held in Alton and Marion

The Illinois Department of Financial and Professional Regulation is holding two public hearings in southern Illinois on the issue of debtor arrests.  Land of Lincoln attorneys will serve on the panels.  The first will be held in Alton on Monday, January 9.  The second will be held in Marion on Wednesday, January 11.

Hearing to address debtor arrests

January 05, 2012 8:29 PM -By LINDA N. WELLER

The Telegraph, Alton

People with experiences or opinions on creditors using or misusing the court system to collect debts can testify Monday before a panel of state officials.The public hearing will begin at 2 p.m. in Alton City Council Chambers, 101 E. Third St.

“We want to get input from as many people as possible so it would work if we have solid reasons” to initiate the legislation process, said Susan Hofer, spokesman for the Illinois Department of Financial and Professional Regulation in Chicago.

“There are a lot of aspects to this,” she said. “We don’t want to draft legislation and educate members of the General Assembly only to find out we are missing a major component. We also could better make a case with the General Assembly, which is why we are doing it this way.”

The contingent from the state office is holding two such sessions, both in Downstate.

The second hearing will be held Wednesday in Marion. People have not complained about creditors using judges to collect past-due installment loan balances, unpaid hospital bills and other uncollected debts from farther north in Illinois, Hofer said.

The department has gotten complaints of creditors’ practices that have landed debtors in jail when they were arrested on warrants for failure to appear in court. The debtors claimed they did not know they were being sued or that they had court dates.

One woman from Macoupin County reportedly was arrested after a police officer pulled her over for having a loud muffler, then discovered she had a warrant for failure to appear in court. She claimed she did not know a collection agency had filed a lawsuit against her on a $730 medical bill.

Thinkprogress.org’s website attributes such arrests to “‘sloppy, incomplete or even false documentation,’ many borrowers facing jail time don’t even know they’re being sued by creditors.”

Comprising the Alton panel will be state Sen. William Haine, D-Alton; Brent Adams, secretary, Emanuel Flores, director of banking, Roxanne Nava, director of financial institutions, and Jay Stewart, director of professional regulation, all from the Department of Financial and Professional Regulation; and representatives and clients from Land of Lincoln Legal Services.

Read more: http://www.thetelegraph.com/articles/court-64192-creditors-hofer.html#ixzz1ih1xuiIt

Land of Lincoln Legal Assistance Foundation, Inc. and University of Illinois Extension to hold small farm risk management webinars

By Laura Roberts, December 20, 2011 – Rockford Register Star

BELVIDERE —University of Illinois Extension is slated to hold a series of small farm risk management webinars, starting in January.

The webinars aim to give an overview of methods for evaluating, managing and reducing risk in relation to small farming operations. Farmers will learn how to address risks at the event, and in-person workshops will be offered in a spring follow-up series to discuss specific issues.

Participants are invited to attend one or all of the Monday sessions, including “Risk Management Basics” (Jan. 23), “Risk Management in Production and Marketing” (Jan. 30), “Financial Risk Management” (Feb. 6) and “Managing Human Risk” (Feb. 13). The series is a free program, co-sponsored by the Land of Lincoln Legal Assistance Foundation and the University of Illinois Extension.

All webinars will be held from 6:30 to 8 p.m., at the Boone County Extension Office, located at 915 Alexandra Drive, in Belvidere. To register, visit web.extension.illinois.edu/bdo.

For more information, contact Ellen Phillips at ephillps@illinois.edu.

Copyright 2011 Rockford Register Star. Some rights reserved

Unpaid Bills Land Some Debtors Behind Bars

The story below ran on Morning Edition today on National Public Radio (NPR).  Staff Attorney Beverly Yang of our Alton office is interviewed in the story.

Unpaid Bills Land Some Debtors Behind Bars

December 12, 2011 from WBEZ – By Susie An

Although debtors’ prisons are illegal across the country, it’s becoming increasingly common for people to serve jail time as a result of their debt.

Collection agencies are resorting to some unusually harsh tactics to force people to pay their unpaid debt, some of whom aren’t aware that lawsuits have been filed against them by creditors.

Take, for example, what happened to Robin Sanders in Illinois.

She was driving home when an officer pulled her over for having a loud muffler. But instead of sending her off with a warning, the officer arrested Sanders and she was taken right to jail.

“That’s when I found out [that] I had a warrant for failure to appear in Macoupin County. And I didn’t know what it was about.”

Sanders owed $730 on a medical bill.

She says she didn’t even know a collection agency had filed a lawsuit against her.

“They say they send out these court notices, and nobody gets them,” Sanders says.

She spent four days in jail waiting for her father to raise $500 for her bail.

That money was then turned over to the collection agency.

Sanders’ story is an increasingly common one across the country. Similar stories have been reported in Indiana, Tennessee and Washington.

Here’s how it happens: a company will often sell off its debt to a collection agency, generally called a creditor. That creditor files a lawsuit against the debtor requiring a court appearance. A notice to appear in court is supposed to be given to the debtor. If they fail to show up, a warrant is issued for their arrest.

Beverly Yang, a legal aid attorney with Land of Lincoln Legal Assistance, says most debtors don’t know their rights.

