Illinois General Assembly - Full Text of HB4554
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Full Text of HB4554  102nd General Assembly


Rep. Maurice A. West, II

Filed: 2/7/2022





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2    AMENDMENT NO. ______. Amend House Bill 4554 by replacing
3everything after the enacting clause with the following:
4    "Section 1. Short title. This Act may be cited as the
5Consumer Income Share Agreement Act.
6    Section 5. Definitions. As used in this Act:
7    "Amount financed" means the amounts advanced by the
8licensee to the consumer or on behalf of the consumer or, if
9the licensee is a merchant financing the sale of goods or
10services to the consumer using an income share agreement, the
11amount credited by the licensee toward the purchase of such
12goods and services on behalf of the consumer.
13    "Annual percentage rate" or "APR" means the percentage
14rate calculated according to the Federal Reserve Board's
15methodology as set forth under Regulation Z, 12 CFR Part 1026.
16The "annual percentage rate" of an income share agreement is



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1the measure of the cost of the income share agreement,
2expressed as a yearly rate, that relates to the amount and
3timing of value received by the consumer to the amount and
4timing of payments made. The "annual percentage rate" is
5determined in accordance with either the actuarial method or
6the United States rule method.
7    "Consumer" means a natural person who enters into an
8income share agreement for personal, family, or household use.
9    "Department" means the Department of Financial and
10Professional Regulation.
11    "Director" means the Director of the Division of Financial
12Institutions of the Department of Financial and Professional
14    "Disposable earnings" means that part of the earnings of
15an individual remaining after the deduction from total
16earnings of amounts required by law to be withheld.
17    "Educational ISA" means an income share agreement that:
18        (1) is not made, insured, or guaranteed under Title IV
19    of the Higher Education Act of 1965, 20 U.S.C. 1070 et
20    seq., or another federally subsidized educational finance
21    program;
22        (2) is extended to a consumer expressly, in whole or
23    in part, for postsecondary educational expenses, tuition,
24    or other obligations of, or pays amounts to, or on behalf
25    of, such individual for costs associated with a
26    postsecondary training program or any other program



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1    designed to increase the individual's human capital,
2    employability, or earning potential, and is not limited to
3    programs eligible to participate as programs under Title
4    IV of the Higher Education Act of 1965, 20 U.S.C. 1070 et
5    seq., as well as any personal expenses, such as books,
6    supplies, transportation, and living costs, incurred by
7    the individual while enrolled in such a program and any
8    other costs or expenses included in the definition of a
9    "qualified higher education expense" as specified in 26
10    U.S.C. 529(e)(3)(A), including refinancing of loans or
11    income share agreements used for the purposes described in
12    this paragraph, and regardless of whether the income share
13    agreement is provided by the educational institution that
14    the consumer attends; and
15        (3) does not include loans, open-end credit, or any
16    loan or income share agreement that is secured by real
17    property or a dwelling.
18    "Federal poverty guidelines" means the poverty guidelines
19updated periodically in the Federal Register by the U.S.
20Department of Health and Human Services under the authority of
2142 U.S.C. 9902(2).
22    "Garnishment" means any legal or equitable procedure
23through which earnings of an individual are required to be
24withheld for payment of the income share agreement.
25    "Income" means the salary, wages, income, tips, capital
26gains, earnings, and other sources of income of a consumer as



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1set forth in an income share agreement.
2    "Income share agreement" or "ISA" means an agreement
3between a consumer and an ISA provider under which:
4        (1) the ISA provider advances a sum of money to the
5    consumer or to a third party on the consumer's behalf or,
6    if the ISA provider is a seller of goods or services to the
7    consumer, the ISA provider credits toward the purchase of
8    such goods or services;
9        (2) the consumer is obligated to make periodic
10    payments, if any become due, to the ISA provider
11    calculated, based upon, or determined by the consumer's
12    income;
13        (3) the consumer's obligation to make payments, if any
14    become due, to the ISA provider is conditional on the
15    consumer's income exceeding the income threshold set forth
16    in the income share agreement;
17        (4) there is an ISA duration; and
18        (5) each of these elements is available at the time of
19    contracting of the income share agreement.
20    "Income threshold" means a fixed dollar amount that, if a
21consumer earns less than such amount during the relevant
22period, the consumer is not required to make a payment for such
23payment period.
24    "Index" means the Consumer Price Index for Urban Wage
25Earners and Clerical Workers: U.S. City Average, All Items,
261967=100, compiled by the Bureau of Labor Statistics, United



