IL
Illinois House Bill HB1519

Illinois 2023-2024 Regular Session

Illinois House Bill HB1519 Compare Versions

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1+103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB1519 Introduced , by Rep. Maurice A. West, II SYNOPSIS AS INTRODUCED: New Act Creates the Consumer Income Share Agreement Act. Provides that no person, partnership, association, limited liability company, or corporation may engage in the business of making income share agreements without a license provided under the Act. Sets forth provisions concerning applications for an income share agreement license, investigations, fees, suspension or revocation of licenses, closing of business, books and records, prohibitions and limitations of income share agreements, required disclosures, statements of account, advertising, penalties, and cease and desist orders. Provides that a person who engages in business as a licensee without the license required by the Act commits a Class 4 felony. Provides that the Department of Financial and Professional Regulation may adopt and enforce reasonable rules, directions, orders, decisions, and findings as the execution and enforcement of the provisions of the Act require and rules in connection with the activities of licensees that are necessary and appropriate for the protection of consumers in the State. Provides that if it appears to the Director that a person or any entity has committed or is about to commit a violation of the Act, a rule adopted under the Act, or an order of the Director, the Director may apply to the circuit court for an order enjoining the person or entity from the violation. Provides that the provisions of the Act are severable. Provides that income share agreements and licensees are subject to the Know Before You Owe Private Education Loan Act, the Student Loan Servicing Rights Act, and the Predatory Loan Prevention Act and shall comply with their requirements and any rules adopted by the Department of Financial and Professional Regulation pursuant to those Acts. Defines terms. Makes other changes. Effective immediately. LRB103 24976 BMS 51310 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB1519 Introduced , by Rep. Maurice A. West, II SYNOPSIS AS INTRODUCED: New Act New Act Creates the Consumer Income Share Agreement Act. Provides that no person, partnership, association, limited liability company, or corporation may engage in the business of making income share agreements without a license provided under the Act. Sets forth provisions concerning applications for an income share agreement license, investigations, fees, suspension or revocation of licenses, closing of business, books and records, prohibitions and limitations of income share agreements, required disclosures, statements of account, advertising, penalties, and cease and desist orders. Provides that a person who engages in business as a licensee without the license required by the Act commits a Class 4 felony. Provides that the Department of Financial and Professional Regulation may adopt and enforce reasonable rules, directions, orders, decisions, and findings as the execution and enforcement of the provisions of the Act require and rules in connection with the activities of licensees that are necessary and appropriate for the protection of consumers in the State. Provides that if it appears to the Director that a person or any entity has committed or is about to commit a violation of the Act, a rule adopted under the Act, or an order of the Director, the Director may apply to the circuit court for an order enjoining the person or entity from the violation. Provides that the provisions of the Act are severable. Provides that income share agreements and licensees are subject to the Know Before You Owe Private Education Loan Act, the Student Loan Servicing Rights Act, and the Predatory Loan Prevention Act and shall comply with their requirements and any rules adopted by the Department of Financial and Professional Regulation pursuant to those Acts. Defines terms. Makes other changes. Effective immediately. LRB103 24976 BMS 51310 b LRB103 24976 BMS 51310 b A BILL FOR
2+103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB1519 Introduced , by Rep. Maurice A. West, II SYNOPSIS AS INTRODUCED:
3+New Act New Act
4+New Act
5+Creates the Consumer Income Share Agreement Act. Provides that no person, partnership, association, limited liability company, or corporation may engage in the business of making income share agreements without a license provided under the Act. Sets forth provisions concerning applications for an income share agreement license, investigations, fees, suspension or revocation of licenses, closing of business, books and records, prohibitions and limitations of income share agreements, required disclosures, statements of account, advertising, penalties, and cease and desist orders. Provides that a person who engages in business as a licensee without the license required by the Act commits a Class 4 felony. Provides that the Department of Financial and Professional Regulation may adopt and enforce reasonable rules, directions, orders, decisions, and findings as the execution and enforcement of the provisions of the Act require and rules in connection with the activities of licensees that are necessary and appropriate for the protection of consumers in the State. Provides that if it appears to the Director that a person or any entity has committed or is about to commit a violation of the Act, a rule adopted under the Act, or an order of the Director, the Director may apply to the circuit court for an order enjoining the person or entity from the violation. Provides that the provisions of the Act are severable. Provides that income share agreements and licensees are subject to the Know Before You Owe Private Education Loan Act, the Student Loan Servicing Rights Act, and the Predatory Loan Prevention Act and shall comply with their requirements and any rules adopted by the Department of Financial and Professional Regulation pursuant to those Acts. Defines terms. Makes other changes. Effective immediately.
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311 1 AN ACT concerning regulation.
412 2 Be it enacted by the People of the State of Illinois,
513 3 represented in the General Assembly:
6-4 Section 5. The Student Loan Servicing Rights Act is
7-5 amended by changing Sections 1-5 and 25-5 and by adding
8-6 Article 7 as follows:
9-7 (110 ILCS 992/1-5)
10-8 Sec. 1-5. Definitions. As used in this Act:
11-9 "Applicant" means a person applying for a license pursuant
12-10 to this Act.
13-11 "Borrower" or "student loan borrower" means a person who
14-12 has received or agreed to pay a student loan for his or her own
15-13 educational expenses.
16-14 "Cosigner" means a person who has agreed to share
17-15 responsibility for repaying a student loan with a borrower.
18-16 "Department" means the Department of Financial and
19-17 Professional Regulation.
20-18 "Division of Banking" means the Division of Banking of the
21-19 Department of Financial and Professional Regulation.
22-20 "Federal loan borrower eligible for referral to a
23-21 repayment specialist" means a borrower who possesses any of
24-22 the following characteristics:
25-23 (1) requests information related to options to reduce
14+4 Section 1. Short title. This Act may be cited as the
15+5 Consumer Income Share Agreement Act.
16+6 Section 5. Definitions. As used in this Act:
17+7 "Amount financed" means the amounts advanced by the
18+8 licensee to the consumer or on behalf of the consumer or, if
19+9 the licensee is a merchant financing the sale of goods or
20+10 services to the consumer using an income share agreement, the
21+11 amount credited by the licensee toward the purchase of such
22+12 goods and services on behalf of the consumer.
23+13 "Annual percentage rate" or "APR" means the percentage
24+14 rate calculated according to the Federal Reserve Board's
25+15 methodology as set forth under Regulation Z, 12 CFR Part 1026.
26+16 The "annual percentage rate" of an income share agreement is
27+17 the measure of the cost of the income share agreement,
28+18 expressed as a yearly rate, that relates to the amount and
29+19 timing of value received by the consumer to the amount and
30+20 timing of payments made. The "annual percentage rate" is
31+21 determined in accordance with either the actuarial method or
32+22 the United States rule method.
33+23 "Consumer" means a natural person who enters into an
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34-1 or suspend his or her monthly payment;
35-2 (2) indicates that he or she is experiencing or
36-3 anticipates experiencing financial hardship, distress, or
37-4 difficulty making his or her payments;
38-5 (3) has missed 2 consecutive monthly payments;
39-6 (4) is at least 75 days delinquent;
40-7 (5) is enrolled in a discretionary forbearance for
41-8 more than 9 of the previous 12 months;
42-9 (6) has rehabilitated or consolidated one or more
43-10 loans out of default within the past 12 months; or
44-11 (7) has not completed a course of study, as reflected
45-12 in the servicer's records, or the borrower identifies
46-13 himself or herself as not having completed a program of
47-14 study.
48-15 "Federal education loan" means any loan made, guaranteed,
49-16 or insured under Title IV of the federal Higher Education Act
50-17 of 1965.
51-18 "Income-driven payment plan certification" means the
52-19 documentation related to a federal student loan borrower's
53-20 income or financial status the borrower must submit to renew
54-21 an income-driven repayment plan.
55-22 "Income-driven repayment options" includes the
56-23 Income-Contingent Repayment Plan, the Income-Based Repayment
57-24 Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
58-25 Plan, the Revised Pay As You Earn Plan, and any other federal
59-26 student loan repayment plan that is calculated based on a
37+103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB1519 Introduced , by Rep. Maurice A. West, II SYNOPSIS AS INTRODUCED:
38+New Act New Act
39+New Act
40+Creates the Consumer Income Share Agreement Act. Provides that no person, partnership, association, limited liability company, or corporation may engage in the business of making income share agreements without a license provided under the Act. Sets forth provisions concerning applications for an income share agreement license, investigations, fees, suspension or revocation of licenses, closing of business, books and records, prohibitions and limitations of income share agreements, required disclosures, statements of account, advertising, penalties, and cease and desist orders. Provides that a person who engages in business as a licensee without the license required by the Act commits a Class 4 felony. Provides that the Department of Financial and Professional Regulation may adopt and enforce reasonable rules, directions, orders, decisions, and findings as the execution and enforcement of the provisions of the Act require and rules in connection with the activities of licensees that are necessary and appropriate for the protection of consumers in the State. Provides that if it appears to the Director that a person or any entity has committed or is about to commit a violation of the Act, a rule adopted under the Act, or an order of the Director, the Director may apply to the circuit court for an order enjoining the person or entity from the violation. Provides that the provisions of the Act are severable. Provides that income share agreements and licensees are subject to the Know Before You Owe Private Education Loan Act, the Student Loan Servicing Rights Act, and the Predatory Loan Prevention Act and shall comply with their requirements and any rules adopted by the Department of Financial and Professional Regulation pursuant to those Acts. Defines terms. Makes other changes. Effective immediately.
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70-1 borrower's income.
71-2 "Licensee" means a person licensed pursuant to this Act.
72-3 "Other repayment plans" means the Standard Repayment Plan,
73-4 the Graduated Repayment Plan, the Extended Repayment Plan, or
74-5 any other federal student loan repayment plan not based on a
75-6 borrower's income.
76-7 "Private loan borrower eligible for referral to a
77-8 repayment specialist" means a borrower who possesses any of
78-9 the following characteristics:
79-10 (1) requests information related to options to reduce
80-11 or suspend his or her monthly payments; or
81-12 (2) indicates that he or she is experiencing or
82-13 anticipates experiencing financial hardship, distress, or
83-14 difficulty making his or her payments.
84-15 "Requester" means any borrower or cosigner that submits a
85-16 request for assistance.
86-17 "Request for assistance" means all inquiries, complaints,
87-18 account disputes, and requests for documentation a servicer
88-19 receives from borrowers or cosigners.
89-20 "Secretary" means the Secretary of Financial and
90-21 Professional Regulation, or his or her designee, including the
91-22 Director of the Division of Banking of the Department of
92-23 Financial and Professional Regulation.
93-24 "Servicing" means: (1) receiving any scheduled periodic
94-25 payments from a student loan borrower or cosigner pursuant to
95-26 the terms of a student loan; (2) applying the payments of
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106-1 principal and interest and such other payments with respect to
107-2 the amounts received from a student loan borrower or cosigner,
108-3 as may be required pursuant to the terms of a student loan; and
109-4 (3) performing other administrative services with respect to a
110-5 student loan.
111-6 "Student loan" or "loan" means any federal education loan
112-7 or other loan primarily for use to finance a postsecondary
113-8 education and costs of attendance at a postsecondary
114-9 institution, including, but not limited to, tuition, fees,
115-10 books and supplies, room and board, transportation, and
116-11 miscellaneous personal expenses. "Student loan" includes a
117-12 loan made to refinance a student loan.
118-13 "Student loan" shall not include an extension of credit
119-14 under an open-end consumer credit plan, a reverse mortgage
120-15 transaction, a residential mortgage transaction, or any other
121-16 loan that is secured by real property or a dwelling.
122-17 "Student loan" shall not include an extension of credit
123-18 made by a postsecondary educational institution to a borrower
124-19 if one of the following apply:
125-20 (1) The term of the extension of credit is no longer
126-21 than the borrower's education program.
127-22 (2) The remaining, unpaid principal balance of the
128-23 extension of credit is less than $1,500 at the time of the
129-24 borrower's graduation or completion of the program.
130-25 (3) The borrower fails to graduate or successfully
131-26 complete his or her education program and has a balance
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68+1 income share agreement for personal, family, or household use.
69+2 "Department" means the Department of Financial and
70+3 Professional Regulation.
71+4 "Director" means the Director of the Division of Financial
72+5 Institutions of the Department of Financial and Professional
73+6 Regulation.
74+7 "Disposable earnings" means that part of the earnings of
75+8 an individual remaining after the deduction from total
76+9 earnings of amounts required by law to be withheld.
77+10 "Educational ISA" means an income share agreement that:
78+11 (1) is not made, insured, or guaranteed under Title IV
79+12 of the Higher Education Act of 1965, 20 U.S.C. 1070 et
80+13 seq., or another federally subsidized educational finance
81+14 program;
82+15 (2) is extended to a consumer expressly, in whole or
83+16 in part, for postsecondary educational expenses, tuition,
84+17 or other obligations of, or pays amounts to, or on behalf
85+18 of, such individual for costs associated with a
86+19 postsecondary training program or any other program
87+20 designed to increase the individual's human capital,
88+21 employability, or earning potential, and is not limited to
89+22 programs eligible to participate as programs under Title
90+23 IV of the Higher Education Act of 1965, 20 U.S.C. 1070 et
91+24 seq., as well as any personal expenses, such as books,
92+25 supplies, transportation, and living costs, incurred by
93+26 the individual while enrolled in such a program and any
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142-1 due at the time of his or her disenrollment from the
143-2 postsecondary institution.
144-3 "Student loan servicer" or "servicer" means any person
145-4 engaged in the business of servicing student loans. "Student
146-5 loan servicer" or "servicer" includes persons or entities
147-6 acting on behalf of the State Treasurer. "Student loan
148-7 servicer" includes an income share agreement provider as set
149-8 forth under Article 7 of this Act.
150-9 "Student loan servicer" shall not include:
151-10 (1) a bank, savings bank, savings association, or
152-11 credit union organized under the laws of the State or any
153-12 other state or under the laws of the United States;
154-13 (2) a wholly owned subsidiary of any bank, savings
155-14 bank, savings association, or credit union organized under
156-15 the laws of the State or any other state or under the laws
157-16 of the United States;
158-17 (3) an operating subsidiary where each owner of the
159-18 operating subsidiary is wholly owned by the same bank,
160-19 savings bank, savings association, or credit union
161-20 organized under the laws of the State or any other state or
162-21 under the laws of the United States;
163-22 (4) the Illinois Student Assistance Commission and its
164-23 agents when the agents are acting on the Illinois Student
165-24 Assistance Commission's behalf;
166-25 (5) a public postsecondary educational institution or
167-26 a private nonprofit postsecondary educational institution
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104+1 other costs or expenses included in the definition of a
105+2 "qualified higher education expense" as specified in 26
106+3 U.S.C. 529(e)(3)(A), including refinancing of loans or
107+4 income share agreements used for the purposes described in
108+5 this paragraph, and regardless of whether the income share
109+6 agreement is provided by the educational institution that
110+7 the consumer attends; and
111+8 (3) does not include loans, open-end credit, or any
112+9 loan or income share agreement that is secured by real
113+10 property or a dwelling.
114+11 "Federal poverty guidelines" means the poverty guidelines
115+12 updated periodically in the Federal Register by the U.S.
116+13 Department of Health and Human Services under the authority of
117+14 42 U.S.C. 9902(2).
118+15 "Garnishment" means any legal or equitable procedure
119+16 through which earnings of an individual are required to be
120+17 withheld for payment of the income share agreement.
