Illinois House Bill HB2377

Illinois 2023-2024 Regular Session

• Introduced: 2/14/23
• Refer: 2/21/23
• Refer: 2/14/23
• Refer: 3/10/23

Caption

DEBT JUDGMENT/HOMESTEAD EXEMPT

Impact

One of the most crucial impacts of HB2377 is the establishment of a modern homestead exemption that reflects current housing prices, offering homeowners better protection against the seizure of their homes in case of debt judgments. The bill sets this exemption at $260,000 or the median sales price of homes in the debtor's area. Furthermore, it limits interest recovery on consumer debt to prevent lenders from profiting unjustly on overdue debts. These changes can potentially prevent homelessness and financial ruin for vulnerable populations, while balancing creditor rights with debtor protections.

Summary

House Bill 2377 amends the Code of Civil Procedure to provide stronger protections for debtors. It stipulates that any summons issued for collecting a debt must include a separate notice alerting the debtor about their rights regarding exempt property and benefits. Moreover, the bill significantly adjusts the limits on wage garnishments and judgments against debtors, reducing the percentage of gross weekly wages that can be garnished from 15% to 10%. This aims to ensure debtors retain a greater portion of their income, which is particularly significant for low-income individuals. Additionally, the bill specifies the minimum wage thresholds that establish how much of the disposable earnings can be garnished, promoting better financial stability for those in precarious economic situations.

Contention

Key areas of contention surrounding HB2377 include the balance between creditor rights and debtor protections. Supporters argue the bill provides necessary relief and ensures that low-income individuals are not left without essential housing or income. Critics, however, warn that limiting garnishment could impede the ability of creditors to recover owed debts, suggesting it may lead to increased default rates and potential losses for lenders. This debate reflects larger discussions about the role of government in regulating financial practices and protecting consumers while ensuring businesses can operate effectively.