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New Legislation

By James M. Morphew, ICA Lobbyist Sorling, Northrup, Hanna, Cullen and Cochran, Ltd.

Legislation that would place in state law an agreement reached with the Illinois Department of Professional Regulation on the issue of contingency fees has passed the Illinois House and is advancing in the Illinois Senate.

Representative Skip Saviano introduced HB3046, which amends the disciplinary provsions of the Collection Agency Act to provide that if a contingency or hourly fee arrangement is 1) established under an agreement between the collection agency and a creditor to collect a debt, and 2) is paid by the debtor pursuant to a contract between the creditor and debtor, then that fee arrangement does not subject the licensee to potential disciplinary action unless the fee is unreasonable.

Senators Patrick O'Malley and Robert Madigan are the Senate sponsors.

HB3046 contains the language proposed by Governor Ryan in his amendatory veto of SB801 that was considered last session. The motion to accept the Governor's amendatory veto was adopted by a unanimous vote in the Senate. However, the motion to accept was called in the House because of the scope of the changes made by the Governor's amendatory veto. This necessitated the introduction of HB3046.

The need for this legislation arose when attorneys for IDPR took position that a collection fee calculated on a percentage basis and added on the debt could result in disciplinary action against the collection agency. IDPR attorneys maintained the position even though the debtor has agreed in his contract with the creditor to pay colleciton fees.

After several meetings with IDPR, the language contained in HB3046 was developed.

On January 1, 2001 this bill became law. Now you, as an Illinois creditor would use the lagnuage spelled out on the next page, our agency can add on our collection agency costs.

New Legislation in Illinois

The Illinois Collectors Association, Inc. (I.C.A.) scored a hard fought victory when Gov. George Ryan signed into law H.B.3046 (Saviono) on June 9.

Effective January 1, 2001, collection agencies will be protected from disciplinary action when collecting a contingency or hourly fee, provided that:

The arrangement is established under an agreement between a collection agency and a creditor to collect the debt;

The fee is paid by a debtor pursuant to a contract between the creditor and the debtor; and

The fee is not "unreasonable."

The bill was originally introduced as S.B. 801 on Feb. 24, 1999, and had passed both houses. However, the governor, acting on the Illinois Department of Professional REgulation's recommendation, signed an amendatory veto. The Department opposed the bill, claiming the fees would harm consumers. This prompted the governor to insert language that would grant the Department the power to determine whether the cotningency or hourly fees charged to debtors were indeed unreasonable. The House Speaker refused to allow a vote on the bill, arguing that the governor had abused his amendatory veto.

 

For more information, contact Ron Bronstein, Chief Operating Officer of Keynote Collections, Inc. at

(847) 788-1530 or via email.