121+18 "Income" means the salary, wages, income, tips, capital
122+19 gains, earnings, and other sources of income of a consumer as
123+20 set forth in an income share agreement.
124+21 "Income share agreement" or "ISA" means an agreement
125+22 between a consumer and an ISA provider under which:
126+23 (1) the ISA provider credits or advances a sum of
127+24 money to the consumer or to a third party on the consumer's
128+25 behalf or, if the ISA provider is a seller of goods or
129+26 services to the consumer, the ISA provider credits or
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178-1 servicing a student loan it extended to the borrower;
179-2 (6) a licensed debt management service under the Debt
180-3 Management Service Act, except to the extent that the
181-4 organization acts as a subcontractor, affiliate, or
182-5 service provider for an entity that is otherwise subject
183-6 to licensure under this Act;
184-7 (7) any collection agency licensed under the
185-8 Collection Agency Act that is collecting post-default
186-9 debt;
187-10 (8) in connection with its responsibilities as a
188-11 guaranty agency engaged in default aversion, a State or
189-12 nonprofit private institution or organization having an
190-13 agreement with the U.S. Secretary of Education under
191-14 Section 428(b) of the Higher Education Act (20 U.S.C.
192-15 1078(B));
193-16 (9) a State institution or a nonprofit private
194-17 organization designated by a governmental entity to make
195-18 or service student loans, provided in each case that the
196-19 institution or organization services fewer than 20,000
197-20 student loan accounts of borrowers who reside in Illinois;
198-21 (10) a law firm or licensed attorney that is
199-22 collecting post-default debt; or
200-23 (11) the State Treasurer.
201-24 (Source: P.A. 100-540, eff. 12-31-18; 100-635, eff. 12-31-18;
202-25 101-586, eff. 8-26-19.)
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140+1 advances toward the purchase of such goods or services;
141+2 (2) the consumer is obligated to make periodic
142+3 payments, if any become due, to the ISA provider
143+4 calculated, based upon, or determined by the consumer's
144+5 income;
145+6 (3) the consumer only incurs an obligation in each
146+7 payment period if the individual's income in that period
147+8 is above an income threshold specified in the ISA
148+9 agreement;
149+10 (4) there is an ISA duration after which the
150+11 obligation is complete regardless of how much has been
151+12 paid, as long as the consumer has paid any prior amounts
152+13 due; and
153+14 (5) each of these elements is available at the time of
154+15 contracting of the income share agreement.
155+16 For purposes of this definition, an income share agreement
156+17 shall be treated as "credit" (within the meaning of that term
157+18 under 15 U.S.C. 1602(f)) and as a "private education loan"
158+19 (within the meaning of that term under 15 U.S.C. 1650(a)(8))
159+20 to the extent the proceeds of the ISA are used for
160+21 postsecondary educational expenses in a manner consistent with
161+22 the definition of that term.
162+23 "Income threshold" means a fixed dollar amount that is the
163+24 minimum income per payment period that an ISA recipient is
164+25 required to earn before the ISA recipient is required to make a
165+26 payment on an income share agreement for such payment period.
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213-1 (110 ILCS 992/Art. 7 heading new)
214-2 ARTICLE 7. EDUCATIONAL INCOME SHARE AGREEMENTS
215-3 (110 ILCS 992/7-1 new)
216-4 Sec. 7-1. Purpose and Construction. This Article shall be
217-5 construed as a consumer protection law for all purposes. This
218-6 Article shall be liberally construed to effectuate its
219-7 purpose.
220-8 (110 ILCS 992/7-5 new)
221-9 Sec. 7-5. Definitions. As used in this Article:
222-10 "Amount financed" means the amounts advanced by the income
223-11 share agreement provider to the consumer or on behalf of the
224-12 consumer or, if the income share agreement provider is a
225-13 merchant financing the sale of goods or services to the
226-14 consumer using an income share agreement, "amount financed"
227-15 means the amount credited by the income share agreement
228-16 provider toward the purchase of such goods and services on
229-17 behalf of the consumer.
230-18
231-19 "Annual percentage rate" or "APR" means the percentage
232-20 rate calculated according to the Federal Reserve Board's
233-21 methodology as set forth under Regulation Z, 12 CFR Part 1026.
234-22 The "annual percentage rate" of an income share agreement is
235-23 the measure of the cost of the income share agreement,
236-24 expressed as a yearly rate, that relates to the amount and
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176+1 "Index" means the Consumer Price Index for Urban Wage
177+2 Earners and Clerical Workers: U.S. City Average, All Items,
178+3 1967=100, compiled by the Bureau of Labor Statistics, United
179+4 States Department of Labor.
180+5 "ISA duration" means the maximum time during which a
181+6 consumer could remain obligated on the income share agreement,
182+7 other than periods when an income share agreement provider is
183+8 attempting to collect past-due amounts and absent periods of
184+9 payment relief pauses, forbearance, military service
185+10 suspension, or other suspension of obligations at the request
186+11 of the consumer, regardless of whether the consumer's income
187+12 is greater than the minimum income.
188+13 "ISA maximum number of payments" means the maximum number
189+14 of ISA payments during ISA payment periods in which the
190+15 consumer's income is equal to or greater than the income
191+16 threshold that a consumer could be required to make. "ISA
192+17 maximum number of payments" does not include periods of
193+18 payment relief pause.
194+19 "ISA payment" means a calculated monthly payment in excess
195+20 of $0.00 that counts toward the maximum income-based payments
196+21 under the ISA. An "ISA payment" is required only for income
197+22 earned during an ISA payment period in which the consumer's
198+23 income was equal to or greater than the income threshold.
199+24 "ISA payment calculation method" means the mechanism,
200+25 formula, percentage, dollar figure, or other means of
201+26 calculating a student's payment obligation, based on the
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247-1 timing of value received by the consumer to the amount and
248-2 timing of payments made. The "annual percentage rate" is
249-3 determined in accordance with either the actuarial method or
250-4 the United States rule method.
251-5 "Cash price" means the price that the consumer would pay
252-6 for the goods or services for which the educational income
253-7 share agreement proceeds are advanced in an equivalent cash
254-8 transaction between the consumer and the provider of goods or
255-9 services. The Cash price excludes any amounts paid by the
256-10 consumer as a down payment to the income share agreement
257-11 provider.
258-12 "Consumer" means a natural person who enters into an
259-13 Educational Income Share Agreement for educational purposes.
260-14 "Disposable earnings" means that part of the earnings of
261-15 an individual remaining after the deduction from total
262-16 earnings of amounts required by law to be withheld.
263-17 "Educational Income Share Agreement" means an income share
264-18 agreement that:
265-19 (1) is not made, insured, or guaranteed under Title IV
266-20 of the Higher Education Act of 1965, 20 U.S.C. 1070 et
267-21 seq., or another federally subsidized educational finance
268-22 program; and
269-23 (2) is extended to a consumer expressly, in whole or
270-24 in part, for postsecondary educational expenses, tuition,
271-25 or other obligations of, or pays amounts to, or on behalf
272-26 of, such individual for costs associated with a
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212+1 student's income, under the terms of the income share
213+2 agreement.
214+3 "ISA payment cap" means the maximum amount of money a
215+4 consumer must pay to satisfy the terms of an income share
216+5 agreement, which may be expressed as a dollar value, a
217+6 multiple of the amount funded to the student or on the
218+7 student's behalf, or as a maximum effective annual percentage
219+8 rate. "ISA payment cap" does not include charges related to
220+9 default or other charges and fees that are due under the income
221+10 share agreement.
222+11 "ISA provider" means a person who provides funding to a
223+12 consumer pursuant to an income share agreement or, if the ISA
224+13 provider is a seller of goods and services, the seller.
225+14 "Licensee" means a person who is licensed under this Act.
226+15 "Net worth" means total assets minus total liabilities.
227+16 "Payment relief pause" means a period of time that is
228+17 requested by the consumer during which the consumer is not
229+18 required to make payments despite the consumer's income
230+19 exceeding the income threshold.
231+20 Section 10. License required to engage in business.
232+21 Without a license provided under this Act, no person,
233+22 partnership, association, limited liability company, or
234+23 corporation may engage in the business of:
235+24 (1) making income share agreements; or
236+25 (2) taking assignments of and undertaking direct
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283-1 postsecondary training program or any other program
284-2 designed to increase the individual's human capital,
285-3 employability, or earning potential, and is not limited to
286-4 programs eligible to participate as programs under Title
287-5 IV of the Higher Education Act of 1965, 20 U.S.C. 1070 et
288-6 seq., as well as any personal expenses, such as books,
289-7 supplies, transportation, and living costs, incurred by
290-8 the individual while enrolled in such a program and any
291-9 other costs or expenses included in the definition of a
292-10 "qualified higher education expense" as specified in 26
293-11 U.S.C. 529(e)(3)(A), including refinancing of loans or
294-12 income share agreements used for the purposes described in
295-13 this paragraph, and regardless of whether the income share
296-14 agreement is provided by the educational institution that
297-15 the consumer attends.
298-16 "Federal poverty guidelines" means the poverty guidelines
299-17 published by the federal Department of Health and Human
300-18 Services under the authority of 42 U.S.C. 9902(2) in the
301-19 Federal Register.
302-20 "Garnishment" means any legal or equitable procedure
303-21 through which earnings of an individual are required to be
304-22 withheld for payment of obligations to an income share
305-23 agreement provider as set forth in the Code of Civil
306-24 Procedure.
307-25 "Income share agreement" or "ISA" means an agreement
308-26 between a consumer and an ISA provider under which:
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247+1 collection of payments from or enforcement of rights
248+2 against consumers arising from income share agreements,
249+3 except for collection of payments and enforcement of
250+4 rights for 3 months without a license if the person or
251+5 entity promptly applies for a license and the application
252+6 has not been denied.
253+7 Section 15. Application for income share agreement
254+8 license; fees; surety bond.
255+9 (a) Application for a license shall be in writing and in a
256+10 form prescribed by the Director. The applicant at the time of
257+11 making an application shall pay the Director the sum of $300 as
258+12 an application fee and the additional sum of $450 as an annual
259+13 license fee for a period terminating on the last day of the
260+14 current calendar year; however, if the application is filed
261+15 after June 30 in any year, the license fee shall be half of the
262+16 annual license fee for the year.
263+17 (b) Before the license is granted, every applicant shall
264+18 provide in a form satisfactory to the Director that the
265+19 applicant has or will maintain a positive net worth in a
266+20 minimum of $30,000. Every applicant and licensee shall
267+21 maintain a surety bond in the principal sum of $25,000 issued
268+22 by a bonding company authorized to do business in this State
269+23 and that shall be approved by the Director. The bond shall run
270+24 to the Director and shall be for the benefit of any consumer
271+25 who incurs damages as a result of a violation of this Act or
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319-1 (1) the ISA provider credits or advances a sum of
320-2 money to the consumer or to a third party on the consumer's
321-3 behalf or, if the ISA provider is a seller of goods or
322-4 services to the consumer, the ISA provider credits or
323-5 advances toward the purchase of such goods or services;
324-6 (2) the consumer is obligated to make periodic
325-7 payments, if any become due, to the ISA provider
326-8 calculated, based upon, or determined by the consumer's
327-9 income;
328-10 (3) the consumer only incurs an obligation in each
329-11 payment period if the individual's income in that period
330-12 is above an income threshold specified in the ISA
331-13 agreement;
332-14 (4) there is an ISA duration after which the
333-15 obligation is complete regardless of how much has been
334-16 paid, as long as the consumer has paid any prior amounts
335-17 due; and
336-18 (5) each of these elements is available at the time of
337-19 contracting of the income share agreement. For purposes of
338-20 this definition, an income share agreement shall be
339-21 treated as "credit", within the meaning of that term under
340-22 15 U.S.C. 1602(f), and as a "private education loan",
341-23 within the meaning of that term under 15 U.S.C.
342-24 1650(a)(8), to the extent the proceeds of the ISA are used
343-25 for postsecondary educational expenses in a manner
344-26 consistent with the definition of that term.
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282+1 rules adopted pursuant to this Act by a licensee. If the
283+2 Director at any time finds that a bond is of insufficient size,
284+3 is insecure, is exhausted, or is otherwise doubtful, an
285+4 additional bond in such amount as determined by the Director
286+5 shall be filed by the licensee within 30 days after written
287+6 demand therefor by the Director.
288+7 Section 20. Appointment of attorney-in-fact for service of
289+8 process. Every licensee shall appoint, in writing, the
290+9 Director and his or her successors in office or any official
291+10 who shall be charged with the administration of this Act, as
292+11 attorney-in-fact upon whom all lawful process against the
293+12 licensee may be served within the same legal force and
294+13 validity as if served on the licensee. A copy of such written
295+14 appointment, duly certified, shall be filed in the office of
296+15 the Director, and a copy thereof certified by him or her shall
297+16 be sufficient evidence. This appointment shall remain in
298+17 effect while any liability remains outstanding in this State
299+18 against the licensee. When summons is served upon the Director
300+19 as attorney-in-fact for such licensee, the Director shall
301+20 immediately notify the licensee by registered mail, enclosing
302+21 the summons and specifying the hour and day of service.
303+22 Section 25. Investigation; license issuance.
304+23 (a) Upon the filing of an application and the payment of
305+24 the fees, the Director shall investigate to determine:
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355-1 "Income threshold" means a fixed dollar amount that is the
356-2 minimum income per payment period that an ISA recipient is
357-3 required to earn before the ISA recipient is required to make a
358-4 payment on an income share agreement for such payment period.
359-5 "Index" means the Consumer Price Index for Urban Wage
360-6 Earners and Clerical Workers: U.S. City Average, All Items,
361-7 1967=100, compiled by the Bureau of Labor Statistics, United
362-8 States Department of Labor.
363-9 "ISA duration" means the maximum time during which a
364-10 consumer could remain obligated on the income share agreement,
365-11 other than periods when an income share agreement provider is
366-12 attempting to collect past-due amounts and absent periods of
367-13 payment relief pauses, forbearance, military service
368-14 suspension, or other suspension of obligations at the request
369-15 of the consumer, regardless of whether the consumer's income
370-16 is greater than the minimum income.
371-17 "ISA maximum number of payments" means the maximum number
372-18 of ISA payments during ISA payment periods in which the
373-19 consumer's income is equal to or greater than the income
374-20 threshold that a consumer could be required to make pursuant
375-21 to the terms of the income share agreement. "ISA maximum
376-22 number of payments" does not include periods of payment relief
377-23 pause.
378-24 "ISA payment" means a calculated monthly payment in excess
379-25 of $0.00 that counts toward the maximum income-based payments
380-26 under the ISA. An "ISA payment" is required only for income
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316+1 (1) that the reputation of the applicant, including
317+2 the managers of a limited liability company, and the
318+3 partners, owners, officers, or directors thereof warrants
319+4 belief that the business will be operated honestly and
320+5 fairly within the purposes of this Act; and
321+6 (2) that the applicant meets the positive net worth
322+7 requirements of this Act.
323+8 Unless the Director makes findings enumerated in this
324+9 subsection, he or she shall not issue a license and shall
325+10 notify the applicant of the denial and return to the applicant
326+11 the sum paid by the applicant as a license fee, but shall
327+12 retain the $300 application fee. The Director shall approve or
328+13 deny every application for license within 60 days after the
329+14 filing of an application with payment of a fee.
330+15 (b) Upon written request, the applicant is entitled to a
331+16 hearing on the question of his or her qualifications for a
332+17 license if:
333+18 (1) the Director notifies the applicant in writing
334+19 that his or her application has been denied; or
335+20 (2) the Director does not issue a license within 60
336+21 days after the application for the license was filed.
