Illinois Debt Collection Basics
In Illinois, a Citation to Discover Assets is typically served upon a debtor after a creditor has already been awarded a judgment on a debt. So to put it simply, this is when a bank has already sued to collect on a debt, and the court has decided that this debt is owed, and has awarded a judgment. This judgment gives the creditor the right to pursue collection of this debt, either through garnishment, bank levy, forfeiture, or other means. Before we begin, it must be noted that if you’re debts are too large a bankruptcy will take care of this issue completely. I would suggest speaking with a Chicago Bankruptcy Attorney before you begin this process.
The Types of Citations
Typically, there are only two types of Citations issued. Section 2-1402 of the Code of Civil Procedure is the statute by which citations are to be issued. The third party citation to discover assets is issued upon an institution that is affiliated with the debtor, usually their bank. Once the citation is issued to a bank, the bank must then freeze all assets held in all accounts associated with the judgment debtor. This serves to prevent the debtor from transferring or spending any of the money in these accounts. If funds are transferred after the citation is issued the bank can be sanctioned under Supreme Court Rule 277(h). An easy way to remove this freeze is to file either a Chapter 7 or a Chapter 13 bankruptcy. The automatic stay of a bankruptcy will remove the freeze and allow access to the account within a relatively short amount of time. Otherwise, the freeze will stay in place until the next court date (or the return date), which is when the judge will determine whether there are any available funds to pay the judgment owed. There are other ways to remove this freeze outside of bankruptcy, but you should speak with an attorney about these options.
There is also the personal citation to discover assets, which is issued to the person who owes the debt. This citation summons the debtor to court to be examined about their particular financial situation. If it is determined that the debtor has no assets to satisfy the debt, then the citation is terminated. Otherwise, the court may order the debtor to turnover funds or to deliver property (either to the creditor or to the sheriff to be auctioned to satisfy the debt). Regardless, Supreme Court Rule 277 states that the citation automatically terminates 6 months after (1) the debtors first appearance in response to citation or (2) the party’s first personal appearance based on subsequent enforcement actions, which ever is sooner. Which leads me to another point, if you do not show up to this hearing the court may issue an arrest warrant based on contempt of court.
Even if you do have funds or assets to satisfy the judgment, 735 ILCS 5/12-1001 of Illinois Law grants exemptions which allow you to keep some assets. These are basically the same exemptions that are allowed in a bankruptcy, coincidentally.
Some of the assets you are allowed to keep:
- $2400 of equity in any single motor vehicle.
- $4000 of worth of any property (typically called the wild card exemption, because it can be applied to anything).
- $15,000 resulting from death or bodily injury.
Please note that this list is not exhaustive and you should speak with an attorney about these exemptions, but it is obvious that there are options available once these citations have been issued. It does help to have an attorney, and your odds of obtaining a favorable conclusion definitely increase (either through settlement, bankruptcy or by using the exemptions). If you live in or around Chicago, please call 312-493-6912 to speak with Steven J. Grace about your options regarding citations such as these, or about a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.