Fixing the Issue of "Debtors' Prisons"

Robert Markoff

Both the Wall Street Journal and the Minneapolis Star Tribune have run articles declaring that debtor prisons still exist in this country.

Illinois Attorney General Lisa M. Madigan recently stated on the radio and in an interview with the Wall Street Journal that there are debtor prisons in Illinois. Madigan referred to a woman who was arrested in a downstate county and spent some time in a jail.

Because the civil case leading to the arrest arose out of a consumer debt, the attorney general concluded that Illinois has debtor prisons. She also stated that she could do little more to fix the problem than educate judges. I do not think the attorney general is correct in either statement.

No one should spend time in jail for failure to pay a debt. In extremely rare circumstances, a finding that a party should be punished for civil contempt of court for disobeying court orders may be appropriate, but only if the party has had a full opportunity, with notice, to defend themselves. In such cases, the party holds the key to the jail doors by complying with the court’s order. A debtor who has no nonexempt funds should never be jailed for failure to make payment.

I have been a collection attorney in Illinois for 35 years, focusing on enforcing judgments. I have never heard of any consumer sentenced to jail for not paying a bill. I doubt that there is any consumer in an Illinois jail on such a charge. Then why all the media noise about debtor prisons?

The real issue, not very well articulated, is the misuse of body attachment orders. Body attachment orders (arrest orders) are used in civil cases to have a sheriff bring a person into open court when they have failed to follow a court order to appear, produce documents, return personal property or make court-ordered payments.

Is the misuse of such arrest orders a real problem? Yes, it is. Are there meaningful solutions that will not intrude upon a court’s ability to enforce it orders? Yes, there are, and they are surprisingly simple.

The root of the problem is Illinois Attorney General William J. Scott’s Opinion No. S-334, Aug. 30, 1971. It is this opinion that created a legal culture (mainly in downstate Illinois and, in particular, Champaign County) allowing the liberal use of arrest orders to bring people into court.

My first recommendation is that Attorney General Madigan rescind this opinion. Next, the Illinios Supreme Court should amend its rules related to small claims and supplemental procedures. In particular, I am speaking of Rule 288 and Rule 277.

The small claims rules are meant to help people by simplifying court cases and process. Unfortunately, they have had unforeseen and unintended consequences. One such problem is in Rule 288, which allows a court to order the defendant to pay a judgment within three years. During the pendency of the payment order, the creditor may not file a garnishment or wage deduction. Assuming a $10,000 small claim judgment, the monthly payment, without interest or court costs, is about $275 per month. If the debtor does not pay as ordered, the creditor must enforce the order in contempt proceedings as many courts refuse to vacate the installment orders and allow the creditor to file a garnishment. It is their misguided attempt to prevent a garnishment that leads to the arrest orders.

When some debtors are served with a notice of the contempt proceedings, they become afraid of returning to court. Their nonappearance leads to the order for the sheriff to bring them to court. In other words, they are arrested.

If the rule is eliminated, the parties would be free to enter a voluntary payment plan or have the debt paid through garnishment (which is the case for matters over $10,000). This would end the possibility of arrest orders in thousands of cases every year.

At the very least, Supreme Court Rule 288 should be amended to prohibit a court from entering a payment order from a debtor’s exempt funds. The Illinois Code of Civil Procedure, 735 5/2-1402 (j) already prohibits such orders in citation proceedings. In addition, debtors should be given a notice of their exemption rights before such installment orders are entered.

Supreme Court Rule 277 should be amended to require a respondent to be served with a rule-to-show cause prior to the entry of an arrest order. The citation itself does state that the recipient may be arrested for failure to appear. The service of a rule would give the debtor a new court date and additional notice of the potential adverse consequence for their failure to appear.

Rule 277 could also be amended to establish guidelines for a court in setting a bond in the attachment order. In matters of indirect civil contempt, the court should set a personal recognizance bond. If the Cook County sheriff office’s procedure is followed, the “arrest” of the debtor is similar to a traffic ticket where the debtor is given a new court date. Deposit or cash bonds should only be used in extreme circumstances.

Arrest orders should be not be valid forever if the defendant is not arrested. They should expire at a set point in time, perhaps six months after the order is entered, if not enforced. The Cook County sheriff’s office, without any basis in law, will not enforce such orders beyond 90 days after placement with his office. This is not true of the sheriffs in most other Illinois counties.

It may surprise some readers that a collection attorney knows and understands the concerns raised by the “debtor prison” narrative. We have known of the issues for years and have attempted to effect change. I wrote a section warning of abuses in creditor’s rights in Illinois published by the Illinois Institute for Continuing Legal Education 10 years ago. Many of us no longer use these orders or only use them in very rare circumstances. Unfortunately, many see us as the source of the problem and not a source for its solution.

My comments and suggestions represent my thoughts on this subject. They are not made on behalf of the various bar associations, committees or the section council that I have chaired. However, I know that if my colleagues are invited to participate in this discussion, our constructive comments will lead to the end of the “debtor prisons in Illinois” story.

Robert G. Markoff, a partner at Markoff, Krasny LLC in Chicago, focuses his practice in creditor’s rights and enforcing judgments. He was the founding president of the Illinois Creditors Bar Association and a past president of the National Association of Retail Collection Attorneys (NARCA). He is the immediate past chairman of the Illinois Institute for Continuing Legal Education and serves as general editor and a primary author of the institute’s practice handbook, “Creditors’ Rights in Illinois.”