337+22 A request for a hearing may not be made more than 15 days
338+23 after the Director mails a writing to the applicant notifying
339+24 him or her that the application has been denied and stating in
340+25 substance the Director's findings supporting denial.
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391-1 earned during an ISA payment period in which the consumer's
392-2 income was equal to or greater than the income threshold.
393-3 "ISA payment calculation method" means the mechanism,
394-4 formula, percentage, dollar figure, or other means of
395-5 calculating a student's payment obligation, based on the
396-6 student's income, under the terms of the income share
397-7 agreement.
398-8 "ISA payment cap" means the maximum amount of money a
399-9 consumer must pay to satisfy the terms of an income share
400-10 agreement, which may be expressed as a dollar value, a
401-11 multiple of the amount funded to the student or on the
402-12 student's behalf, or as a maximum effective annual percentage
403-13 rate.
404-14 "ISA payment cap" does not include charges related to
405-15 default or other charges and fees that are due under the income
406-16 share agreement.
407-17 "Income share agreement provider" means:
408-18 (1) a person that provides money, payments, or credits
409-19 to or on behalf of a consumer pursuant to the terms of an
410-20 income share agreement; or
411-21 (2) any other person engaged in the business of
412-22 soliciting, making, funding, or extending income share
413-23 agreements. This subsection does not apply to an entity
414-24 that either: (A) has no direct interactions with the
415-25 consumer and is not responsible for making credit
416-26 decisions regarding the consumer, or (B) is the provider
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351+1 Section 30. License. The license shall state the address,
352+2 including the city and state, at which the business is to be
353+3 conducted and shall state fully the name of the licensee. The
354+4 license shall be conspicuously posted in the place of business
355+5 of the licensee and shall not be transferable or assignable.
356+6 Section 35. License; place of business.
357+7 (a) Not more than one place of business shall be
358+8 maintained under the same license, but the Director may issue
359+9 more than one license to the same licensee upon compliance
360+10 with all the provisions of this Act governing the original
361+11 issuance of a license. A website operated by the licensee
362+12 shall constitute a location.
363+13 (b) Whenever a licensee changes his or her place of
364+14 business to a location other than that set forth in the
365+15 license, he or she shall give written notice to the Director at
366+16 least 10 days before the relocation. However, if the new
367+17 location is in excess of 15 miles from the previous location,
368+18 the licensee shall obtain written approval from the Director
369+19 before relocation.
370+20 Section 40. Annual license fee; expenses.
371+21 (a) Before December 1 of each year, a licensee shall pay to
372+22 the Director, and the Department must receive, the annual
373+23 license fee required by this Act for the next succeeding
374+24 calendar year. The license shall expire on January 1 of the
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427-1 of the educational services to the consumer, even if these
428-2 entities may qualify under subsection (1), or (C) whose
429-3 role is solely limited to the marketing or advertising of
430-4 the income share agreement to the consumer on behalf of a
431-5 licensed income share agreement provider.
432-6 An income share agreement provider who is a student loan
433-7 servicer as defined in the Student Loan Servicing Rights Act
434-8 shall also comply with the provisions of this Article 7.
435-9 "Payment relief pause" means a period of time that is
436-10 requested by the consumer during which the consumer is not
437-11 required to make payments despite the consumer's income
438-12 exceeding the income threshold.
439-13 "Sales price" means, for an educational income share
440-14 agreement, the sum of the cash price and any other amounts
441-15 financed by the educational income share agreement.
442-16 (110 ILCS 992/7-10 new)
443-17 Sec. 7-10. Monthly payment affordability.
444-18 (a) Maximum ISA income obligation. Each income share
445-19 agreement shall specify the ISA payment calculation method
446-20 applicable to the income share agreement and shall comply with
447-21 the following:
448-22 (1) An income share agreement provider shall not enter
449-23 into an ISA with a consumer if the consumer would be
450-24 committing more than a total of 20% of the consumer's
451-25 future income toward the payment of the ISA.
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385+1 following year unless the licensee fee has been paid before
386+2 then.
387+3 (b) In addition to the license fee, the reasonable expense
388+4 of any examination, investigation, or custody by the Director
389+5 under any provisions of this Act shall be borne by the
390+6 licensee.
391+7 (c) If a licensee fails to renew his or her license by
392+8 December 31, it shall automatically expire and the licensee is
393+9 not entitled to a hearing; however, the Director, in his or her
394+10 discretion, may reinstate an expired license upon payment of
395+11 the annual renewal fee and proof of good cause for failure to
396+12 renew.
397+13 Section 45. Suspension or revocation of license.
398+14 (a) The Director may issue to a licensee an order to show
399+15 cause why his or her license should not be suspended for a
400+16 period not in excess of 6 months or be revoked. The order shall
401+17 set a place for a hearing and a time therefor that is no less
402+18 than 10 days after the date of the order. After the hearing,
403+19 the Director shall revoke or suspend the license, or, if there
404+20 are mitigating circumstances, may accept an assurance of
405+21 discontinuance and allow retention of the license, if the
406+22 Director finds that:
407+23 (1) the licensee has repeatedly and intentionally
408+24 violated this Act or any rule or order lawfully made
409+25 pursuant to this Act, or has violated an assurance of
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462-1 (2) An income share agreement provider shall not enter
463-2 into an educational ISA with a consumer if the consumer
464-3 would be committing to pay more than 20% of his or her
465-4 income at any time during the ISA duration, based on
466-5 information available to the income share agreement
467-6 provider at the time of the projection, inclusive of any
468-7 payment obligations that the income share agreement
469-8 provider knows will arise in the future for other
470-9 educational ISAs and education loans upon which the
471-10 consumer is obligated at the time of the projection. The
472-11 ISA provider must confirm a consumer's educational ISA and
473-12 education loan liabilities through a verifiable
474-13 third-party source. At a minimum, the income share
475-14 agreement provider must confirm such liabilities using
476-15 information maintained by a nationwide consumer reporting
477-16 agency, as defined by 15 U.S.C. 1681a(f), and doing so is
478-17 sufficient for meeting the requirement in this paragraph;
479-18 however, nothing in this paragraph shall prohibit an
480-19 income share agreement provider from using other sources
481-20 to provide additional verification. For the purposes of
482-21 calculating the portion of a student's future income that
483-22 would be consumed by the educational ISA for which the
484-23 student has applied and other educational ISAs and
485-24 education loans known at the time, the ISA provider shall
486-25 calculate the aggregate future burden of all such
487-26 obligations, including the educational ISA for which the
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420+1 discontinuance; or
421+2 (2) facts or conditions exist that clearly would have
422+3 justified the Director in refusing to grant a license for
423+4 that place or those places of business were the facts or
424+5 conditions known to exist at the time the application for
425+6 the license was made.
426+7 (b) A revocation or suspension of a license is not lawful
427+8 unless the Director, before instituting proceedings, gives
428+9 notice to the licensee of the facts or conduct that warrant the
429+10 intended action and the licensee is afforded an opportunity to
430+11 show compliance with all lawful requirements for retention of
431+12 the license.
432+13 (c) If the Director finds that probable cause for
433+14 revocation of a license exists and that enforcement of this
434+15 Act requires immediate suspension of the license pending
435+16 investigation, the Director, after a hearing upon 10 days'
436+17 written notice, may enter an order suspending the license for
437+18 not more than 30 days.
438+19 (d) Whenever the Director revokes or suspends a license,
439+20 he or she shall enter an order to that effect and forthwith
440+21 notify the licensee of the revocation or suspension. Within 10
441+22 days after entry of the order he or she shall deliver to the
442+23 licensee a copy of the order and the findings supporting the
443+24 order.
444+25 (e) A person holding a license to make income share
445+26 agreements may relinquish the license by notifying the
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498-1 student is applying, at hypothetical future income levels
499-2 ranging from the income threshold of the ISA for which the
500-3 student has applied up to $70,000, with such number
501-4 adjusting for inflation each year, in increments of
502-5 $10,000. The terms of the educational ISA for which the
503-6 student has applied cannot cause the student's aggregate
504-7 future burden to exceed the limit in subsection (b) at any
505-8 of the income increments stated in this paragraph. For the
506-9 purpose of calculating the percentage burden of an
507-10 educational ISA at a given future income level, the ISA
508-11 provider shall use the ISA payment amount that would be
509-12 applicable for the ISA at such income level. For the
510-13 purpose of calculating the percentage burden of an
511-14 educational loan at a given future income level, the ISA
512-15 provider shall divide the annual payment obligation by
513-16 income level using the most affordable payment plan or
514-17 option which would yield the lowest monthly payments that
515-18 would be available to the student at such income level
516-19 under such loan. For students enrolled in a Title IV
517-20 program, as part of this analysis the ISA provider shall
518-21 assume a federal loan balance equal to the larger of (1)
519-22 the student's existing federal loan balance, and (2) the
520-23 aggregate maximum amount the student is eligible to borrow
521-24 under Federal Direct Stafford Loans for his or her status,
522-25 dependent or independent.
523-26 (b) Protections during periods of low earnings. The income
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456+1 Director in writing of its relinquishment, but the
457+2 relinquishment does not affect his or her liability for acts
458+3 previously committed.
459+4 (f) Revocation, suspension, or relinquishment of a license
460+5 does not impair or affect the obligation of any preexisting
461+6 lawful contract between the licensee and any consumer.
462+7 (g) The Director may reinstate a license, terminate a
463+8 suspension, or grant a new license to a person whose license
464+9 has been revoked or suspended if no fact or condition then
465+10 exists that clearly would have justified the Director in
466+11 refusing to grant a license.
467+12 Section 50. Closing of business; surrender of license.
468+13 (a) At least 10 days before a licensee ceases operations,
469+14 closes business, or files for bankruptcy, the licensee shall
470+15 do the following:
471+16 (1) Notify the Department of its action in writing.
472+17 (2) With the exception of filing for bankruptcy,
473+18 surrender its license to the Director for cancellation;
474+19 the surrender of the license shall not affect the
475+20 licensee's civil or criminal liability for acts committed
476+21 before surrender or entitle the licensee to return any
477+22 part of the annual license fee.
478+23 (3) Notify the Director of the location where the
479+24 books, accounts, contracts, and records will be maintained
480+25 and the procedure to ensure prompt return of contracts,
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534-1 share agreement must state that when a consumer has income
535-2 that is equal to or below the income threshold set forth in the
536-3 income share agreement that the consumer's payment obligation
537-4 is zero dollars. The income threshold at the time of
538-5 origination must be high enough such that the consumer's gross
539-6 income minus any income share agreement obligation must leave
540-7 the consumer with gross income equal to at least 200% of the
541-8 federal poverty guidelines for a single person.
542-9 (c) Required payment relief pauses. An income share
543-10 agreement must offer at least 3 months of voluntary payment
544-11 relief pauses, so long as a consumer's current income at the
545-12 time of requesting the payment relief pause is equal to or less
546-13 than 400% of the federal poverty guidelines for a single
547-14 individual, for every 30 income-determined payments required
548-15 under the income share agreement.
549-16 (110 ILCS 992/7-15 new)
550-17 Sec. 7-15. Maximum effective annual percentage rate. An
551-18 income share agreement must specify that the maximum amount
552-19 that a consumer could be required to pay under the income share
553-20 agreement will not result in a consumer ever being required to
554-21 pay an effective annual percentage rate that is greater than
555-22 36%. If at any time the provider accepts a payment of an amount
556-23 that would cause the limit in this Section to apply, the
557-24 provider shall refund any amounts, within 20 calendar days,
558-25 necessary to ensure that the consumer's payments do not result
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491+1 titles, and releases to the customers.
492+2 (4) Ensure that the accounts, books, records, and
493+3 contracts shall be maintained and serviced by the licensee
494+4 or another licensee under this Act or an entity exempt
495+5 from licensure under this Act.
496+6 (b) The Department shall have the authority to conduct
497+7 examinations of the books, records, and loan documents at any
498+8 time after surrender of the license, filing of bankruptcy, or
499+9 the cessation of operations.
500+10 Section 55. Examinations and investigations of conduct of
501+11 business.
502+12 (a) The Director shall examine periodically, at intervals
503+13 he or she deems appropriate but not less than once per year,
504+14 income share agreements, business, and records of every
505+15 licensee. In addition, for the purpose of discovering
506+16 violations of this Act or securing information lawfully
507+17 required, the Director at any time may investigate the income
508+18 share agreements, business, and records of any licensee. For
509+19 these purposes the Director shall have free and reasonable
510+20 access to the offices, places of business, and records of the
511+21 licensee.
512+22 (b) If the licensee's records are located outside this
513+23 State, the licensee at the Director's request shall make them
514+24 available to the Director at a convenient location within this
515+25 State, or pay the reasonable and necessary expenses for the
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569-1 in an effective annual percentage rate that is greater than
570-2 the limit specified in this Section.
571-3 (110 ILCS 992/7-20 new)
572-4 Sec. 7-20. Limits on duration of income share agreements.
573-5 (a) ISA maximum number of payments shall not exceed 180
574-6 monthly payments.
575-7 (b) The ISA duration shall not exceed 240 months,
576-8 excluding any months in which a consumer has requested and
577-9 received a payment relief pause.
578-10 (110 ILCS 992/7-25 new)
579-11 Sec. 7-25. Risk sharing.
580-12 (a) An income share agreement provider may not contract
581-13 for income share agreement terms that would result in a
582-14 consumer having income that is less than or equal to 300% of
583-15 the federal poverty guidelines for a single person for the ISA
584-16 duration being required to make a stream of ISA payments that
585-17 would yield an effective APR greater than 8%, or the high yield
586-18 of the 10-year United States Constant Maturity Treasury Notes
587-19 auctioned at the final auction held before the current
588-20 calendar year in which an ISA offering is made plus 7%,
589-21 whichever is greater.
590-22 (b) An income share agreement provider may not contract
591-23 for income share agreement terms that would result in a
592-24 consumer having income that is less than or equal to 400% of
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526+1 Director or his or her representative to examine them where
527+2 they are located. The Director may designate representatives,
528+3 including comparable officials of the state in which the
529+4 records are located, to inspect them on the Director's behalf.
530+5 (c) For purposes of this Section, the Director may
531+6 administer oaths or affirmations, and upon request of a party
532+7 or his or her own motion may subpoena witnesses, compel their
533+8 attendance, adduce evidence, and require the production of any
534+9 matter that is relevant to the investigation, including the
535+10 existence, description, nature, custody, condition, and
536+11 location of any books, documents, or other tangible things and
537+12 the identity and location of persons having knowledge of
538+13 relevant facts or any other matter reasonably calculated to
539+14 lead to the discovery of admissible evidence.
540+15 (d) Upon failure without lawful excuse to obey a subpoena
541+16 or to give testimony and upon reasonable notice to all persons
542+17 affected thereby, the Director may apply to the court for an
543+18 order compelling compliance.
544+19 Section 60. Books and records.
545+20 (a) Every licensee shall maintain records in conformity
546+21 with generally accepted accounting principles and practices in
547+22 a manner that will enable the Director to determine whether
548+23 the licensee is complying with this Act. The recordkeeping
549+24 system of a licensee is sufficient if it makes the required
550+25 information reasonably available. The records pertaining to
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603-1 the federal poverty guidelines for a single person for the ISA
604-2 duration being required to make a stream of ISA payments that
605-3 would yield an effective APR greater than 12%, or the high
606-4 yield of the 10-year United States Constant Maturity Treasury
607-5 Notes auctioned at the final auction held before the current
608-6 calendar year in which an ISA offering is made plus 11%,
609-7 whichever is greater.