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1States Department of Labor.
2    "ISA duration" means the maximum length of time during
3which income may be subject to an ISA payment, absent periods
4of payment relief pause at the request of the consumer. "ISA
5duration" does not include periods of payment relief pause.
6    "ISA maximum number of payments" means the maximum number
7of ISA payments during ISA payment periods in which the
8consumer's income is equal to or greater than the income
9threshold that a consumer could be required to make. "ISA
10maximum number of payments" does not include periods of
11payment relief pause.
12    "ISA payment" means the amount of a consumer's periodic
13payment obligation, if any, based on the terms of the income
14share agreement. The "ISA payment" is equal to the product of
15the ISA percentage multiplied by the consumer's income, except
16in cases of an ISA where the ISA payment amount is determined
17by a schedule of fixed amounts based on a consumer's income in
18a given payment period. An "ISA payment" is required only for
19income earned during an ISA payment period in which the
20consumer's income was equal to or greater than the income
22    "ISA payment cap" means the maximum amount of money a
23consumer must pay to satisfy the terms of an income share
25    "ISA percentage" or "percentage" means the percentage of
26income or schedule of percentages of income or fixed amounts



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1based on the consumer's income in a given ISA payment period
2used to calculate a consumer's ISA payment pursuant to an
3income share agreement.
4    "ISA provider" means a person who provides funding to a
5consumer pursuant to an income share agreement or, if the ISA
6provider is a seller of goods and services, the seller.
7    "Licensee" means a person who is licensed under this Act.
8    "Net worth" means total assets minus total liabilities.
9    "Payment relief pause" means a period of time that is
10requested by the consumer during which the consumer is not
11required to make payments despite the consumer's income
12exceeding the income threshold.
13    Section 10. License required to engage in business.
14Without a license provided under this Act, no person,
15partnership, association, limited liability company, or
16corporation may engage in the business of:
17        (1) making income share agreements; or
18        (2) taking assignments of and undertaking direct
19    collection of payments from or enforcement of rights
20    against consumers arising from income share agreements,
21    except for collection of payments and enforcement of
22    rights for 3 months without a license if the person or
23    entity promptly applies for a license and the application
24    has not been denied.



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1    Section 15. Application for income share agreement
2license; fees; surety bond.
3    (a) Application for a license shall be in writing and in a
4form prescribed by the Director. The applicant at the time of
5making an application shall pay the Director the sum of $300 as
6an application fee and the additional sum of $450 as an annual
7license fee for a period terminating on the last day of the
8current calendar year; however, if the application is filed
9after June 30 in any year, the license fee shall be half of the
10annual license fee for the year.
11    (b) Before the license is granted, every applicant shall
12provide in a form satisfactory to the Director that the
13applicant has or will maintain a positive net worth in a
14minimum of $30,000. Every applicant and licensee shall
15maintain a surety bond in the principal sum of $25,000 issued
16by a bonding company authorized to do business in this State
17and that shall be approved by the Director. The bond shall run
18to the Director and shall be for the benefit of any consumer
19who incurs damages as a result of a violation of this Act or
20rules adopted pursuant to this Act by a licensee. If the
21Director at any time finds that a bond is of insufficient size,
22is insecure, is exhausted, or is otherwise doubtful, an
23additional bond in such amount as determined by the Director
24shall be filed by the licensee within 30 days after written
25demand therefor by the Director.