In fact, she says, some judges don’t even know the debtors’ rights, which could result in the debtor being intimidated into a pay agreement.

“I’ve seen this even when I’m standing in the court room as the legal aid attorney,” Yang says, “The judge will ask if they can pay, how about $150 a month. How about $75 a month? How come you can’t even pay $50 a month? Did you apply for a job last week?”

Read (or listen to) the entire story here: http://www.npr.org/2011/12/12/143274773/unpaid-bills-land-some-debtors-behind-bars

 

Homeowners Taking Advantage of Madison County’s Foreclosure Mediation Program

Published in The Telegraph – December 04, 2011

By SANFORD J. SCHMIDT

EDWARDSVILLE – As of the end of October, 52 people had been referred to a new Madison County Residential Mortgage Program since its inception in April, said Linda Jun, program administrator of Land of Lincoln Legal Services.

An estimated 20 more have joined the program since the end of October.

“It’s picking up. I think more people are becoming aware of the service, and there may be more foreclosure cases being filed,” Jun said.

The people who have taken advantage of the new service are being helped with the paperwork needed to handle their cases, she said. Most of them do not have lawyers.

Chief 3rd Circuit Judge Ann Callis announced in April that homeowners facing foreclosure can take advantage of the program in the wake of an Illinois Supreme Court ruling establishing the mediation program in Madison County.

The program creates a chance for homeowners and lenders to come together to explore mutually beneficial alternatives to foreclosure.

In some cases, a loan might be restructured, and in others, the homeowner might be able to give up the home and move without the necessity of proceeding with the foreclosure suit, Jun said.

Homeowners facing foreclosure receive information about the program with their court papers. To participate, they must submit a request for mediation and meet certain financial eligibility requirements.

Read more: http://www.thetelegraph.com/articles/program-62890-foreclosure-homeowners.html#ixzz1ffltlwjW

Illinois Attorney General fighting to limit use of arrest warrants by debt collectors

The article below ran in today’s Washington Street Journal and Chicago Tribune.  The practice of debt collectors using arrest warrants to collect on judgments for credit card, auto loan, and other debts is all too common in Illinois.  Beverly Yang of the Western Regional Office in Alton and John Roska of the Eastern Regional Office in Champaign spoke with Ms. Silver-Greenberg about this practice.

Madigan pushing to limit debt collectors’ use of arrest warrants

By Jessica Silver-Greenberg, Wall Street Journal – November 22, 2011

The top state law-enforcement official in Illinois said she plans to fight the use of arrest warrants by debt collectors pursuing money they are owed on credit cards, auto loans and other bills.

Illinois Attorney General Lisa Madigan, in an interview, vowed to push state-court judges to quash arrest-warrant requests by lawyers representing the fast-growing debt-collection industry. Madigan also said she will file enforcement actions against companies that “abuse” their power to seek arrest warrants under Illinois law.

“We can no longer allow debt collectors to pervert the courts,” said Madigan, a Democrat who took office in 2003.

More than one-third of U.S. states allow borrowers who can’t or won’t pay to be jailed. Nationwide statistics aren’t known because many courts don’t keep track of warrants by alleged offense, but a tally by The Wall Street Journal earlier this year of court filings in nine counties across the U.S. showed that judges signed off on more than 5,000 such warrants since the start of 2010.

In Illinois, the practice is “flourishing statewide,” Madigan said, though exact numbers aren’t available.

A debt-related arrest warrant is typically issued when a borrower who was sued for payments on an outstanding debt doesn’t show up in court or fails to make payments ordered by a judge.

Debt collectors say the threat of jail is used only as a last resort. “Debt collectors aren’t advocating for debtors’ arrests,” said Mark Schiffman, a spokesman for ACA International, the industry’s main trade group.

Some judges have criticized the use of such warrants, comparing them to a modern-day version of debtors’ prison. Madigan said she has grown increasingly concerned that borrowers sometimes are being thrown into jail without even knowing they were sued, a problem she blames on sloppy, incomplete or false paperwork submitted to courts.

Other defendants avoid showing up in court because they can’t afford to pay and fear they will be sentenced to jail, a “perverse Catch-22,” she said. A March article in the Journal about the use of arrest warrants in debt-collection lawsuits “helped shed light on a practice we need to address,” she added in the interview.

In September, Vivian Joy, 53 years old, was handcuffed and taken to a jail in Champaign, after being stopped for driving with a broken taillight. A public-records search by the police had shown an outstanding arrest warrant because Joy didn’t appear in court following a default judgment against her over $2,200 owed to Champaign Heights Finance Corp., based in Peoria.

“They cuffed me in front of my kids. That was terrifying,” said Joy, who claims she didn’t know about the lawsuit or judge’s order until her arrest. She said she owes the money but can’t afford to pay because she has no job.

Joy was released after she posted a $120 bond. The finance company and police officials couldn’t be reached for comment about the arrest warrant.

Madigan can’t force judges to stop signing off on debt-related arrest warrants. Still, she predicted that many Illinois judges will agree with her once they fully understand the practice.

Click here to see the original Wall Street Journal article (subscription required).

Click here to see the reprint in the Chicago Tribune.