610-8 (c) An income share agreement provider may not contract
611-9 for income share agreement terms that would result in a
612-10 consumer having income that is less than or equal to 500% of
613-11 the federal poverty guidelines for a single person for the ISA
614-12 duration being required to make a stream of ISA payments that
615-13 would yield an effective APR greater than 15%, or the high
616-14 yield of the 10-year United States Constant Maturity Treasury
617-15 Notes auctioned at the final auction held before the current
618-16 calendar year in which an ISA offering is made plus 14%,
619-17 whichever is greater.
620-18 (d) An income share agreement provider may not contract
621-19 for income share agreement terms that would result in a
622-20 consumer having income that is less than or equal to 600% of
623-21 the federal poverty guidelines for a single person for the ISA
624-22 duration being required to make a stream of ISA payments that
625-23 would yield an effective APR greater than 18%, or the high
626-24 yield of the 10-year United States Constant Maturity Treasury
627-25 Notes auctioned at the final auction held before the current
628-26 calendar year in which an ISA offering is made plus 17%,
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561+1 any income share agreement need not be preserved for more than
562+2 2 years after making the final entry relating to the income
563+3 share agreement.
564+4 (b) On or before April 15 of each year, every licensee
565+5 shall file with the Director a composite annual report in a
566+6 form prescribed by the Director relating to all income share
567+7 agreements made by the licensee. Information contained in
568+8 annual reports shall be confidential and may be published only
569+9 in composite form.
570+10 Section 65. No other business allowed.
571+11 (a) A licensee may not carry on other business for the
572+12 purpose of evasion or violation of this Act at a location where
573+13 the licensee makes income share agreements.
574+14 (b) Upon application by the licensee, the Director may
575+15 approve the conduct of other businesses not specifically
576+16 permitted by this Act in the licensee's place of business,
577+17 unless the Director finds that such conduct will conceal or
578+18 facilitate evasion or violation of this Act. The Director's
579+19 approval shall be in writing and shall describe the other
580+20 businesses which may be conducted in the licensed office.
581+21 Section 70. Prohibitions.
582+22 (a) No licensee shall take any power of attorney in
583+23 connection with an income share agreement.
584+24 (b) A consumer may not authorize any person to confess
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639-1 whichever is greater.
640-2 (e) For the purposes of determining the various tiers set
641-3 forth in this Section, an income share agreement provider
642-4 shall calculate the effective APR by determining the various
643-5 federal poverty guidelines tiers at the time the consumer's
644-6 income share agreement is originated and assuming such amounts
645-7 are fixed through the ISA duration.
646-8 (f) For the purposes of determining ISA duration in this
647-9 Section: in the case of an educational ISA, an income share
648-10 agreement provider shall assume the ISA duration started after
649-11 a period equal to the expected length of the program for which
650-12 a consumer is enrolling; or in the case of a non-educational
651-13 ISA, an income share agreement provider shall assume the ISA
652-14 duration started immediately.
653-15 (110 ILCS 992/7-30 new)
654-16 Sec. 7-30. Limits on covered income. An income share
655-17 agreement must specify the definition of income to be used for
656-18 the purposes of calculating a consumer's payment obligation
657-19 under the income share agreement. No income share agreement
658-20 shall include any of the following in its definition of
659-21 income:
660-22 (1) The income of the consumer's spouse, party to a
661-23 civil union under the Illinois Religious Freedom and Civil
662-24 Union Act, children or dependents.
663-25 (2) Any amount paid by the consumer under Title II or
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595+1 judgment on a claim arising out of an income share agreement.
596+2 An authorization in violation of this Section is void.
597+3 Section 75. Pledge or sale of income share agreement.
598+4 (a) No licensee or other person shall pledge, hypothecate,
599+5 or sell an income share agreement entered into under this Act
600+6 by a consumer except to another licensee under this Act, a
601+7 bank, savings bank, savings and loan association, or credit
602+8 union created under the laws of this State or the United
603+9 States, or to other persons or entities authorized by the
604+10 Director in writing. Sales of such notes by licensees under
605+11 this Act or other persons shall be made by agreement in writing
606+12 and shall authorize the Director to examine the income share
607+13 agreement documents so hypothecated, pledged, or sold.
608+14 (b) A consumer may pay the original ISA provider until he
609+15 or she receives notification of assignment of rights to
610+16 payment pursuant to an income share agreement and that payment
611+17 is to be made to the assignee. A notification that does not
612+18 reasonably identify the rights assigned is ineffective. If
613+19 requested by the consumer, the assignee shall seasonably
614+20 furnish reasonable proof that the assignment has been made and
615+21 unless the proof is furnished the consumer may pay the
616+22 original ISA provider.
617+23 (c) An assignee of the rights of the ISA provider is
618+24 subject to all claims and defenses of the consumer against the
619+25 ISA provider arising from the income share agreement. A claim
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674-1 XVI of the Social Security Act, 42 U.S.C. 401 et seq., 42
675-2 U.S.C. 1381 et seq.; or under a State program funded by
676-3 Title IV of the Social Security Act, 42 U.S.C. 601 et seq.
677-4 (3) Individual retirement account distributions.
678-5 (4) Pensions and annuities.
679-6 (5) Social security benefits.
680-7 (6) Other sources of federal or State aid provided to
681-8 individuals through any of the following:
682-9 (A) unemployment programs;
683-10 (B) disaster relief programs;
684-11 (C) Medicare or Medicaid benefits;
685-12 (D) benefits received through the Supplemental
686-13 Nutrition Assistance Program; (E)economic impact
687-14 payments;
688-15 (E) the earned income tax credit or child tax
689-16 credit;
690-17 (F) other income excluded from the definition of
691-18 taxable income set forth by the Internal Revenue
692-19 Service; or
693-20 (G) passive income that is not derived as a result
694-21 of a consumer's active participation in any trade or
695-22 business.
696-23 (110 ILCS 992/7-35 new)
697-24 Sec. 7-35. Fees permitted. In addition to the ISA
698-25 obligation permitted by this Act, an income share agreement
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630+1 or defense of a consumer may be asserted against the assignee
631+2 under this Section only if the consumer has made a good faith
632+3 attempt to obtain satisfaction from the ISA provider with
633+4 respect to the claim or defense and then only to the extent of
634+5 the amount owing to the assignee with respect to the ISA
635+6 provider or defense that arose at the time the assignee has
636+7 notice of the claim or defense. Notice of the claim or defense
637+8 may be given before the good faith attempt specified in this
638+9 subsection. Oral notice is effective unless the assignee
639+10 requests written confirmation when or promptly after oral
640+11 notice is given and the consumer fails to give the assignee
641+12 written confirmation within the period of time, not less than
642+13 14 days, stated to the consumer when written confirmation is
643+14 requested. An agreement may not limit or waive the claims or
644+15 defenses of a consumer under this Section.
645+16 Section 80. Monthly payment affordability.
646+17 (a) Maximum ISA income obligation. Each income share
647+18 agreement shall specify the ISA payment calculation method
648+19 applicable to the income share agreement and shall comply with
649+20 the following:
650+21 (1) An ISA provider shall not enter into an ISA with a
651+22 consumer if the consumer would be committing more than a
652+23 total of 20% of the consumer's future income toward the
653+24 payment of the ISA.
654+25 (2) An income share agreement provider may not enter
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709-1 provider may contract for and receive the following additional
710-2 charges:
711-3 (1) government fees and taxes;
712-4 (2) a fee, which shall not exceed the sum of $25, for
713-5 failure to provide documentation to the income share
714-6 agreement provider for the confirmation and reconciliation
715-7 of the consumer's income;
716-8 (3) a fee for processing any forms to confirm the
717-9 consumer's income with the United States Internal Revenue
718-10 Service or a State department of revenue or taxation on a
719-11 dollar-for-dollar, pass-through basis of the expenses
720-12 incurred by the income share agreement provider;
721-13 (4) a late payment fee in an amount of $20 or 5% of the
722-14 late payment, whichever is greater, for any payment that
723-15 is more than 15 days past due; no late payment fee may be
724-16 charged more than once per late payment;
725-17 (5) an amount not exceeding $25, plus any actual
726-18 expenses incurred in connection with a check or draft that
727-19 is not honored because of insufficient or uncollected
728-20 funds or because no such account exists;
729-21 (6) other fees authorized by the Secretary. In
730-22 determining whether to authorize a charge, the Secretary
731-23 shall consider whether the charge benefits the consumer
732-24 and is reasonable;
733-25 (7) before or after default in payment of a scheduled
734-26 payment of an income share agreement, the parties to the
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665+1 into an educational ISA with a consumer if the consumer
666+2 would be committing more than 20% of his or her income,
667+3 inclusive of the obligations that the consumer will incur
668+4 through other educational ISA and education loans the
669+5 consumer holds at the time. The ISA provider must confirm
670+6 a consumer's educational ISA and education loan
671+7 liabilities through a verifiable third-party source. At a
672+8 minimum, the licensee must confirm such liabilities using
673+9 information maintained by a nationwide consumer reporting
674+10 agency, as defined by 15 U.S.C. 1681a(f), and doing so is
675+11 sufficient for meeting the requirement in this paragraph;
676+12 however, nothing in this paragraph shall prohibit a
677+13 licensee from using other sources to provide additional
678+14 verification. For the purposes of calculating the portion
679+15 of a student's future income that would be consumed by the
680+16 educational ISA for which the student has applied and
681+17 other educational ISAs and education loans known at the
682+18 time, the ISA provider shall calculate the aggregate
683+19 future burden of all such obligations, including the
684+20 educational ISA for which the student is applying, at
685+21 hypothetical future income levels ranging from the income
686+22 threshold of the ISA for which the student has applied up
687+23 to $70,000, with such number adjusting for inflation each
688+24 year, in increments of $10,000. The terms of the
689+25 educational ISA for which the student has applied cannot
690+26 cause the student's aggregate future burden to exceed the
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745-1 income share agreement may agree in writing to a deferral
746-2 of all or part of one or more unpaid payments and the
747-3 income share agreement provider may make, at the time of
748-4 deferral and receive at that time or at any time
749-5 thereafter, a deferral charge not exceeding an amount
750-6 equal to 10% of the missed payment. Provided this
751-7 subsection shall not apply to voluntary payment relief
752-8 pauses.
753-9 (110 ILCS 992/7-40 new)
754-10 Sec. 7-40. Restriction on security interest. Under no
755-11 circumstances shall an income share agreement provider take a
756-12 security interest in any collateral in connection with an
757-13 income share agreement.
758-14 (110 ILCS 992/7-45 new)
759-15 Sec. 7-45. Discharge of obligations.
760-16 (a) All further obligations under an income share
761-17 agreement, shall terminate if the consumer is deemed totally
762-18 and permanently disabled by the applicable governmental
763-19 agency.
764-20 (b) All further obligations under the income share
765-21 agreement, except those accruing before the consumer's death,
766-22 shall terminate upon the death of the consumer.
767-23 (110 ILCS 992/7-50 new)
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701+1 limit in subsection (b) at any of the income increments
702+2 stated in this paragraph. For the purpose of calculating
703+3 the percentage burden of an educational ISA at a given
704+4 future income level, the ISA provider shall use the ISA
705+5 payment amount that would be applicable for the ISA at
706+6 such income level. For the purpose of calculating the
707+7 percentage burden of an educational loan at a given future
708+8 income level, the ISA provider shall divide the annual
709+9 payment obligation by income level using the most
710+10 affordable payment plan or option which would yield the
711+11 lowest monthly payments that would be available to the
712+12 student at such income level under such loan. For students
713+13 enrolled in a Title IV program, as part of this analysis
714+14 the ISA provider shall assume a federal loan balance equal
715+15 to the larger of (1) the student's existing federal loan
716+16 balance, and (2) the maximum amount the student is
717+17 eligible to borrow under Federal Direct Stafford Loans for
718+18 his or her status, dependent or independent.
719+19 (b) Protections during periods of low earnings. The income
720+20 share agreement must state that when a consumer has income
721+21 that is equal to or below the income threshold set forth in the
722+22 income share agreement that the consumer's payment obligation
723+23 is zero dollars. The income threshold at the time of
724+24 origination must be high enough such that the consumer's gross
725+25 income minus any income share agreement obligation must leave
726+26 the consumer with gross income equal to at least 200% of the
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778-1 Sec. 7-50. Prohibition on co-signers. No income share
779-2 agreement shall include or permit the use of a co-signer in
780-3 connection with any obligation related to an income share
781-4 agreement.
782-5 (110 ILCS 992/7-55 new)
783-6 Sec. 7-55. Limitation on acceleration.
784-7 (a) Income share agreement providers shall not attempt to
785-8 accelerate or otherwise liquidate a future payment stream
786-9 under an income share agreement.
787-10 (b) Notwithstanding subsection (a), nothing in this
788-11 Section shall prevent an income share agreement provider from
789-12 collecting or pursuing any other remedy available to the
790-13 income share agreement provider for the collection of amounts
791-14 that were due from the consumer under an income share
792-15 agreement that were not paid or properly remitted to the
793-16 income share agreement provider. Nothing in this Section shall
794-17 prevent an income share agreement provider from calculating a
795-18 projected future income for a consumer and calculating a
796-19 consumer's payment obligation using that projection if the
797-20 consumer does not provide contractually obligated
798-21 documentation of income.
799-22 (c) Notwithstanding subsection (a), an income share
800-23 agreement may contain a provision that allows a consumer to
801-24 terminate his or her income share agreement before the events
802-25 terminating further obligations under the income share
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737+1 federal poverty guidelines for a single person.
738+2 (c) Required payment relief pauses. An income share
739+3 agreement must offer at least 3 months of voluntary payment
740+4 relief pauses, so long as a consumer's current income at the
741+5 time of requesting the payment relief pause is equal to or less
742+6 than 400% of the federal poverty guidelines for a single
743+7 individual, for every 30 income-determined payments required
744+8 under the income share agreement.
745+9 Section 85. Maximum effective annual percentage rate. An
746+10 income share agreement must specify that the maximum amount
747+11 that a consumer could be required to pay based on the
748+12 consumer's income under the income share agreement will not
749+13 result in a consumer ever being required to pay an effective
750+14 annual percentage rate that is greater than 36%. If at any time
751+15 the consumer makes and the provider accepts a payment of an
752+16 amount that would cause the limit in this Section to apply, the
753+17 provider shall refund any amounts, within 20 calendar days,
754+18 necessary to ensure that the consumer's payments do not result
755+19 in an effective annual percentage rate that is greater than
756+20 the limit specified in this Section.
757+21 Section 90. Limits on duration of income share agreements.
758+22 (a) The ISA maximum number of payments shall not exceed
759+23 240 monthly payments.
760+24 (b) The ISA duration shall not exceed 360 months,
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813-1 agreement. The early termination mechanisms, such as total
814-2 caps on payments due to the income share agreement provider or
815-3 other rights to partially or fully terminate further
816-4 obligations under the income share agreement, must be optional
817-5 to the consumer and within the consumer's control. In such
818-6 circumstances, such mechanisms will not be deemed a form of
819-7 acceleration, early termination penalty, or prepayment
820-8 penalty.
821-9 (110 ILCS 992/7-60 new)
822-10 Sec. 7-60. No assignment of wages.
823-11 (a) An income share agreement provider may not take an
824-12 assignment of earnings of the consumer for payment or as
825-13 security for payment of a debt arising out of an income share
826-14 agreement. An assignment of earnings in violation of this
827-15 Section is unenforceable by the assignee of the earnings and
828-16 revocable by the consumer. This Section does not prohibit a
829-17 consumer from authorizing deductions from his or her earnings
830-18 in favor of a licensee if the authorization complies with the
831-19 Illinois Wage Assignment Act.