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1    Section 20. Appointment of attorney-in-fact for service of
2process. Every licensee shall appoint, in writing, the
3Director and his or her successors in office or any official
4who shall be charged with the administration of this Act, as
5attorney-in-fact upon whom all lawful process against the
6licensee may be served within the same legal force and
7validity as if served on the licensee. A copy of such written
8appointment, duly certified, shall be filed in the office of
9the Director, and a copy thereof certified by him or her shall
10be sufficient evidence. This appointment shall remain in
11effect while any liability remains outstanding in this State
12against the licensee. When summons is served upon the Director
13as attorney-in-fact for such licensee, the Director shall
14immediately notify the licensee by registered mail, enclosing
15the summons and specifying the hour and day of service.
16    Section 25. Investigation; license issuance.
17    (a) Upon the filing of an application and the payment of
18the fees, the Director shall investigate to determine:
19        (1) that the reputation of the applicant, including
20    the managers of a limited liability company, and the
21    partners, owners, officers, or directors thereof warrants
22    belief that the business will be operated honestly and
23    fairly within the purposes of this Act; and
24        (2) that the applicant meets the positive net worth
25    requirements of this Act.



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1    Unless the Director makes findings enumerated in this
2subsection, he or she shall not issue a license and shall
3notify the applicant of the denial and return to the applicant
4the sum paid by the applicant as a license fee, but shall
5retain the $300 application fee. The Director shall approve or
6deny every application for license within 60 days after the
7filing of an application with payment of a fee.
8    (b) Upon written request, the applicant is entitled to a
9hearing on the question of his or her qualifications for a
10license if:
11        (1) the Director notifies the applicant in writing
12    that his or her application has been denied; or
13        (2) the Director does not issue a license within 60
14    days after the application for the license was filed.
15    A request for a hearing may not be made more than 15 days
16after the Director mails a writing to the applicant notifying
17him or her that the application has been denied and stating in
18substance the Director's findings supporting denial.
19    Section 30. License. The license shall state the address,
20including the city and state, at which the business is to be
21conducted and shall state fully the name of the licensee. The
22license shall be conspicuously posted in the place of business
23of the licensee and shall not be transferable or assignable.
24    Section 35. License; place of business.



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1    (a) Not more than one place of business shall be
2maintained under the same license, but the Director may issue
3more than one license to the same licensee upon compliance
4with all the provisions of this Act governing the original
5issuance of a license. A webpage operated by the licensee
6shall constitute a location.
7    (b) Whenever a licensee changes his or her place of
8business to a location other than that set forth in the
9license, he or she shall give written notice to the Director at
10least 10 days before the relocation. However, if the new
11location is in excess of 15 miles from the previous location,
12the licensee shall obtain written approval from the Director
13before relocation.
14    Section 40. Annual license fee; expenses.
15    (a) Before December 1 of each year, a licensee shall pay to
16the Director, and the Department must receive, the annual
17license fee required by this Act for the next succeeding
18calendar year. The license shall expire on January 1 of the
19following year unless the licensee fee has been paid before
21    (b) In addition to the license fee, the reasonable expense
22of any examination, investigation, or custody by the Director
23under any provisions of this Act shall be borne by the
25    (c) If a licensee fails to renew his or her license by



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1December 31, it shall automatically expire and the licensee is
2not entitled to a hearing; however, the Director, in his or her
3discretion, may reinstate an expired license upon payment of
4the annual renewal fee and proof of good cause for failure to
6    Section 45. Suspension or revocation of license.
7    (a) The Director may issue to a licensee an order to show
8cause why his or her license should not be suspended for a
9period not in excess of 6 months or be revoked. The order shall
10set a place for a hearing and a time therefor that is no less
11than 10 days after the date of the order. After the hearing,
12the Director shall revoke or suspend the license, or, if there
13are mitigating circumstances, may accept an assurance of
14discontinuance and allow retention of the license, if the
15Director finds that:
16        (1) the licensee has repeatedly and intentionally
17    violated this Act or any rule or order lawfully made
18    pursuant to this Act, or has violated an assurance of
19    discontinuance; or
20        (2) facts or conditions exist that clearly would have
21    justified the Director in refusing to grant a license for
22    that place or those places of business were the facts or
23    conditions known to exist at the time the application for
24    the license was made.
25    (b) A revocation or suspension of a license is not lawful



