February 2012Volume 100Number 2Page 70

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Curbing abuse of arrest warrants for debtors

The attorney general's office and a circuit court judge describe steps they're taking to help prevent debtors from being unfairly jailed for failure to pay.

An article appearing in the March 17, 2011, issue of The Wall Street Journal (WSJ) has prompted Illinois Attorney General Lisa Madigan to launch an initiative to curb the improper use of arrest warrants in debt collection cases.

As Jessica Silver-Greenberg reported in the WSJ, "sloppy, incomplete or even false documentation" has resulted in courts issuing arrest warrants for borrowers who had no notice that debt collectors were suing them. The article referenced cases from Illinois, among other states, citing one payday lender who had obtained arrest warrants against at least four customers, one of whom, the article said, had failed to pay a $275 bill and ended up spending five days in jail.

On reading the article, Madigan's office did some research, said Natalie Bauer, Madigan's communications director. The results indicated that abuses of requests and orders of body attachment were common in several counties in the central and southern parts of the state.

Madigan decided to make curbing those abuses a priority. In November, the WSJ reported that she said her office will press state judges to quash requests for arrest warrants by lawyers representing debt collectors and file enforcement actions against companies who abuse their power to seek arrest warrants.

Debtors' prison?

The WSJ's report of Madigan's statements provoked a lively discussion on ISBA's general discussion group. Now, Bauer has provided LawPulse with more information about the attorney general's initiative.

"Our office is engaged in ongoing discussions with the Administrative Office of Illinois Courts to determine the most effective approach for working with the court system to put an end to this practice," said Bauer. "We are also exploring additional options for addressing this problem, including working with the general assembly to clarify and strengthen the rights of judgment debtors."

Though Madigan acknowledged that she can't force judges to adopt any particular practices, Bauer said, "Members of the judiciary have been responsive to our outreach efforts and have indicated they take this problem seriously."

She summarized Madigan's objectives: "We are working to improve the uniformity of court procedures to ensure that debtors cannot go to jail for 1) failing to pay a debt that they do not have the ability to pay, and 2) failing to appear at a hearing when there is no proof that they were personally served with the hearing notice."

Some ISBA members expressed concern that articles in, for example, the WSJ "make it sound like Illinois has debtors' prison." Bauer emphasized that the attorney general's concern is with improper requests for and the improper issuance of arrest warrants, not with contempt proceedings and prison terms that may result. The facts of the cases described in the WSJ, Bauer said, "demonstrate that this issue is absolutely not about the enforcement of court orders or the failure to comply with a rule to show cause that has actually been served."

Contempt - making sure safeguards are followed

But Logan County Resident Circuit Judge Thomas M. Harris Jr. said it's important not only for judges but also for attorneys for both creditors and debtors to make certain all procedural safeguards are followed, whether the proceedings are for the issuance of an arrest warrant or for contempt.

In a contempt proceeding, Harris said, "The court needs to take an active part in the examination of the defendant debtor. If the debtor is unrepresented, I'll do most of the examination so I can make sure I have all the relevant information.

"I make sure in any contempt proceeding that I explain to that individual what must be established before a contempt finding can be made. I find it important for individuals to have an understanding of the framework of the hearing, for that might prompt them to volunteer information that might not be elicited through my questioning or that of the creditor's lawyer.

"Judges may be reluctant to engage in actively questioning an individual, especially when lawyers are involved. But in a contempt proceeding where someone's liberty is at stake, where we're talking about a potential jail sanction for the failure to pay on a debt, the court has to make sure all of the available information is before it for making that decision."

As a resource, Harris recommends Principles of Contempt, by Judge John P. Shonkwiler, Chief Judge of Illinois's Sixth Judicial Circuit. He also suggests reading Turner v Rogers, 564 US ___ (June 20, 2011). "That case provides best practices guidance to trial courts and a cautionary note that there are certain minimum procedural safeguards that should be followed."

Providing proof that the "cupboard is bare"

ISBA members also weighed in on their procedures in debt collection litigation.

Downers Grove lawyer Dennis Bordyn wrote, "When I am representing a judgment debtor and they get the citation to discover assets, I usually contact the creditor's law firm and ask them if we can provide proof that the 'cupboard is bare' before the appearance date and, if we do so, then strike the appearance.

"They save the few hundred dollars it would take to send an attorney to the courthouse to get the same information and my client can put this behind them and not worry about a body attachment. Besides, the law firm can avoid the cost of going through the process of a rule to show cause and a body attachment.

"If the cupboard is not bare, we can usually agree to a reasonable payment plan that could avoid a bankruptcy filing."

To read more and add your .02, navigate to ISBA's general discussion group (www.isba.org/discussions) and look for the discussion entitled "Madigan pushing to limit debt collectors' use of arrest warrants" dated November 22, 2011.

Helen W. Gunnarsson is an associate counsel at the American Bar Association's Center for Professional Responsibility in Chicago. As the IBJ's first contributing writer, she wrote the LawPulse feature since its inception in 2001 and most of the cover stories from 2004 through this issue in 2012. She can be reached at Helen.Gunnarsson@americanbar.org.

Member Comments (1)

As always, Helen's articles are topical and insightful. However, I think the article could benefit from a comment from the collection bar as our practices are seen as the source of the problem.

The collection bar is working with the Attorney General's office to better define the problems and update procedures to prevent abuse. Her office also struggles with these concerns as she also uses Body Attachment Orders to enforce court orders...and we are not even speaking of incarcerating dead-beat dads.

I wrote about the problem almost 10 years ago. I also provided simple and effective solutions in an article published on January 6, 2012 in the Chicago Daily Law Bulletin. If you wish to see the article, it may be found
at Markofflaw.com under News Events.

We know the concerns and know how to address them without destroying a court's ability to enforce its orders.

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