832-20 (b) A sale of unpaid earnings made in consideration of the
833-21 payment of money to or for the account of the seller of the
834-22 earnings is deemed to be a loan to the seller secured by an
835-23 assignment of earnings.
836-24 (110 ILCS 992/7-65 new)
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771+1 excluding any months in which a consumer has requested and
772+2 received a payment relief pause.
773+3 Section 95. Risk sharing.
774+4 (a) A licensee may not contract for income share agreement
775+5 terms that would result in a consumer having income that is
776+6 less than or equal to 300% of the federal poverty guidelines
777+7 for a single person for the ISA duration being required to make
778+8 a stream of ISA payments that would yield an effective APR
779+9 greater than 8%, or the high yield of the 10-year United States
780+10 Constant Maturity Treasury Notes auctioned at the final
781+11 auction held before the current calendar year in which an ISA
782+12 offering is made plus 7%, whichever is greater.
783+13 (b) A licensee may not contract for income share agreement
784+14 terms that would result in a consumer having income that is
785+15 less than or equal to 400% of the federal poverty guidelines
786+16 for a single person for the ISA duration being required to make
787+17 a stream of ISA payments that would yield an effective APR
788+18 greater than 12%, or the high yield of the 10-year United
789+19 States Constant Maturity Treasury Notes auctioned at the final
790+20 auction held before the current calendar year in which an ISA
791+21 offering is made plus 11%, whichever is greater.
792+22 (c) A licensee may not contract for income share agreement
793+23 terms that would result in a consumer having income that is
794+24 less than or equal to 500% of the federal poverty guidelines
795+25 for a single person for the ISA duration being required to make
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847-1 Sec. 7-65. Limitations on garnishment. Before entry of
848-2 judgment in an action against a consumer for a payment arising
849-3 from an income share agreement, a licensee may not attach
850-4 unpaid earnings of the consumer by garnishment or like
851-5 proceedings.
852-6 (110 ILCS 992/7-70 new)
853-7 Sec. 7-70. Use of multiple agreements. An income share
854-8 agreement provider shall not use multiple agreements with
855-9 respect to a single income share agreement with intent to
856-10 violate any limitations of this Act.
857-11 (110 ILCS 992/7-75 new)
858-12 Sec. 7-75. Required disclosures.
859-13 (a) An income share agreement provider shall disclose the
860-14 following information to each consumer, clearly and
861-15 conspicuously, in a form that the consumer can keep at the time
862-16 the transaction is consummated:
863-17 (1) The date of the income share agreement.
864-18 (2) The dollar amount of the amount financed.
865-19 (3) The sales price of the transaction if different
866-20 from the amount financed;
867-21 (4) The ISA payment calculation method. Any
868-22 percentages used in the ISA payment calculation method
869-23 shall be rounded to the nearest one-hundredth of 1% if the
870-24 percentage is not a whole number.
804+HB1519- 23 -LRB103 24976 BMS 51310 b HB1519 - 23 - LRB103 24976 BMS 51310 b
805+ HB1519 - 23 - LRB103 24976 BMS 51310 b
806+1 a stream of ISA payments that would yield an effective APR
807+2 greater than 15%, or the high yield of the 10-year United
808+3 States Constant Maturity Treasury Notes auctioned at the final
809+4 auction held before the current calendar year in which an ISA
810+5 offering is made plus 14%, whichever is greater.
811+6 (d) A licensee may not contract for income share agreement
812+7 terms that would result in a consumer having income that is
813+8 less than or equal to 600% of the federal poverty guidelines
814+9 for a single person for the ISA duration being required to make
815+10 a stream of ISA payments that would yield an effective APR
816+11 greater than 18%, or the high yield of the 10-year United
817+12 States Constant Maturity Treasury Notes auctioned at the final
818+13 auction held before the current calendar year in which an ISA
819+14 offering is made plus 17%, whichever is greater.
820+15 (e) For the purposes of determining the various tiers set
821+16 forth in this Section, a licensee shall calculate the
822+17 effective APR by determining the various federal poverty
823+18 guidelines tiers at the time the consumer's income share
824+19 agreement is originated and assuming such amounts are fixed
825+20 through the ISA duration.
826+21 (f) For the purposes of determining ISA duration in this
827+22 Section: in the case of an educational ISA, a licensee shall
828+23 assume the ISA duration started after a period equal to the
829+24 expected length of the program for which a consumer is
830+25 enrolling; or in the case of a non-educational ISA, a licensee
831+26 shall assume the ISA duration started immediately.
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881-1 (5) The maximum number of payments expressed as a
882-2 whole number.
883-3 (6) The maximum duration expressed as a whole number
884-4 of the period of time.
885-5 (7) The income threshold expressed as a dollar amount
886-6 and a statement that payments will only be required during
887-7 periods when the consumer's income is equal to or exceeds
888-8 the income threshold.
889-9 (8) An itemization of the amount financed; if the ISA
890-10 provider is a seller of goods or services, then the amount
891-11 of any down payment and any additional fees or costs shall
892-12 be itemized.
893-13 (9) The definition of income to be used for the
894-14 purposes of calculating the consumer's obligations under
895-15 the income share agreement.
896-16 (10) A description of the terms under which the
897-17 obligations of the consumer under the income share
898-18 agreement will be extinguished before the full ISA
899-19 duration.
900-20 (11) A payment schedule that shows the date on which
901-21 the first payment will be due and reflecting each date
902-22 thereafter during the ISA duration that a payment may be
903-23 due.
904-24 (12) An itemization of any permissible fees associated
905-25 with the ISA.
906-26 (13) A description of the methods used by the ISA
840+HB1519- 24 -LRB103 24976 BMS 51310 b HB1519 - 24 - LRB103 24976 BMS 51310 b
841+ HB1519 - 24 - LRB103 24976 BMS 51310 b
842+1 Section 100. Limits on covered income. An income share
843+2 agreement must specify the definition of income to be used for
844+3 the purposes of calculating a consumer's payment obligation
845+4 under the income share agreement. No income share agreement
846+5 shall include any of the following in its definition of
847+6 income:
848+7 (1) The income of the consumer's children or
849+8 dependents.
850+9 (2) Any amount paid by the consumer under Title II or
851+10 XVI of the Social Security Act, 42 U.S.C. 401 et seq., 42
852+11 U.S.C. 1381 et seq.; or under a State program funded by
853+12 Title IV of the Social Security Act, 42 U.S.C. 601 et seq.
854+13 (3) Individual retirement account distributions.
855+14 (4) Pensions and annuities.
856+15 (5) Social security benefits.
857+16 (6) Other sources of federal or State aid provided to
858+17 individuals through any of the following:
859+18 (A) unemployment programs;
860+19 (B) disaster relief programs;
861+20 (C) Medicare or Medicaid benefits;
862+21 (D) benefits received through the Supplemental
863+22 Nutrition Assistance Program;
864+23 (E) economic impact payments; or
865+24 (F) other income excluded from the definition of
866+25 taxable income set forth by the Internal Revenue
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913873
914874
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917-1 provider to engage in a process of reconciliation and
918-2 verification to determine if the consumer's payments are
919-3 more than, equal to, or less than the payments owed by the
920-4 consumer under his or her income share agreement; this
921-5 description shall include the following:
922-6 (i) a description of the frequency or triggers for
923-7 the commencement of the income verification process;
924-8 (ii) a description of the requirements and timing
925-9 of the process in which the consumer must participate
926-10 in order for the ISA provider to verify the consumer's
927-11 income; and
928-12 (iii) a description of any records or forms,
929-13 including tax records, that the consumer may be
930-14 required to execute or submit.
931-15 (14) The name and address of the ISA provider.
932-16 (15) A table displaying the dollar amounts of each
933-17 payment, the number of payments, the effective annual
934-18 percentage rate, and the total of all payments that a
935-19 consumer would be required to pay under the income share
936-20 agreement at a range of annual income levels based on the
937-21 ISA duration. The comparison table shall include a
938-22 statement that "This comparison table is for illustrative
939-23 purposes only and may not reflect the amounts that you are
940-24 likely to pay under this income share agreement. This
941-25 table assumes you have the same income over the entire
942-26 term of your income share agreement. It does not take into
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876+ HB1519 - 25 - LRB103 24976 BMS 51310 b
877+1 Service.
878+2 Section 105. Fees permitted. In addition to the ISA
879+3 obligation permitted by this Act, a licensee may contract for
880+4 and receive the following additional charges:
881+5 (1) Official fees and taxes.
882+6 (2) A fee, which shall not exceed the sum of $25, for
883+7 failure to provide documentation to the licensee for the
884+8 confirmation and reconciliation of the consumer's income.
885+9 (3) A fee for processing any forms to confirm the
886+10 consumer's income with the United States Internal Revenue
887+11 Service or a State department of revenue or taxation on a
888+12 dollar-for-dollar, pass-through basis of the expenses
889+13 incurred by the licensee.
890+14 (4) A late payment fee in an amount of $20 or 5% of the
891+15 late payment, whichever is greater, for any payment that
892+16 is more than 15 days past due; no late payment fee may be
893+17 charged more than once per late payment.
894+18 (5) An amount not exceeding $25, plus any actual
895+19 expenses incurred in connection with a check or draft that
896+20 is not honored because of insufficient or uncollected
897+21 funds or because no such account exists.
898+22 (6) Charges for other benefits conferred on the
899+23 consumer, if the benefits are of value to her or him and
900+24 the charges are reasonable in relation to the benefits,
901+25 are of a type that is not for credit, and are authorized as
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950909
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953-1 account changes in income. Your income will likely change
954-2 over time. This table does not represent the income or
955-3 range of incomes that you are likely to earn in the
956-4 future.". In computing the APR, the ISA provider shall use
957-5 the amount financed and may assume that the income share
958-6 agreement will be disbursed in the amount and with the
959-7 disbursement schedule that it reasonably expects to follow
960-8 for such income share agreement and that payments would
961-9 commence on the date set forth in the income share
962-10 agreement. The income used in this disclosure shall
963-11 include, at minimum, the obligations at the following
964-12 incomes:
965-13 (i) no income;
966-14 (ii) income equal to the annual equivalent of the
967-15 income threshold;
968-16 (iii) various income scenarios with at least
969-17 calculations at annual incomes of $40,000, $60,000,
970-18 $80,000, $100,000, $125,000, $150,000, $175,000, and
971-19 $200,000; and
972-20 (iv) if known by the ISA provider, the consumer's
973-21 current income.
974-22 (16) A statement that the income share agreement is
975-23 not a fixed payment installment loan and that the amount
976-24 the consumer will be required to pay under the income
977-25 share agreement:
978-26 (i) may be more or less than the amount financed by
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911+ HB1519 - 26 - LRB103 24976 BMS 51310 b
912+1 permissible additional charges by rule adopted by the
913+2 Department.
914+3 (7) Before or after default in payment of a scheduled
915+4 payment of an income share agreement, the parties to the
916+5 income share agreement may agree in writing to a deferral
917+6 of all or part of one or more unpaid payments and the
918+7 licensee may make, at the time of deferral and receive at
919+8 that time or at any time thereafter, a deferral charge not
920+9 exceeding an amount equal to 10% of the missed payment.
921+10 Section 110. Restriction on security interest. Under no
922+11 circumstances shall a licensee take a security interest in any
923+12 collateral in connection with an income share agreement.
924+13 Section 115. Discharge of obligations.
925+14 (a) All further obligations under an income share
926+15 agreement, except those accruing before the date of
927+16 determination by a relevant governmental agency, shall
928+17 terminate if the consumer is deemed totally and permanently
929+18 disabled by the applicable governmental agency.
930+19 (b) All further obligations under the income share
931+20 agreement, except those accruing before the consumer's death,
932+21 shall terminate upon the death of the consumer.
933+22 Section 120. Prohibition on co-signers. No income share
934+23 agreement shall include or permit the use of a co-signer in
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980936
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989-1 the ISA provider; and
990-2 (ii) will vary in proportion with the consumer's
991-3 income.
992-4 (b) The disclosures required by this Section shall be
993-5 grouped together and segregated from all other information.
994-6 (c) The disclosures required by this Section may be
995-7 provided to a consumer in electronic form, subject to
996-8 compliance with the consumer's consent and other applicable
997-9 provisions of the Electronic Signatures in Global and National
998-10 Commerce Act, 15 U.S.C. 7001 et seq., and applicable State
999-11 law.
1000-12 (d) If model documents are established pursuant to any
1001-13 federal law covering income share agreements, compliance with
1002-14 those forms shall be considered compliance with this Act with
1003-15 respect to the disclosure requirements contained in this Act.
1004-16 (110 ILCS 992/7-80 new)
1005-17 Sec. 7-80. Early completion. An income share agreement
1006-18 shall specify the terms and conditions by which the consumer
1007-19 may extinguish his or her obligations under the income share
1008-20 agreement before the end of the income share agreement's
1009-21 duration. An income share agreement may include any method to
1010-22 determine the early completion payment; however, a consumer
1011-23 may always cancel an income share agreement by making
1012-24 aggregate payments, excluding payments to fees, equal to the
1013-25 ISA payment cap. The consumer is entitled to this early
943+HB1519- 27 -LRB103 24976 BMS 51310 b HB1519 - 27 - LRB103 24976 BMS 51310 b
944+ HB1519 - 27 - LRB103 24976 BMS 51310 b
945+1 connection with any obligation related to an income share
946+2 agreement.
947+3 Section 125. Limitation on acceleration.
948+4 (a) Licensees may not attempt to accelerate or otherwise
949+5 liquidate a future payment stream under an income share
950+6 agreement.
951+7 (b) Notwithstanding subsection (a), nothing in this
952+8 Section shall prevent a licensee from collecting or pursuing
953+9 any other remedy available to the licensee for the collection
954+10 of amounts that were due from the consumer under an income
955+11 share agreement that were not paid or properly remitted to the
956+12 licensee. Nothing in this Section shall prevent a licensee
957+13 from calculating a projected future income for a consumer and
958+14 calculating a consumer's payment obligation using that
959+15 projection if the consumer does not provide contractually
960+16 obligated documentation of income.
961+17 (c) Notwithstanding subsection (a), an income share
962+18 agreement may contain a provision that allows a consumer to
963+19 terminate his or her income share agreement before the events
964+20 terminating further obligations under the income share
965+21 agreement. The early termination mechanisms, such as total
966+22 caps on payments due to the licensee or other rights to
967+23 partially or fully terminate further obligations under the
968+24 income share agreement, must be optional to the consumer and
969+25 within the consumer's control. In such circumstances, such
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1021977
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1023- HB1519 Engrossed - 30 - LRB103 24976 BMS 51310 b
1024-1 completion regardless of whether the consumer makes this early
1025-2 completion payment by making regularly scheduled payments or
1026-3 by making a single lump sum payment in the amount of the early
1027-4 completion payment.
1028-5 (110 ILCS 992/7-85 new)
1029-6 Sec. 7-85. Assumption of increase in future income.