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1unless the Director, before instituting proceedings, gives
2notice to the licensee of the facts or conduct that warrant the
3intended action and the licensee is afforded an opportunity to
4show compliance with all lawful requirements for retention of
5the license.
6    (c) If the Director finds that probable cause for
7revocation of a license exists and that enforcement of this
8Act requires immediate suspension of the license pending
9investigation, the Director, after a hearing upon 10 days'
10written notice, may enter an order suspending the license for
11not more than 30 days.
12    (d) Whenever the Director revokes or suspends a license,
13he or she shall enter an order to that effect and forthwith
14notify the licensee of the revocation or suspension. Within 10
15days after entry of the order he or she shall deliver to the
16licensee a copy of the order and the findings supporting the
18    (e) A person holding a license to make income share
19agreements may relinquish the license by notifying the
20Director in writing of its relinquishment, but the
21relinquishment does not affect his or her liability for acts
22previously committed.
23    (f) Revocation, suspension, or relinquishment of a license
24does not impair or affect the obligation of any preexisting
25lawful contract between the licensee and any consumer.
26    (g) The Director may reinstate a license, terminate a



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1suspension, or grant a new license to a person whose license
2has been revoked or suspended if no fact or condition then
3exists that clearly would have justified the Director in
4refusing to grant a license.
5    Section 50. Closing of business; surrender of license.
6    (a) At least 10 days before a licensee ceases operations,
7closes business, or files for bankruptcy, the licensee shall
8do the following:
9        (1) Notify the Department of its action in writing.
10        (2) With the exception of filing for bankruptcy,
11    surrender its license to the Director for cancellation;
12    the surrender of the license shall not affect the
13    licensee's civil or criminal liability for acts committed
14    before surrender or entitle the licensee to return any
15    part of the annual license fee.
16        (3) Notify the Director of the location where the
17    books, accounts, contracts, and records will be maintained
18    and the procedure to ensure prompt return of contracts,
19    titles, and releases to the customers.
20        (4) Ensure that the accounts, books, records, and
21    contracts shall be maintained and serviced by the licensee
22    or another licensee under this Act or an entity exempt
23    from licensure under this Act.
24    (b) The Department shall have the authority to conduct
25examinations of the books, records, and loan documents at any



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1time after surrender of the license, filing of bankruptcy, or
2the cessation of operations.
3    Section 55. Examinations and investigations of conduct of
5    (a) The Director shall examine periodically, at intervals
6he or she deems appropriate but not less than once per year,
7income share agreements, business, and records of every
8licensee. In addition, for the purpose of discovering
9violations of this Act or securing information lawfully
10required, the Director at any time may investigate the income
11share agreements, business, and records of any licensee. For
12these purposes the Director shall have free and reasonable
13access to the offices, places of business, and records of the
15    (b) If the licensee's records are located outside this
16State, the licensee at the Director's request shall make them
17available to the Director at a convenient location within this
18State, or pay the reasonable and necessary expenses for the
19Director or his or her representative to examine them where
20they are located. The Director may designate representatives,
21including comparable officials of the state in which the
22records are located, to inspect them on the Director's behalf.
23    (c) For purposes of this Section, the Director may
24administer oaths or affirmations, and upon request of a party
25or his or her own motion may subpoena witnesses, compel their



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1attendance, adduce evidence, and require the production of any
2matter that is relevant to the investigation, including the
3existence, description, nature, custody, condition, and
4location of any books, documents, or other tangible things and
5the identity and location of persons having knowledge of
6relevant facts or any other matter reasonably calculated to
7lead to the discovery of admissible evidence.
8    (d) Upon failure without lawful excuse to obey a subpoena
9or to give testimony and upon reasonable notice to all persons
10affected thereby, the Director may apply to the court for an
11order compelling compliance.
12    Section 60. Books and records.
13    (a) Every licensee shall maintain records in conformity
14with generally accepted accounting principles and practices in
15a manner that will enable the Director to determine whether
16the licensee is complying with this Act. The recordkeeping
17system of a licensee is sufficient if it makes the required
18information reasonably available. The records pertaining to
19any income share agreement need not be preserved for more than
202 years after making the final entry relating to the income
21share agreement.
22    (b) On or before April 15 of each year, every licensee
23shall file with the Director a composite annual report in a
24form prescribed by the Director relating to all income share
25agreements made by the licensee. Information contained in



