how to collect a debt

Illinois Debt Collection Explained | How to Collect A Debt in Illinois

Article written by Illinois & Iowa Attorney Kevin O'Flaherty
Updated on
November 1, 2019

If you are a small business owner dealing with past due accounts receivable, or if you are having trouble paying your monthly bills and are receiving notices from creditors, you should acquaint yourself with the collection process.  This article will provide a summary of that process.  The narrative will be from the creditor’s perspective, but it will be equally helpful to debtors.

Bear in mind that each of the following steps tends to increase the pressure on the debtor to settle his debt.  Each successive step will only be required if the debtor is non-responsive to the previous steps.  In practice, it is usually unnecessary to take a collections case all the way through Step 7.

STEP 1:  Internal collections procedures:  Before you speak to a collections attorney, you should be sure to refine your own collection procedures.  Every business is different, but the following tips may help you increase your collections on your accounts receivable:

  • In your contracts with your customers, include an attorney-fee provision providing that if either party is required to take action to enforce the contract, the other party will be required to pay attorney fees and other expenses.
  • In your contracts with your customers, include a late fee provision, informing your customers that late fees will be charged on late invoices.
  • On the face of each invoice, you should explain your collection procedures.  Let your customers know in advance that if their invoice is x days past due they will be required to pay late fees, and that if it becomes days past due, the invoice will be sent to collections.
  • Follow up on past due invoices with letters explaining the consequences of continued failure to pay.

If you believe that it will not be possible to collect an account internally, you should hand the account to your attorney to begin a collection suit.

STEP 2:  Demand Letter:  Once the past due account has been turned over to your attorney, he should send the debtor a demand letter to the debtor informing him that suit will be filed unless payment is made within a specific time period.

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STEP 3:  File suit and obtain a judgment:  If the debtor does not respond to your attorney’s demand letter, he should file a complaint against the debtor in the proper county (usually the county where the defendant does business or resides).  In my experience, debtors tend not to defend collections cases.  If the debtor does not defend the case, the court will enter a default judgment (judgment for failure to defend) in your favor at the first court date.  Default judgments can be easily vacated (reversed) if the defendant files a motion within thirty days.  Your attorney will therefore wait for thirty days after judgment before initiating post-judgment proceedings.

STEP 4:  Citation to Discover Assets:  Often, obtaining a judgment against a debtor is the easy part.  Once you have a judgment, the next step is to find the debtors assets. Sometimes, you will be able to discover real estate or vehicles owned by the debtor through an advanced internet search.  If this search does not provide you with assets sufficient to satisfy your judgment your attorney will file a citation to discover assets.  A citation is a demand that the debtor appear in court on a specific date to testify under oath as to his assets.

Like the complaint, the citation will have to be personally served upon the debtor by sheriff or special process server.  If you have any previous checks from the debtor, you will be able to determine at least one of the debtor’s banks.  Your attorney should send the citation to any banks at which you suspect the debtor maintains an account.  These banks will be required to freeze the debtor’s accounts until the citation is lifted.

STEP 5:  Rule to Show Cause:  In my experience, debtors rarely appear at the original court date set for the citation.  If the debtor fails to appear, the court will enter a Rule to Show Cause order.   A Rule to Show Cause is an order requiring the debtor to appear at a second court date to explain to the court why he should not be held in contempt for failing to appear on the citation.  Like the citation and the complaint, the Rule to Show Cause will have to be personally served upon the debtor by sheriff or special process server.  If the debtor appears at this court date, the citation will go forward and he will be interviewed as to his assets.

STEP 6:  Body Attachment:  If the debtor fails to appear on the Rule to Show Cause, the Court will enter a  Body Attachment.  A Body Attachment is a warrant for the debtor’s arrest.  Your attorney will deliver this to the sheriff, who will seek to enforce it.  If the sheriff is successful, the debtor will be arrested and will usually be required to spend the night in jail until he can be brought before the judge to answer for his failure to appear on the citation.  At this point, the judge will fine the debtor and set a new date for the citation.

STEP 7:  Turnover of assets:  Once your attorney discovers assets held by the debtor, he will seek an order from the court instructing the debtor (or his bank) to turn over all such assets to you by a specific date, except for those that are exempt from collection.  If the debtor fails to do so, he will be held in contempt of court.  If your attorney discovers the debtor’s place of employment, he will serve a wage garnishment upon the debtor’s employer, which will require the employer to directly pay you a percentage of the debtor’s wages.  If your attorney discovers real estate or vehicles, a sheriff’s sale will be held with the proceeds going to satisfy the debt in question.

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