Illinois Debt Relief: The Tools You Need to Escape the Debt Trap

Roughly 12,582,032 people make Illinois their home. Although the typical resident’s personal income is only $59,650, the state’s lower-than-average cost of living helps balance things out. Even so, many Illinois residents struggle to find debt relief and manage day-to-day expenses.

In fact, the average debt per capita is $49,480 (excluding mortgages). Also, the state’s official poverty rate is 11.5%, meaning roughly 1,420,542 people live in poverty. This is 0.01% lower than the national average, but it’s still a significant number.

If you’re a resident of Illinois needing debt relief, or if you’re looking for other hardship resources, here’s everything you need to get started.

Are you eligible for debt relief?

If you’re an Illinois resident, DebtHammer may be able to help.

Illinois debt statistics

Here are some of the Prairie State’s most recent debt and credit statistics:

  • Average household debt (debt per capita): $49,480
  • Average student loan debt: $37,757
  • Average credit score: 719
  • Median mortgage payment: $1,668
  • Personal bankruptcies: 20,944
  • Personal income/Annual mean wage: $59,650
  • Child poverty: 15.5% (ranked 28th)
  • Unemployment: 4.7%

Debt collection laws in Illinois

The Fair Debt Collection Practices Act (FDCPA) protects residents of Illinois from unfair or deceptive debt collection practices. This federal law prohibits debt collectors from doing many things, including:

  • Contacting the debtor (person who owes the debt) at irregular hours or harassing them at work or at home
  • Claiming to be someone they’re not, such as a government or legal official
  • Threatening that the debtor will face jail time or other legal action (unless they intend to file a lawsuit)
  • Trying to deceive or manipulate someone into paying a debt, whether it’s legitimately theirs or not
  • Attempting to collect interest or other fees on the debt (unless outlined in the original contract)

Illinois has its own regulations that work in conjunction with the FDCPA. The Illinois Collection Agency Act, for example, states that:

  • Debt collectors must be licensed in the state (found under “4.5 Unlicensed Practice”)
  • Unlicensed debt collectors may face a civil penalty of up to $10,000 per offense
  • Debt collectors cannot use threats, violence, abuse, deception, or other harmful or oppressive tactics to get money
  • A debt collector cannot engage in other unfair practices, such as trying to make the debtor accept collect calls
  • Anyone trying to collect a debt cannot contact a debtor during off hours or contact their employer (with some exceptions)
  • A debt collector cannot do anything that might cause the debtor or their family mental or physical illness

The Illinois Collection Agency Act further outlines the consequences of not following the FDCPA, as well as other consumer protections. It also indicates what you can do if you’re being harassed by debt collectors. For example, you can stop them from calling you by writing a letter. After that, they can only contact you if they intend to take further action.

Illinois also has the Illinois Consumer Fraud and Deceptive Practices Act. This act primarily applies to businesses rather than individuals. It also clearly outlines what debt collectors can and cannot do.

For more information about your rights as a consumer in Illinois, refer to the state’s Attorney General’s office.

Debt relief options for Illinois residents

Need debt relief in Illinois? Here are your options:

  • Debt settlement: Debt settlement is the process of working with your creditors to reduce how much you owe on a debt. Typically, people do this through a debt settlement agency.

READ MORE: Best debt settlement companies in your area

  • Debt consolidation: Debt consolidation loans are loans that combine several debts into one large loan with a single, fixed monthly payment. These loans can make it easier to manage or pay off debt.
  • Debt management plan (DMP): Many credit counseling agencies offer DMPs to people who need help managing their debts. A DMP could help you get better rates or terms, too. They usually last a few years.
  • DIY plans: Dealing with debt collectors on your own can be tough, but it’s not impossible. With a DIY plan, you could try settling your debts, waiving late fees, or setting up a better repayment plan.
  • Personal bankruptcy: If you’re drowning in debt, you may choose to file for either a Chapter 7 or Chapter 13 bankruptcy. Eligibility will depend on your circumstances. Speak with a bankruptcy lawyer before filing.

To learn more about Chapter 7 bankruptcy in Illinois, check out this video:

Debt settlement in Illinois

Debt settlement might work for you if you’re dealing with expensive unsecured debts like:

  • Personal lines of credit
  • Credit cards
  • Personal loans
  • Student loans in default
  • Department store credit cards
  • Old judgments

It can help if you’re having trouble managing your debts or have fallen behind on regular bills. It might also help if you’ve been using credit cards or short-term loans to pay for monthly expenses. Finally, debt settlement may be an option if you’re trying to avoid bankruptcy.

With a debt settlement plan, you might be able to reduce your debts by up to 50% — or more. This could help you pay off debts, while you get your finances back on track.

Debt settlement does come with some risks, so keep that in mind. If you go through a company, for example, they may suggest that you stop making payments. This could lead to late fees and damage your credit as payment history accounts for 35% of your FICO credit score.

Weigh your options carefully and speak with a debt settlement agency to learn more.

READ MORE: Debt settlement pros and cons

Illinois debt settlement companies

If you’re considering debt settlement or need other forms of debt relief, one of these Illinois debt settlement agencies could help:

Debt settlement attorneys

A debt settlement attorney can help you understand your rights as a consumer when it comes to debt collection. They can also represent you if a creditor or third-party agency tries to sue you. Here are a few operating in Illinois:

READ MORE: Debt settlement attorneys: Do you need one?

Debt resources for Illinois residents facing hardship

Illinois has an array of resources and programs to help residents facing financial difficulties. These can help with things like utility bills or rent payments, healthcare costs, childcare, and so forth.

The Prairie State also offers food and nutrition resources, such as food banks and pantries. This is good news for the roughly 1,052,040 people (one in 12) currently facing hunger or food insecurity in the state.