1030-7 (a) If a consumer fails to provide income documentation as
1031-8 reasonably required by an income share agreement, an income
1032-9 share agreement provider may assign an amount of income to the
1033-10 consumer and compute the consumer's monthly payment amount by
1034-11 any of the following methods, to the extent disclosed in the
1035-12 income share agreement:
1036-13 (1) assigning an income amount obtained from a
1037-14 reasonably reliable third party or a credit reporting
1038-15 agency;
1039-16 (2) if the consumer previously provided income
1040-17 documentation or has had an income assigned in the prior
1041-18 12-month period that has increased by an amount not to
1042-19 exceed 10%, but such increase may not be applied more than
1043-20 once per 12-month period;
1044-21 (3) contacting the consumer's employer, or any person
1045-22 or entity reasonably believed to represent the consumer's
1046-23 employer, to obtain, verify, or update the consumer's
1047-24 income information;
1048-25 (4) contacting the Department of Revenue or the
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979+ HB1519 - 28 - LRB103 24976 BMS 51310 b
980+1 mechanisms will not be deemed a form of acceleration, early
981+2 termination penalty, or prepayment penalty.
982+3 Section 130. No assignment of wages.
983+4 (a) A licensee may not take an assignment of earnings of
984+5 the consumer for payment or as security for payment of a debt
985+6 arising out of an income share agreement. An assignment of
986+7 earnings in violation of this Section is unenforceable by the
987+8 assignee of the earnings and revocable by the consumer. This
988+9 Section does not prohibit a consumer from authorizing
989+10 deductions from his or her earnings in favor of a licensee if
990+11 the authorization is revocable, the consumer is given a
991+12 complete copy of the writing evidencing the authorization at
992+13 the time the consumer signs it, and the writing contains on its
993+14 face a conspicuous notice of the consumer's right to revoke
994+15 the authorization.
995+16 (b) A sale of unpaid earnings made in consideration of the
996+17 payment of money to or for the account of the seller of the
997+18 earnings is deemed to be a loan to the seller secured by an
998+19 assignment of earnings.
999+20 Section 135. Limitations on garnishment.
1000+21 (a) Before entry of judgment in an action against a
1001+22 consumer for a payment arising from an income share agreement,
1002+23 a licensee may not attach unpaid earnings of the consumer by
1003+24 garnishment or like proceedings.
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10501005
10511006
10521007
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1058- HB1519 Engrossed - 31 - LRB103 24976 BMS 51310 b
1059-1 Internal Revenue Service to obtain the most recent
1060-2 information available about the student's income; or
1061-3 (5) for income share agreement providers providing
1062-4 educational income share agreements, assigning a
1063-5 reasonable qualified income based on the incomes of:
1064-6 (A) the nearest reasonably relevant quantile of
1065-7 income for individuals working in the profession for
1066-8 which the consumer's educational program was intended
1067-9 to prepare the participant, as determined by
1068-10 information published by the Bureau of Labor
1069-11 Statistics or other reasonably reliable publicly
1070-12 available data sources; or
1071-13 (B) the nearest reasonably relevant quantile of
1072-14 income of consumers who attended the same or a
1073-15 reasonably comparable covered educational program or
1074-16 course of study, as determined by information
1075-17 published by the Bureau of Labor Statistics or other
1076-18 reasonably reliable publicly available data sources.
1077-19 (b) If an income share agreement provider assigns an
1078-20 income to a consumer's income share agreement, then it shall
1079-21 notify the consumer in the monthly billing statement, and in
1080-22 each billing statement thereafter while the assigned income
1081-23 remains applicable to the consumer's income share agreement,
1082-24 that income has been assigned and of the consumer's rights
1083-25 under this Section.
1084-26 (c) If the consumer does provide income information as
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1013+ HB1519 - 29 - LRB103 24976 BMS 51310 b
1014+1 (b) The maximum part of the aggregate disposable earnings
1015+2 of an individual for any workweek which is subjected to
1016+3 garnishment to enforce payment of a judgment arising from an
1017+4 income share agreement may not exceed the lesser of:
1018+5 (1) 25% of the individual's disposable earnings for
1019+6 that week; or
1020+7 (2) the amount by which the individual's disposable
1021+8 earnings for that week exceed 40 times the federal minimum
1022+9 hourly wage prescribed by Section 6(a)(1) of the Fair
1023+10 Labor Standards Act of 1938, 29 U.S.C. 206(a)(1), in
1024+11 effect at the time the earnings are payable.
1025+12 In case of earnings for a pay period other than a week, the
1026+13 Department shall prescribe by rule a multiple of the federal
1027+14 minimum hourly wage equivalent to the amount set forth in
1028+15 paragraph (2).
1029+16 (c) No court may make, execute, or enforce an order or
1030+17 process in violation of this Section.
1031+18 (d) At any time after entry of a judgment in favor of a
1032+19 licensee in an action against a consumer for a payment arising
1033+20 from an income share agreement, the consumer may file with the
1034+21 court a verified application for an order exempting from
1035+22 garnishment pursuant to that judgment, for an appropriate
1036+23 period of time, a greater portion or all of the consumer's
1037+24 aggregate disposable earnings for a workweek or other
1038+25 applicable pay period than is provided for in subsection (b).
1039+26 The consumer shall in the application designate the portion of
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1095-1 reasonably required by the income share agreement within one
1096-2 year of the date on which the income share agreement provider
1097-3 notified the consumer that assigned income will be applied to
1098-4 the income share agreement, then, within 15 days after the
1099-5 income share agreement provider's receipt of such information,
1100-6 the income share agreement provider shall update each prior
1101-7 instance in which assigned income was applied using the income
1102-8 information provided by the consumer; if the consumer provides
1103-9 income information more than one year after the income share
1104-10 agreement provider first assigned income to the consumer's
1105-11 income share agreement, then the income share agreement
1106-12 provider may, but is not obligated to, update each prior
1107-13 instance in which assigned income was applied using the income
1108-14 information provided by the consumer.
1109-15 (d) An income share agreement provider that assigns income
1110-16 to an income share agreement shall retain all applicable
1111-17 records relating to the method and data sources used to make
1112-18 such estimation for 3 years after the end of that income share
1113-19 agreement.
1114-20 (110 ILCS 992/7-90 new)
1115-21 Sec. 7-90. Receipts; statements of account; evidence of
1116-22 payment.
1117-23 (a) The income share agreement provider shall deliver or
1118-24 mail to the consumer, without request, a written receipt for
1119-25 each payment made pursuant to an income share agreement. A
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1049+ HB1519 - 30 - LRB103 24976 BMS 51310 b
1050+1 earnings not exempt from garnishment under this Section and
1051+2 other law, designate the period of time for which the
1052+3 additional exemption is sought, describe the judgment with
1053+4 respect to which the application is made, and state that the
1054+5 designated portion as well as his or her earnings that are
1055+6 exempt by law are necessary for the maintenance of the
1056+7 consumer or a family supported wholly or partly by the
1057+8 earnings. Upon filing a sufficient application under this
1058+9 subsection, the court may issue any temporary order necessary
1059+10 under the circumstances to stay enforcement of the judgment by
1060+11 garnishment, shall set a hearing on the application not less
1061+12 than 5 nor more than 10 days after the date of filing of the
1062+13 application, and shall cause notice of the application and the
1063+14 hearing date to be served on the judgment creditor or the
1064+15 creditor's attorney of record. At the hearing, if it appears
1065+16 to the court that all or any portion of the earnings sought to
1066+17 be additionally exempt are necessary for the maintenance of
1067+18 the consumer or a family supported wholly or partly by the
1068+19 earnings of the consumer for all or any part of the time
1069+20 requested in the application, the court shall issue an order
1070+21 granting the application to that extent; otherwise it shall
1071+22 deny the application. The order is subject to modification or
1072+23 vacation upon further application of any party to it upon a
1073+24 showing of changed circumstances after a hearing upon notice
1074+25 to all interested parties.
1075+26 (e) An employer may not discharge an employee because a
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1130-1 periodic statement showing a payment received by mail complies
1131-2 with this subsection.
1132-3 (b) Upon written request of a consumer, the income share
1133-4 agreement provider shall provide a written statement of the
1134-5 dates and amounts of payments made within the 12 months
1135-6 preceding the month in which the request is received. The
1136-7 statement shall be provided without charge once during each
1137-8 year of the term of the obligation. If additional statements
1138-9 are requested, the income share agreement provider may charge
1139-10 an amount not to exceed $5.00 for each additional statement.
1140-11 (c) After a consumer has fulfilled all obligations with
1141-12 respect to an income share agreement, the income share
1142-13 agreement provider, upon request of the consumer, shall
1143-14 deliver or mail to the consumer written evidence acknowledging
1144-15 termination of all obligations with respect to the income
1145-16 share agreement.
1146-17 (110 ILCS 992/7-95 new)
1147-18 Sec. 7-95. Adjustment of dollar amounts.
1148-19 (a) From time to time the dollar amounts in this Act
1149-20 designated as subject to change shall change, as provided in
1150-21 this Section, according to and to the extent of changes in the
1151-22 index.
1152-23 (b) The index for December of the year preceding the year
1153-24 in which this Act becomes effective is the reference base
1154-25 index.
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1085+ HB1519 - 31 - LRB103 24976 BMS 51310 b
1086+1 licensee has subjected or attempted to subject unpaid earnings
1087+2 of the employee to garnishment or like proceedings directed to
1088+3 the employer for the purpose of paying a judgment arising from
1089+4 an income share agreement.
1090+5 Section 140. Use of multiple agreements. A licensee may
1091+6 not use multiple agreements with respect to a single income
1092+7 share agreement with intent to violate any limitations of this
1093+8 Act.
1094+9 Section 145. Required disclosures.
1095+10 (a) A licensee shall disclose the following information to
1096+11 each consumer, clearly and conspicuously, in a form that the
1097+12 consumer can keep at the time the transaction is consummated:
1098+13 (1) The date of the contract.
1099+14 (2) The dollar amount of the amount financed.
1100+15 (3) The ISA payment calculation method. Any
1101+16 percentages used in the ISA payment calculation method
1102+17 shall be rounded to the nearest one-hundredth of 1% if the
1103+18 percentage is not a whole number.
1104+19 (4) The maximum number of payments expressed as a
1105+20 whole number.
1106+21 (5) The maximum duration expressed as a whole number
1107+22 of the period of time.
1108+23 (6) The income threshold expressed as a dollar amount
1109+24 and a statement that payments will only be required during
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1165-1 (c) The designated dollar amounts shall change on July 1
1166-2 of each even-numbered year if the percentage of change,
1167-3 calculated to the nearest whole percentage point, between the
1168-4 index and the end of the preceding year and the reference base
1169-5 index is 10% or more, but:
1170-6 (1) the portion of the percentage change in the index
1171-7 in excess of a multiple of 10% shall be disregarded and the
1172-8 dollar amounts shall change only in multiples of 10% of
1173-9 the amounts provided in this Act on the date of enactment;
1174-10 and
1175-11 (2) the dollar amounts shall not change if the amounts
1176-12 required by this Section are those currently in effect
1177-13 pursuant to this Act as a result of earlier application of
1178-14 this Section.
1179-15 (d) If the index is revised, the percentage of change
1180-16 pursuant to this Section shall be calculated on the basis of
1181-17 the revised index. If a revision of the index changes the
1182-18 reference base index, a revised reference base index shall be
1183-19 determined by multiplying the reference base index then
1184-20 applicable by the rebasing factor furnished by the Bureau of
1185-21 Labor Statistics. If the index is superseded, the index
1186-22 referred to in this Section is the one represented by the
1187-23 Bureau of Labor Statistics as reflecting most accurately
1188-24 changes in the purchasing power of the dollar for consumers.
1189-25 (e) The Department shall adopt a rule setting forth, on or
1190-26 before April 30 of each year in which dollar amounts are to
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1119+ HB1519 - 32 - LRB103 24976 BMS 51310 b
1120+1 periods when the consumer's income is equal to or exceeds
1121+2 the income threshold.
1122+3 (7) An itemization of the amount financed; if the ISA
1123+4 provider is a seller of goods or services, then the amount
1124+5 of any down payment and any additional fees or costs shall
1125+6 be itemized.
1126+7 (8) The definition of income to be used for the
1127+8 purposes of calculating the consumer's obligations under
1128+9 the income share agreement.
1129+10 (9) A description of the terms under which the
1130+11 obligations of the consumer under the income share
1131+12 agreement will be extinguished before the full ISA
1132+13 duration.
1133+14 (10) A payment schedule that shows the date on which
1134+15 the first payment will be due and reflecting each date
1135+16 thereafter during the ISA duration that a payment may be
1136+17 due.
1137+18 (11) An itemization of any permissible fees associated
1138+19 with the ISA.
1139+20 (12) A description of the methods used by the ISA
1140+21 provider to engage in a process of reconciliation and
1141+22 verification to determine if the consumer's payments are
1142+23 more than, equal to, or less than the payments owed by the
1143+24 consumer under his or her income share agreement; this
1144+25 description shall include the following:
1145+26 (i) a description of the frequency or triggers
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1201-1 change, the changes in dollar amounts required by this
1202-2 Section. As soon as practical after the changes occur, the
1203-3 Department shall adopt a rule setting forth the changes in the
1204-4 index required by subsection (d), including, if applicable,
1205-5 the numerical equivalent of the reference base index under a
1206-6 revised reference base index and the designation or title of
1207-7 any index superseding the index.
1208-8 (f) A person does not violate this Act with respect to a
1209-9 transaction otherwise complying with this Act if he or she
1210-10 relies on dollar amounts either determined according to
1211-11 subsection (c) or appearing in the last rule of the Department
1212-12 announcing the then-current dollar amounts.
1213-13 (110 ILCS 992/7-100 new)
1214-14 Sec. 7-100. Construction against implicit authority. This
1215-15 Act is a general Act intended as a unified coverage of its
1216-16 subject matter; no part of this Act shall be construed to be
1217-17 impliedly repealed by subsequent legislation if that
1218-18 construction can reasonably be avoided.
1219-19 (110 ILCS 992/7-105 new)
1220-20 Sec. 7-105. Application of other Acts. Income share
1221-21 agreements and income share agreement providers are subject to
1222-22 other Articles of this Act, the Know Before You Owe Private
1223-23 Education Loan Act, and the Predatory Loan Prevention Act and
1224-24 shall comply with their requirements and any rules adopted by
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1155+ HB1519 - 33 - LRB103 24976 BMS 51310 b
1156+1 for the commencement of the income verification
1157+2 process;
1158+3 (ii) a description of the requirements and
1159+4 timing of the process in which the consumer must
1160+5 participate in order for the ISA provider to
1161+6 verify the consumer's income; and
1162+7 (iii) a description of any records or forms,
1163+8 including tax records, that the consumer may be
1164+9 required to execute or submit.
1165+10 (13) The name and address of the ISA provider.
1166+11 (14) A table displaying the dollar amounts of each
1167+12 payment, the number of payments, the effective annual
1168+13 percentage rate, and the total of all payments that a
1169+14 consumer would be required to pay under the income share
1170+15 agreement at a range of annual income levels based on the
1171+16 ISA duration. The comparison table shall include a
1172+17 statement that "This Comparison Table is for illustrative
1173+18 purposes only and may not reflect the amounts that you are
1174+19 likely to pay under this income share agreement. This
1175+20 table assumes you have the same income over the entire
1176+21 term of your income share agreement. It does not take into
1177+22 account changes in income. Your income will likely change
1178+23 over time. This table does not represent the income or
1179+24 range of incomes that you are likely to earn in the
1180+25 future.". In computing the APR, the ISA provider shall use
1181+26 the amount financed and may assume that the income share
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1235-1 the Department of Financial and Professional Regulation
1236-2 pursuant to those Acts. Nothing herein is intended to imply
1237-3 that an education ISA: (i) is not a credit transaction or (ii)
1238-4 that, upon an obligation accruing, does not create a debt.
