An Overview of Legal Remedies Available for Unpaid Debts

 Posted on May 23,2024 in Debt Collection

As a creditor in Illinois, you have various legal options to recover money owed when a debtor fails to pay. Understanding your rights and the proper legal procedures can help you collect what you are owed more effectively. An Illinois lawyer can help you with the legalities available under the law to collect on delinquent accounts and unpaid debts.

Demand Letter

The first step in addressing an unpaid debt should be to send the debtor a formal demand letter. A strongly worded letter outlining the debt owed, including the principal, interest, and any penalties, may be enough to prompt payment. The letter should specify a deadline for paying the debt, after which you will pursue legal action. Sending a demand letter establishes that you have made a good-faith attempt to collect the debt before escalating to a lawsuit.

Filing a Lawsuit

If a demand letter does not result in payment, the next step is usually to file a lawsuit against the debtor in civil court. In Illinois, for debts under $10,000, you would file the case in small claims court. For larger debts, you would file in the appropriate district court in the county where the debtor resides or where the agreement giving rise to the debt was signed.

The lawsuit begins by filing a complaint with the court and properly serving the defendant. The complaint must demonstrate the validity of the debt and your right to collect. If the defendant fails to respond, you can seek a default judgment. If they do respond, the case will proceed until the court issues a judgment, which, if in your favor, becomes a vital tool for collecting the debt.

Garnishing Wages

One of the most effective remedies after securing a judgment is to garnish the debtor’s wages. Under Illinois law, you can garnish up to 15 percent of a debtor’s gross wages or the amount by which their weekly net income exceeds 45 times the state minimum wage, whichever is less. To do this, you provide the debtor’s employer with the judgment and a garnishment notice to withhold funds from their paycheck to pay off the judgment.

Wage garnishment continues until the debt is satisfied or the debtor leaves that place of employment. Certain forms of income, like Social Security, are exempt from garnishment. If the debtor attempts to avoid garnishment by frequently changing jobs, you can file a new garnishment notice with each new employer.

Levy and Lien

In addition to wages, you can also go after a debtor’s assets to satisfy a judgment. One option is to place a lien on their real estate holdings. A Memorandum of Judgment creates a lien on any real property owned by the debtor in the county where the judgment is recorded. If the debtor tries to sell the property, you are entitled to payment from the proceeds to satisfy the lien.

You can also seek a writ of execution to direct the sheriff to seize and sell the debtor’s non-exempt property to pay off the judgment. This is known as a levy. The types of personal property that can be levied include bank accounts, vehicles, valuable collectibles, or machinery and equipment owned by a business. Creditors can even levy the contents of a debtor’s safety deposit box. Certain essential property is exempt from levy in Illinois.

Contact a Chicago, IL Debt Collection Lawyer

Creditors have significant remedies to collect unpaid debts under Illinois law. From initial demand letters, to lawsuits and judgments, to enforcing those judgments through wage garnishment, liens, and levies, you have powerful tools to compel debtors to pay the money they owe. The key is understanding your rights as a creditor and diligently following the proper procedures to build an effective case. Consulting with a Chicago, IL debt collection attorney can help you successfully navigate this process and collect what you are owed. Call Dimand Walinski Law Offices, P.C. at 312-704-0771 to start your private consultation.