Legislators in the Illinois House overwhelmingly passed a bill to stop lenders who illegally make loans from collecting any amount of an outstanding loan.
The bill, HB 3935, targets unlicensed online and out-of-state lenders, who previously have been free from regulation. These lenders offer harmful high-cost, short-term or installment loans that are secured against a borrower’s anticipated wages.
Legislators voted 90-27 to approve the bill, which also is under consideration in the Senate. SB 3179 uses the same language as the House bill and is currently in the Senate’s Assignments Committee.
Both the House and Senate versions of the bill amend the Consumer Installment Loan Act and the Payday Reform Act to nullify any loan made by an unlicensed lender. Those lenders would have no right to collect any portion of the loan â€“ principle, interest or loan-related charges.
Currently, the only remedy to unlicensed lending is a cease-and-desist order issued by the Illinois Department of Financial and Professional Regulation. The new regulations would be effective January 1, 2013, if the Senate version passes and Governor Quinn signs the legislation into law.