1239-5 (110 ILCS 992/25-5)
1240-6 Sec. 25-5. Enforcement; Consumer Fraud and Deceptive
1241-7 Business Practices Act. The Attorney General may enforce a
1242-8 violation of Article 5 or 7 of this Act as an unlawful practice
1243-9 under the Consumer Fraud and Deceptive Business Practices Act.
1244-10 (Source: P.A. 100-540, eff. 12-31-18.)
1245-11 Section 10. The Consumer Installment Loan Act is amended
1246-12 by changing Section 1 as follows:
1247-13 (205 ILCS 670/1) (from Ch. 17, par. 5401)
1248-14 Sec. 1. License required to engage in business. No person,
1249-15 partnership, association, limited liability company, or
1250-16 corporation shall engage in the business of making loans of
1251-17 money and charge, contract for, or receive on any such loan a
1252-18 greater annual percentage rate than 9% except as authorized by
1253-19 this Act after first obtaining a license from the Director of
1254-20 Financial Institutions (hereinafter called the Director). No
1255-21 licensee, or employee or affiliate thereof, that is licensed
1256-22 under the Payday Loan Reform Act shall obtain a license under
1257-23 this Act except that a licensee under the Payday Loan Reform
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1192+1 agreement will be disbursed in the amount and with the
1193+2 disbursement schedule that it reasonably expects to follow
1194+3 for such income share agreement and that payments would
1195+4 commence on the date set forth in the income share
1196+5 agreement. The income used in this disclosure shall
1197+6 include, at minimum, the obligations at the following
1198+7 incomes:
1199+8 (i) no income;
1200+9 (ii) income equal to the annual equivalent of
1201+10 the income threshold;
1202+11 (iii) various income scenarios with at least
1203+12 calculations at annual incomes of $40,000,
1204+13 $60,000, $80,000, $100,000, $125,000, $150,000,
1205+14 $175,000, and $200,000; and
1206+15 (iv) if known by the ISA provider, the
1207+16 consumer's current income.
1208+17 (15) A statement that the income share agreement is
1209+18 not a fixed payment installment loan and that the amount
1210+19 the consumer will be required to pay under the income
1211+20 share agreement:
1212+21 (i) may be more or less than the amount
1213+22 financed by the ISA provider; and
1214+23 (ii) will vary in proportion with the
1215+24 consumer's income.
1216+25 (b) The disclosures required by this Section shall be
1217+26 grouped together and segregated from all other information.
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12591219
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1268-1 Act may obtain a license under this Act for the exclusive
1269-2 purpose and use of making title-secured loans, as defined in
1270-3 subsection (a) of Section 15 of this Act and governed by Title
1271-4 38, Section 110.300 of the Illinois Administrative Code. For
1272-5 the purpose of this Section, "affiliate" means any person or
1273-6 entity that directly or indirectly controls, is controlled by,
1274-7 or shares control with another person or entity. A person or
1275-8 entity has control over another if the person or entity has an
1276-9 ownership interest of 25% or more in the other. A person or
1277-10 entity licensed as an Income Share Agreement provider is
1278-11 exempt from the requirements of this Act to the extent of their
1279-12 operation as an Income Share Agreement under Article 7 of the
1280-13 Student Loan Servicing Rights Act. In addition, Educational
1281-14 Income Share Agreements as provided under Article 7 of the
1282-15 Student Loan Servicing Rights Act are not subject to the
1283-16 requirements of this Act.
1284-17 In this Act, "Director" means the Director of Financial
1285-18 Institutions of the Department of Financial and Professional
1286-19 Regulation.
1287-20 (Source: P.A. 101-658, eff. 3-23-21.)
1288-21 Section 15. The Interest Act is amended by changing
1289-22 Section 4 as follows:
1290-23 (815 ILCS 205/4) (from Ch. 17, par. 6404)
1291-24 Sec. 4. General interest rate.
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1227+ HB1519 - 35 - LRB103 24976 BMS 51310 b
1228+1 (c) The disclosures required by this Section may be
1229+2 provided to a consumer in electronic form, subject to
1230+3 compliance with the consumer's consent and other applicable
1231+4 provisions of the Electronic Signatures in Global and National
1232+5 Commerce Act, 15 U.S.C. 7001 et seq., and applicable State
1233+6 law.
1234+7 (d) If model documents are established pursuant to any
1235+8 federal law covering income share agreements, compliance with
1236+9 those forms shall be considered compliance with this Act with
1237+10 respect to the disclosure requirements contained in this Act.
1238+11 Section 150. Early completion. An income share agreement
1239+12 shall specify the terms and conditions by which the consumer
1240+13 may extinguish his or her obligations under the income share
1241+14 agreement before the end of the income share agreement's
1242+15 duration. An income share agreement may include any method to
1243+16 determine the early completion payment; however, a consumer
1244+17 may always cancel an income share agreement by making
1245+18 aggregate payments, excluding payments to fees, equal to the
1246+19 ISA payment cap. The consumer is entitled to this early
1247+20 completion regardless of whether the consumer makes this early
1248+21 completion payment by making regularly scheduled payments or
1249+22 by making a single lump sum payment in the amount of the early
1250+23 completion payment.
1251+24 Section 155. Assumption of increase in future income.
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1302-1 (1) Except as otherwise provided in Section 4.05, in all
1303-2 written contracts it shall be lawful for the parties to
1304-3 stipulate or agree that an annual percentage rate of 9%, or any
1305-4 less sum, shall be taken and paid upon every $100 of money
1306-5 loaned or in any manner due and owing from any person to any
1307-6 other person or corporation in this state, and after that rate
1308-7 for a greater or less sum, or for a longer or shorter time,
1309-8 except as herein provided.
1310-9 The maximum rate of interest that may lawfully be
1311-10 contracted for is determined by the law applicable thereto at
1312-11 the time the contract is made. Any provision in any contract,
1313-12 whether made before or after July 1, 1969, which provides for
1314-13 or purports to authorize, contingent upon a change in the
1315-14 Illinois law after the contract is made, any rate of interest
1316-15 greater than the maximum lawful rate at the time the contract
1317-16 is made, is void.
1318-17 It is lawful for a state bank or a branch of an
1319-18 out-of-state bank, as those terms are defined in Section 2 of
1320-19 the Illinois Banking Act, to receive or to contract to receive
1321-20 and collect interest and charges at any rate or rates agreed
1322-21 upon by the bank or branch and the borrower. It is lawful for a
1323-22 savings bank chartered under the Savings Bank Act or a savings
1324-23 association chartered under the Illinois Savings and Loan Act
1325-24 of 1985 to receive or contract to receive and collect interest
1326-25 and charges at any rate agreed upon by the savings bank or
1327-26 savings association and the borrower.
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1262+1 (a) If a consumer fails to provide income documentation as
1263+2 reasonably required by an income share agreement, a licensee
1264+3 may assign an amount of income to the consumer and compute the
1265+4 consumer's monthly payment amount by any of the following
1266+5 methods, to the extent disclosed in the income share
1267+6 agreement:
1268+7 (1) assigning an income amount obtained from a
1269+8 reasonably reliable third party or a credit reporting
1270+9 agency;
1271+10 (2) if the consumer previously provided income
1272+11 documentation or has had an income assigned in the prior
1273+12 12-month period that has increased by an amount not to
1274+13 exceed 10%, but such increase may not be applied more than
1275+14 once per 12-month period;
1276+15 (3) contacting the consumer's employer, or any person
1277+16 or entity reasonably believed to represent the consumer's
1278+17 employer, to obtain, verify, or update the consumer's
1279+18 income information;
1280+19 (4) contacting the Department of Revenue or the
1281+20 Internal Revenue Service to obtain the most recent
1282+21 information available about the student's income; or
1283+22 (5) for licensees providing educational income share
1284+23 agreements, assigning a reasonable qualified income based
1285+24 on the incomes of:
1286+25 (A) the nearest reasonably relevant quantile of
1287+26 income for individuals working in the profession for
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1338-1 It is lawful to receive or to contract to receive and
1339-2 collect interest and charges as authorized by this Act and as
1340-3 authorized by the Consumer Installment Loan Act, the Payday
1341-4 Loan Reform Act, the Retail Installment Sales Act, the
1342-5 Illinois Financial Services Development Act, the Motor Vehicle
1343-6 Retail Installment Sales Act, or the Consumer Legal Funding
1344-7 Act, or the Student Loan Servicing Rights Act. It is lawful to
1345-8 charge, contract for, and receive any rate or amount of
1346-9 interest or compensation, except as otherwise provided in the
1347-10 Predatory Loan Prevention Act, with respect to the following
1348-11 transactions:
1349-12 (a) Any loan made to a corporation;
1350-13 (b) Advances of money, repayable on demand, to an
1351-14 amount not less than $5,000, which are made upon warehouse
1352-15 receipts, bills of lading, certificates of stock,
1353-16 certificates of deposit, bills of exchange, bonds or other
1354-17 negotiable instruments pledged as collateral security for
1355-18 such repayment, if evidenced by a writing;
1356-19 (c) Any credit transaction between a merchandise
1357-20 wholesaler and retailer; any business loan to a business
1358-21 association or copartnership or to a person owning and
1359-22 operating a business as sole proprietor or to any persons
1360-23 owning and operating a business as joint venturers, joint
1361-24 tenants or tenants in common, or to any limited
1362-25 partnership, or to any trustee owning and operating a
1363-26 business or whose beneficiaries own and operate a
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1298+1 which the consumer's educational program was intended
1299+2 to prepare the participant, as determined by
1300+3 information published by the Bureau of Labor
1301+4 Statistics or other reasonably reliable publicly
1302+5 available data sources; or
1303+6 (B) the nearest reasonably relevant quantile of
1304+7 income of consumers who attended the same or a
1305+8 reasonably comparable covered educational program or
1306+9 course of study, as determined by information
1307+10 published by the Bureau of Labor Statistics or other
1308+11 reasonably reliable publicly available data sources.
1309+12 (b) If a licensee assigns an income to a consumer's income
1310+13 share agreement, then it shall notify the consumer in the
1311+14 monthly billing statement, and in each billing statement
1312+15 thereafter while the assigned income remains applicable to the
1313+16 consumer's income share agreement, that income has been
1314+17 assigned and of the consumer's rights under this Section.
1315+18 (c) If the consumer does provide income information as
1316+19 reasonably required by the income share agreement within one
1317+20 year of the date on which the licensee notified the consumer
1318+21 that assigned income will be applied to the income share
1319+22 agreement, then, within 15 days after the licensee's receipt
1320+23 of such information, the licensee shall update each prior
1321+24 instance in which assigned income was applied using the income
1322+25 information provided by the consumer; if the consumer provides
1323+26 income information more than one year after the licensee first
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1374-1 business, except that any loan which is secured (1) by an
1375-2 assignment of an individual obligor's salary, wages,
1376-3 commissions or other compensation for services, or (2) by
1377-4 his household furniture or other goods used for his
1378-5 personal, family or household purposes shall be deemed not
1379-6 to be a loan within the meaning of this subsection; and
1380-7 provided further that a loan which otherwise qualifies as
1381-8 a business loan within the meaning of this subsection
1382-9 shall not be deemed as not so qualifying because of the
1383-10 inclusion, with other security consisting of business
1384-11 assets of any such obligor, of real estate occupied by an
1385-12 individual obligor solely as his residence. The term
1386-13 "business" shall be deemed to mean a commercial,
1387-14 agricultural or industrial enterprise which is carried on
1388-15 for the purpose of investment or profit, but shall not be
1389-16 deemed to mean the ownership or maintenance of real estate
1390-17 occupied by an individual obligor solely as his residence;
1391-18 (d) Any loan made in accordance with the provisions of
1392-19 Subchapter I of Chapter 13 of Title 12 of the United States
1393-20 Code, which is designated as "Housing Renovation and
1394-21 Modernization";
1395-22 (e) Any mortgage loan insured or upon which a
1396-23 commitment to insure has been issued under the provisions
1397-24 of the National Housing Act, Chapter 13 of Title 12 of the
1398-25 United States Code;
1399-26 (f) Any mortgage loan guaranteed or upon which a
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1334+1 assigned income to the consumer's income share agreement, then
1335+2 the licensee may, but is not obligated to, update each prior
1336+3 instance in which assigned income was applied using the income
1337+4 information provided by the consumer.
1338+5 (d) A licensee that assigns income to an income share
1339+6 agreement shall retain all applicable records relating to the
1340+7 method and data sources used to make such estimation for 3
1341+8 years after the end of that income share agreement.
1342+9 Section 160. Receipts; statements of account; evidence of
1343+10 payment.
1344+11 (a) The licensee shall deliver or mail to the consumer,
1345+12 without request, a written receipt for each payment made
1346+13 pursuant to an income share agreement. A periodic statement
1347+14 showing a payment received by mail complies with this
1348+15 subsection.
1349+16 (b) Upon written request of a consumer, the licensee shall
1350+17 provide a written statement of the dates and amounts of
1351+18 payments made within the 12 months preceding the month in
1352+19 which the request is received. The statement shall be provided
1353+20 without charge once during each year of the term of the
1354+21 obligation. If additional statements are requested, the
1355+22 licensee may charge an amount not to exceed $5.00 for each
1356+23 additional statement.
1357+24 (c) After a consumer has fulfilled all obligations with
1358+25 respect to an income share agreement, the licensee, upon
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1410-1 commitment to guaranty has been issued under the
1411-2 provisions of the Veterans' Benefits Act, Subchapter II of
1412-3 Chapter 37 of Title 38 of the United States Code;
1413-4 (g) Interest charged by a broker or dealer registered
1414-5 under the Securities Exchange Act of 1934, as amended, or
1415-6 registered under the Illinois Securities Law of 1953,
1416-7 approved July 13, 1953, as now or hereafter amended, on a
1417-8 debit balance in an account for a customer if such debit
1418-9 balance is payable at will without penalty and is secured
1419-10 by securities as defined in Uniform Commercial
1420-11 Code-Investment Securities;
1421-12 (h) Any loan made by a participating bank as part of
1422-13 any loan guarantee program which provides for loans and
1423-14 for the refinancing of such loans to medical students,
1424-15 interns and residents and which are guaranteed by the
1425-16 American Medical Association Education and Research
1426-17 Foundation;
1427-18 (i) Any loan made, guaranteed, or insured in
1428-19 accordance with the provisions of the Housing Act of 1949,
1429-20 Subchapter III of Chapter 8A of Title 42 of the United
1430-21 States Code and the Consolidated Farm and Rural
1431-22 Development Act, Subchapters I, II, and III of Chapter 50
1432-23 of Title 7 of the United States Code;
1433-24 (j) Any loan by an employee pension benefit plan, as
1434-25 defined in Section 3 (2) of the Employee Retirement Income
1435-26 Security Act of 1974 (29 U.S.C.A. Sec. 1002), to an
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1369+1 request of the consumer, shall deliver or mail to the consumer
1370+2 written evidence acknowledging termination of all obligations
1371+3 with respect to the income share agreement.
1372+4 Section 165. Advertising. A licensee may not advertise,
1373+5 print, display, publish, distribute, broadcast, or cause to be
1374+6 advertised, printed, displayed, published, distributed, or
1375+7 broadcast in any manner any statement or representation that
1376+8 is false, deceptive, or misleading.
1377+9 Section 170. Penalties.
1378+10 (a) A person who engages in business as a licensee without
1379+11 the license required by this Act commits a Class 4 felony.
