IllinoisSB2457104th General Assembly (2025–2026)SenateWALLET

COLLECTION AGENCY ACT

Sponsored By: Mark L. Walker (Democratic)

Became Law

assignmentsfinancial institutionsfinancial institutions and licensing

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 2 benefits, 2 costs, 2 mixed.

Unlicensed collectors face steep penalties

You must be licensed to run a collection agency in Illinois. Out‑of‑state agencies can collect here by interstate communication only if they are licensed at home and their state gives the same right to Illinois agencies. Unlicensed activity can bring civil penalties up to $10,000 per offense, and you have 60 days to pay after the order. The Department can order you to show cause with 7 days to answer and can issue an immediate cease‑and‑desist if you do not. A first offense is a Class A misdemeanor; repeat offenses can be a Class 4 felony, and the Secretary seeks a permanent injunction. Penalty money goes to the Financial Institution Fund.

Debt collection law ends 2026

Beginning January 1, 2026, Illinois repeals the Collection Agency Act. State licensing and many conduct rules for private debt collectors end on that date. Consumers may have fewer protections, while agencies face fewer state rules. The law also removes Section 3 of the Act.

Stronger discipline for licensed collectors

The Department can investigate agencies and applicants and hold hearings. Before discipline or refusal, it must give notice; you have 30 days to file a Petition for a Hearing. Fines can reach $10,000 per violation, and licenses can be suspended, revoked, put on probation, or reprimanded. The Department can enter consent orders that carry any allowed discipline and must state they were not made under coercion; informal conferences after a hearing request include a Board member. A seven‑member Board (five industry, two public) advises on standards and discipline, and the Department meets yearly with industry if at least 20 ask. If a payment to the Department bounces, there is a $50 fine, and you have 30 days to repay by certified check or money order or your license ends or your application is denied.

Child support fees capped, tougher tactics

The law limits how much a collection agency can keep from child support it collects. Until rules are set, agencies may keep no more than 29% of what they collect. After that, the Department sets a rate between 25% and 35%. Agencies cannot charge any fee on support collected by a federal, State, or local agency, such as tax refunds, unemployment, or Social Security. Collections must pay current support first. Agencies must turn over up to the current monthly amount, show any fee came from their work, and stop charging after arrears plus interest are paid. For court‑ordered support with a verified delinquency notice under the Income Withholding for Support Act, agencies may contact more often, contact an employer, publish arrears lists, and disclose disputed arrears.

Limits on collector calls to others

When a collector asks other people where you are, they must identify themselves and say they are confirming your location. They cannot say you owe a debt. They usually get one contact, cannot use postcards, and cannot reveal an employer unless asked. They cannot contact someone who has a lawyer, unless the lawyer does not respond within at least 30 days.

Who is exempt from licensing

Some businesses that collect as part of their main work do not need a collection agency license. Examples include banks, licensed attorneys, real estate brokers, insurers, credit unions, retail sellers collecting their own accounts, and unit owners associations. The Department can add more exemptions by rule. These exemptions have applied since August 3, 2015.

Sponsors & Cosponsors

Sponsor

Mark L. Walker
Democratic • Senate

Cosponsors

Graciela Guzmán
Democratic • Senate
Karina Villa
Democratic • Senate
Margaret Croke
Democratic • House
Mary Edly-Allen
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 197 • No: 0

House vote • 5/22/2025

Third Reading - Short Debate - Passed

Yes: 113 • No: 0

House vote • 4/29/2025

Do Pass / Short Debate Financial Institutions and Licensing Committee;

Yes: 12 • No: 0

Senate vote • 4/9/2025

Third Reading - Passed;

Yes: 56 • No: 0

Senate vote • 4/3/2025

Senate Floor Amendment No. 2 Recommend Do Adopt Financial Institutions;

Yes: 8 • No: 0

Senate vote • 3/19/2025

Do Pass as Amended Financial Institutions;