Here are some of the biggest food banks across the state:

For more information on food banks in the state, head to Feeding Illinois.

Income and employment in Illinois

Illinois ranks 24th when it comes to job growth with 190,000 new jobs in the state. However, the unemployment rate is still relatively high at 4.7% as of November 2022. This is a significant drop from the unemployment rate in April 2020 when it was 17.4%. However, it’s still the highest out of all 50 states.

The state is an employment-at-will state, meaning any employer can fire an employee with or without reason. The exception to this is if the reason is deemed illegal or discriminatory. Illinois does not have right-to-work laws.

How to apply for unemployment benefits in Illinois

In Illinois, you can apply for unemployment benefits via phone at (800) 244-5631 or online at the Department of Employment Security website. This site offers several job-related resources and additional information for residents.

Once on the site, click “File A Claim.” Doing this will give you details about applying, eligibility, and the next steps. To qualify for unemployment benefits, the following must be true:

  • You’re actively looking for work (you can do this at IllinoisJobLink)
  • You earned enough money in the last 18 months to receive benefits (ex. $1,600)
  • The reason you’re unemployed is through no fault of your own
  • Etc.

When you’re ready to file, click “File an Unemployment Insurance Claim.” If you don’t have an ILogin account, you’ll need to make one. Otherwise, sign in.

You can file for benefits online at any time, except between the hours of 8:00 pm and 10:00 pm. You’ll need the following information:

  • SSN
  • State ID or driver’s license
  • Employment history for the past 18 months
  • Whether you plan to claim a dependent

Seven to 10 days after filing a claim, you’ll receive a UI Finding letter that tells you how much you’ll receive and when you’ll need to recertify for future payments. Most people receive their payments within a couple of days of this.

Banking and taxes in Illinois

Illinois has a flat individual income tax rate of 4.95%.

Approximately 4.4% of Illinois residents are unbanked. This means they have neither a checking nor a savings account. People who are unbanked are more likely to turn to expensive forms of financing, like payday loans, to cover unexpected expenses. This can lead to more financial problems or a cycle of debt.

Illinois housing market

The average home value in Illinois is $264,622, an 8.1% increase over one year. For context, the average home value in the United States is $357,319.

The homeownership rate in the state is around 66.6%. Homeowners pay an average of $1,668 on their monthly mortgage payments. By contrast, the average rent price in Chicago, IL is $2,224 for a 749-sq-ft apartment.

For homeowners looking for mortgage assistance, the Illinois Homeowners Assistance Fund could help. Eligible households could receive around $60,000 to help with things like delinquent mortgage payments, property taxes, and homeowner’s insurance.

The application period is currently open. To apply, fill out an application online. The eligibility requirements are listed on the site.

Retirement in Illinois

To retire comfortably, the average Illinois resident needs $636,188 set aside for retirement purposes. But the average resident has closer to $449,983.

Average Illinois insurance premiums

In Illinois, the average homeowner’s insurance policy costs  $1,376 a year for a $250,000 dwelling coverage. This is fairly standard.

Car insurance premiums cost around $1,946 annually for full coverage. This is slightly higher than the national average.

Payday lending status in Illinois: Illegal

Payday lending is illegal in Illinois.

  • Maximum loan amount: N/A
  • Maximum Interest Rate (APR): N/A
  • Minimum loan term: N/A
  • Maximum loan term: N/A

Statute of limitations on debt in Illinois

The statute of limitations is the time in which a debt collector can try to sue you for an unpaid debt. In Illinois, it ranges from four to 20 years on most written contracts, depending on the debt type.

  • Medical debt: 5 years
  • Credit card: 5 years
  • Auto loan debt: 4 years
  • State tax debt: 20 years

State hardship programs

Illinois offers a myriad of state-specific hardship programs to residents seeking debt relief or financial relief. These include:

Help for Veterans 

As of 2020, Illinois was home to 608,035 veterans. The Illinois Department of Veteran Affairs has many resources for veterans — and qualifying spouses — facing unemployment, homelessness, or other hardships.

Facilities in Illinois

Need to find a VA facility in Illinois? Here are some of the biggest ones:

Employment resources for Veterans

The Illinois Department of Employment Security (IDES) is committed to helping veterans find civilian employment. It also helps veterans with other things like job training and filing a claim for unemployment insurance.

Besides IDES, here are a few national and state resources to consider if you need employment help:

  • MilitaryHire.com — online platform for veterans looking to upload their resumes and apply for jobs
  • CareerOneStop — comprehensive resource that helps veterans find civilian work
  • Helmets to Hardhats — a nationwide program helping veterans and military personnel transition into the construction industry
  • My Next Move — helps veterans find civilian employment
  • Hiring Our Heroes — nationwide program that connects veterans to prospective employers and provides job training
  • Warriors to Work — offers resume help, job counseling, and related services to veterans
  • VeteranRecruiting.com — this resource connects veterans to employment opportunities, while also holding virtual career fairs

The bottom line

The state of Illinois offers many debt relief and financial assistance programs to residents. Some programs are local, while others are offered at the federal level. If you’re struggling financially, consider your options, and don’t be afraid to reach out for the help you — and your family — need.

FAQs

How long can a debt be collected in Illinois?

A debt can be collected for anywhere from five years (verbal agreements) to 10 years (on most written agreements). Some debts can be collected for a longer period of time, though.

When does the statute of limitations begin in Illinois?

It starts on the date you make your last payment. Making a new payment on debt could reactivate the statute of limitations.

Am I responsible for my spouse’s debt if I get divorced in Illinois?

If you’re getting divorced in Illinois, any debts gained during the marriage will be split equitably between both parties. This does not mean a 50/50 split, so you could be responsible (or partially responsible) for your spouse’s debt.

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