1380+12 (b) The consumer, before the expiration of 2 years after
1381+13 the date of his or her last scheduled payment, may recover such
1382+14 reasonable attorney's fees and court costs as a court may
1383+15 assess. A bona fide error by a licensee in calculating
1384+16 charges, fees, or rebates is not a violation if the licensee
1385+17 corrects the error within a reasonable time after discovery.
1386+18 (c) No provision of this Section imposing any liability
1387+19 shall apply to any act done or omitted in conformity with any
1388+20 rule or written interpretation of a rule by the Division of
1389+21 Financial Institutions of the Department of Financial and
1390+22 Professional Regulation, notwithstanding that after such act
1391+23 or omission has occurred, such rule or interpretation is
1392+24 amended, rescinded, or determined by judicial or other
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1446-1 individual participating in such plan, provided that such
1447-2 loan satisfies the prohibited transaction exemption
1448-3 requirements of Section 408 (b) (1) (29 U.S.C.A. Sec. 1108
1449-4 (b) (1)) or Section 2003 (a) (26 U.S.C.A. Sec. 4975 (d)
1450-5 (1)) of the Employee Retirement Income Security Act of
1451-6 1974;
1452-7 (k) Written contracts, agreements or bonds for deed
1453-8 providing for installment purchase of real estate,
1454-9 including a manufactured home as defined in subdivision
1455-10 (53) of Section 9-102 of the Uniform Commercial Code that
1456-11 is real property as defined in the Conveyance and
1457-12 Encumbrance of Manufactured Homes as Real Property and
1458-13 Severance Act;
1459-14 (l) Loans secured by a mortgage on real estate,
1460-15 including a manufactured home as defined in subdivision
1461-16 (53) of Section 9-102 of the Uniform Commercial Code that
1462-17 is real property as defined in the Conveyance and
1463-18 Encumbrance of Manufactured Homes as Real Property and
1464-19 Severance Act;
1465-20 (m) Loans made by a sole proprietorship, partnership,
1466-21 or corporation to an employee or to a person who has been
1467-22 offered employment by such sole proprietorship,
1468-23 partnership, or corporation made for the sole purpose of
1469-24 transferring an employee or person who has been offered
1470-25 employment to another office maintained and operated by
1471-26 the same sole proprietorship, partnership, or corporation;
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1403+1 authority to be invalid for any reason. All interpretations
1404+2 must be written and signed by the Department's chief counsel
1405+3 and approved by the Director.
1406+4 (d) Notwithstanding any other provision of this Section,
1407+5 if any person who does not have a license issued under this Act
1408+6 makes an income share agreement to an Illinois consumer, then
1409+7 the loan shall be null and void and the person who made the
1410+8 income share agreement shall have no right to collect,
1411+9 receive, or retain any amounts related to the income share
1412+10 agreement.
1413+11 Section 175. Cease and desist.
1414+12 (a) The Director may issue a cease and desist order to any
1415+13 licensee or another person doing business without a required
1416+14 license, when in the opinion of the Director, the licensee or
1417+15 the other person is violating or is about to violate any
1418+16 provision of this Act or any rule or requirement imposed in
1419+17 writing by the Department as a condition of granting any
1420+18 authorization permitted by this Act.
1421+19 (b) The Director may issue a cease and desist order before
1422+20 a hearing.
1423+21 (c) The Director shall serve notice of his or her action,
1424+22 designated as a cease and desist order made pursuant to this
1425+23 Section, including a statement of the reasons for the action,
1426+24 either personally or by certified mail, return receipt
1427+25 requested. Service by certified mail shall be deemed completed
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1482-1 (n) Loans to or for the benefit of students made by an
1483-2 institution of higher education.
1484-3 (2) Except for loans described in subparagraph (a), (c),
1485-4 (d), (e), (f) or (i) of subsection (1) of this Section, and
1486-5 except to the extent permitted by the applicable statute for
1487-6 loans made pursuant to Section 4a or pursuant to the Consumer
1488-7 Installment Loan Act:
1489-8 (a) Whenever the rate of interest exceeds an annual
1490-9 percentage rate of 8% on any written contract, agreement
1491-10 or bond for deed providing for the installment purchase of
1492-11 residential real estate, or on any loan secured by a
1493-12 mortgage on residential real estate, it shall be unlawful
1494-13 to provide for a prepayment penalty or other charge for
1495-14 prepayment.
1496-15 (b) No agreement, note or other instrument evidencing
1497-16 a loan secured by a mortgage on residential real estate,
1498-17 or written contract, agreement or bond for deed providing
1499-18 for the installment purchase of residential real estate,
1500-19 may provide for any change in the contract rate of
1501-20 interest during the term thereof. However, if the Congress
1502-21 of the United States or any federal agency authorizes any
1503-22 class of lender to enter, within limitations, into
1504-23 mortgage contracts or written contracts, agreements or
1505-24 bonds for deed in which the rate of interest may be changed
1506-25 during the term of the contract, any person, firm,
1507-26 corporation or other entity not otherwise prohibited from
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1438+1 when the notice is deposited into the U.S. mail.
1439+2 (d) Within 15 days after service of the cease and desist
1440+3 order, the licensee or the other person may request, in
1441+4 writing, a hearing.
1442+5 (e) The Director shall schedule a hearing within 30 days
1443+6 after the request for a hearing unless otherwise agreed to by
1444+7 the parties.
1445+8 (f) The cost for the administrative hearing shall be set
1446+9 by rule.
1447+10 (g) If it is determined that the Director had the
1448+11 authority to issue the cease and desist order, he or she may
1449+12 issue such orders as may be reasonably necessary to correct,
1450+13 eliminate, or remedy such conduct.
1451+14 (h) The powers vested in the Director by this Section are
1452+15 additional to all other powers and remedies vested in the
1453+16 Director by law, and nothing in this Section shall be
1454+17 construed as requiring that the Director employ the power
1455+18 conferred in this Section instead of or as a condition
1456+19 precedent to the exercise of any other power or remedy vested
1457+20 in the Director.
1458+21 (i) The Department shall have the authority to adopt rules
1459+22 for the administration of this Section.
1460+23 Section 180. Civil action. A claim of violation of this
1461+24 Act may be asserted in a civil action.
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1518-1 entering into mortgage contracts or written contracts,
1519-2 agreements or bonds for deed in Illinois may enter into
1520-3 mortgage contracts or written contracts, agreements or
1521-4 bonds for deed in which the rate of interest may be changed
1522-5 during the term of the contract, within the same
1523-6 limitations.
1524-7 (3) In any contract or loan which is secured by a mortgage,
1525-8 deed of trust, or conveyance in the nature of a mortgage, on
1526-9 residential real estate, the interest which is computed,
1527-10 calculated, charged, or collected pursuant to such contract or
1528-11 loan, or pursuant to any regulation or rule promulgated
1529-12 pursuant to this Act, may not be computed, calculated, charged
1530-13 or collected for any period of time occurring after the date on
1531-14 which the total indebtedness, with the exception of late
1532-15 payment penalties, is paid in full.
1533-16 (4) For purposes of this Section, a prepayment shall mean
1534-17 the payment of the total indebtedness, with the exception of
1535-18 late payment penalties if incurred or charged, on any date
1536-19 before the date specified in the contract or loan agreement on
1537-20 which the total indebtedness shall be paid in full, or before
1538-21 the date on which all payments, if timely made, shall have been
1539-22 made. In the event of a prepayment of the indebtedness which is
1540-23 made on a date after the date on which interest on the
1541-24 indebtedness was last computed, calculated, charged, or
1542-25 collected but before the next date on which interest on the
1543-26 indebtedness was to be calculated, computed, charged, or
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1472+1 Section 185. Application of Act.
1473+2 (a) This Act does not apply to any person, partnership,
1474+3 association, limited liability company, or corporation doing
1475+4 business under and as permitted by any law of this State or the
1476+5 United States relating to banks, savings and loan
1477+6 associations, savings banks, or credit unions. This Act does
1478+7 not apply to any income share agreements or the like made with
1479+8 business or commercial entities.
1480+9 (b) During the first 90 days after the effective date of
1481+10 this Act, any person who has applied for a license under this
1482+11 Act or filed written notice of intention to apply for a license
1483+12 with the Director and whose application has not been denied,
1484+13 shall be subject to all provisions of this Act and may make
1485+14 income share agreements as if he or she were a licensee under
1486+15 this Act.
1487+16 (c) This Act shall not apply to any contractor transaction
1488+17 made before the effective date of this Act.
1489+18 Section 190. Rules. The Department may adopt and enforce
1490+19 such reasonable rules, directions, orders, decisions, and
1491+20 findings as the execution and enforcement of the provisions of
1492+21 this Act require and that are not inconsistent with this Act.
1493+22 In addition, the Department may adopt rules in connection with
1494+23 the activities of licensees that are necessary and appropriate
1495+24 for the protection of consumers in this State. All rules and
1496+25 directions of a general character shall be sent electronically
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1554-1 collected, the lender may calculate, charge and collect
1555-2 interest on the indebtedness for the period which elapsed
1556-3 between the date on which the prepayment is made and the date
1557-4 on which interest on the indebtedness was last computed,
1558-5 calculated, charged or collected at a rate equal to 1/360 of
1559-6 the annual rate for each day which so elapsed, which rate shall
1560-7 be applied to the indebtedness outstanding as of the date of
1561-8 prepayment. The lender shall refund to the borrower any
1562-9 interest charged or collected which exceeds that which the
1563-10 lender may charge or collect pursuant to the preceding
1564-11 sentence. The provisions of this amendatory Act of 1985 shall
1565-12 apply only to contracts or loans entered into on or after the
1566-13 effective date of this amendatory Act, but shall not apply to
1567-14 contracts or loans entered into on or after that date that are
1568-15 subject to Section 4a of this Act, the Consumer Installment
1569-16 Loan Act, the Payday Loan Reform Act, the Predatory Loan
1570-17 Prevention Act, or the Retail Installment Sales Act, or that
1571-18 provide for the refund of precomputed interest on prepayment
1572-19 in the manner provided by such Act.
1573-20 (5) For purposes of items (a) and (c) of subsection (1) of
1574-21 this Section, a rate or amount of interest may be lawfully
1575-22 computed when applying the ratio of the annual interest rate
1576-23 over a year based on 360 days. The provisions of this
1577-24 amendatory Act of the 96th General Assembly are declarative of
1578-25 existing law.
1579-26 (6) For purposes of this Section, "real estate" and "real
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1507+1 to all licensees.
1508+2 Section 195. Judicial review. All final administrative
1509+3 decisions of the Department under this Act shall be subject to
1510+4 judicial review pursuant to the provisions of the
1511+5 Administrative Review Law and any rules adopted pursuant to
1512+6 the Administrative Review Law.
1513+7 Section 200. Injunction; civil penalties; costs. If it
1514+8 appears to the Director that a person or any entity has
1515+9 committed or is about to commit a violation of this Act, a rule
1516+10 adopted under this Act, or an order of the Director, the
1517+11 Director may apply to the circuit court for an order enjoining
1518+12 the person or entity from violating or continuing to violate
1519+13 this Act, the rule, or order and for injunctive or other relief
1520+14 that the nature of the case may require and may, in addition,
1521+15 request the court to assess a civil penalty up to $1,000 along
1522+16 with costs and attorney's fees.
1523+17 Section 205. Adjustment of dollar amounts.
1524+18 (a) From time to time the dollar amounts in this Act
1525+19 designated as subject to change shall change, as provided in
1526+20 this Section, according to and to the extent of changes in the
1527+21 index.
1528+22 (b) The index for December of the year preceding the year
1529+23 in which this Act becomes effective is the reference base
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1590-1 property" include a manufactured home, as defined in
1591-2 subdivision (53) of Section 9-102 of the Uniform Commercial
1592-3 Code that is real property as defined in the Conveyance and
1593-4 Encumbrance of Manufactured Homes as Real Property and
1594-5 Severance Act.
1595-6 (Source: P.A. 101-658, eff. 3-23-21; 102-987, eff. 5-27-22.)
1596-7 Section 97. Severability. The provisions of this Act are
1597-8 severable under Section 1.31 of the Statute on Statutes.
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1540+1 index.
1541+2 (c) The designated dollar amounts shall change on July 1
1542+3 of each even-numbered year if the percentage of change,
1543+4 calculated to the nearest whole percentage point, between the
1544+5 index and the end of the preceding year and the reference base
1545+6 index is 10% or more, but:
1546+7 (1) the portion of the percentage change in the index
1547+8 in excess of a multiple of 10% shall be disregarded and the
1548+9 dollar amounts shall change only in multiples of 10% of
1549+10 the amounts provided in this Act on the date of enactment;
1550+11 and
1551+12 (2) the dollar amounts shall not change if the amounts
1552+13 required by this Section are those currently in effect
1553+14 pursuant to this Act as a result of earlier application of
1554+15 this Section.
1555+16 (d) If the index is revised, the percentage of change
1556+17 pursuant to this Section shall be calculated on the basis of
1557+18 the revised index. If a revision of the index changes the
1558+19 reference base index, a revised reference base index shall be
1559+20 determined by multiplying the reference base index then
1560+21 applicable by the rebasing factor furnished by the Bureau of
1561+22 Labor Statistics. If the index is superseded, the index
1562+23 referred to in this Section is the one represented by the
1563+24 Bureau of Labor Statistics as reflecting most accurately
1564+25 changes in the purchasing power of the dollar for consumers.
1565+26 (e) The Department shall adopt a rule setting forth, on or
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1576+1 before April 30 of each year in which dollar amounts are to
1577+2 change, the changes in dollar amounts required by this
1578+3 Section. As soon as practical after the changes occur, the
1579+4 Department shall adopt a rule setting forth the changes in the
1580+5 index required by subsection (d), including, if applicable,
1581+6 the numerical equivalent of the reference base index under a
1582+7 revised reference base index and the designation or title of
1583+8 any index superseding the index.
1584+9 (f) A person does not violate this Act with respect to a
1585+10 transaction otherwise complying with this Act if he or she
1586+11 relies on dollar amounts either determined according to
1587+12 subsection (c) or appearing in the last rule of the Department
1588+13 announcing the then-current dollar amounts.
1589+14 Section 210. Construction against implicit authority. This
1590+15 Act is a general act intended as a unified coverage of its
1591+16 subject matter; no part of this Act shall be construed to be
1592+17 impliedly repealed by subsequent legislation if that
1593+18 construction can reasonably be avoided.
1594+19 Section 215. Application of other Acts.
1595+20 (a) Income share agreements and licensees are subject to
1596+21 the Know Before You Owe Private Education Loan Act, the
1597+22 Student Loan Servicing Rights Act, and the Predatory Loan
1598+23 Prevention Act and shall comply with their requirements and
1599+24 any rules adopted by the Department of Financial and
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1610+1 Professional Regulation pursuant to those Acts.
1611+2 (b) For the purpose of the certified database requirement
1612+3 under Section 17.5 of the Consumer Installment Loan Act, an
1613+4 ISA provider shall be required to report to such database if
1614+5 the provider is extending ISAs to consumers where a consumer
1615+6 could pay an effective APR that is greater than or equal to the
1616+7 interest rate that would require an installment lender to be
1617+8 licensed under the Consumer Installment Loan Act. The
1618+9 Department of Financial and Professional Regulation shall
1619+10 adopt rules to update the certified database to provide fields
1620+11 specific to ISAs using the key terms of an ISA as defined in
1621+12 this Act.
1622+13 Section 220. Severability. The provisions of this Act are
1623+14 severable under Section 1.31 of the Statute on Statutes.
1624+15 Section 999. Effective date. This Act takes effect upon
1625+16 becoming law.
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