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1annual reports shall be confidential and may be published only
2in composite form.
3    Section 65. No other business allowed.
4    (a) A licensee may not carry on other business for the
5purpose of evasion or violation of this Act at a location where
6the licensee makes income share agreements.
7    (b) Upon application by the licensee, the Director may
8approve the conduct of other businesses not specifically
9permitted by this Act in the licensee's place of business,
10unless the Director finds that such conduct will conceal or
11facilitate evasion or violation of this Act. The Director's
12approval shall be in writing and shall describe the other
13businesses which may be conducted in the licensed office.
14    Section 70. Prohibitions.
15    (a) No licensee shall take any power of attorney in
16connection with an income share agreement.
17    (b) A consumer may not authorize any person to confess
18judgment on a claim arising out of an income share agreement.
19An authorization in violation of this Section is void.
20    Section 75. Pledge or sale of income share agreement.
21    (a) No licensee or other person shall pledge, hypothecate,
22or sell an income share agreement entered into under this Act
23by a consumer except to another licensee under this Act, a



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1bank, savings bank, savings and loan association, or credit
2union created under the laws of this State or the United
3States, or to other persons or entities authorized by the
4Director in writing. Sales of such notes by licensees under
5this Act or other persons shall be made by agreement in writing
6and shall authorize the Director to examine the income share
7agreement documents so hypothecated, pledged, or sold.
8    (b) A consumer may pay the original ISA provider until he
9or she receives notification of assignment of rights to
10payment pursuant to an income share agreement and that payment
11is to be made to the assignee. A notification that does not
12reasonably identify the rights assigned is ineffective. If
13requested by the consumer, the assignee shall seasonably
14furnish reasonable proof that the assignment has been made and
15unless the proof is furnished the consumer may pay the
16original ISA provider.
17    (c) An assignee of the rights of the ISA provider is
18subject to all claims and defenses of the consumer against the
19ISA provider arising from the income share agreement. A claim
20or defense of a consumer may be asserted against the assignee
21under this Section only if the consumer has made a good faith
22attempt to obtain satisfaction from the ISA provider with
23respect to the claim or defense and then only to the extent of
24the amount owing to the assignee with respect to the ISA
25provider or defense that arose at the time the assignee has
26notice of the claim or defense. Notice of the claim or defense



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1may be given before the good faith attempt specified in this
2subsection. Oral notice is effective unless the assignee
3requests written confirmation when or promptly after oral
4notice is given and the consumer fails to give the assignee
5written confirmation within the period of time, not less than
614 days, stated to the consumer when written confirmation is
7requested. An agreement may not limit or waive the claims or
8defenses of a consumer under this Section.
9    Section 80. Monthly payment affordability.
10    (a) Maximum income percentage. Each income share agreement
11shall specify the ISA percentage applicable to the income
12share agreement and shall comply with the following:
13        (1) The income share agreement may not include an ISA
14    percentage in excess of 20%, or if an ISA defines a series
15    of fixed amounts based on the consumer's income, such
16    amounts shall not equate to more than 20% of the
17    consumer's income.
18        (2) A licensee may not enter into an educational ISA
19    with a consumer if the consumer would be committing more
20    than 20% of his or her income, inclusive of other
21    educational ISA and education loans known at the time. The
22    licensee must confirm a consumer's educational ISA and
23    education loan liabilities through a verifiable
24    third-party source. At a minimum, the licensee must
25    confirm such liabilities using information maintained by a



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1    nationwide consumer reporting agency, as defined by 15
2    U.S.C. 1681a(f), and doing so is sufficient for meeting
3    the requirement in this paragraph; however, nothing in
4    this paragraph shall prohibit a licensee from using other
5    sources to provide additional verification. For the
6    purposes of calculating the portion of a student's future
7    income that would be consumed by the educational ISA for
8    which the student has applied and other educational ISAs
9    and education loans known at the time, the ISA provider
10    shall calculate the aggregate future burden of all such
11    obligations, including the educational ISA for which the
12    student is applying, at hypothetical future income levels
13    ranging from the income threshold of the ISA for which the
14    student has applied up to $70,000, with such number
15    adjusting for inflation each year, in increments of
16    $10,000. The terms of the educational ISA for which the
17    student has applied cannot cause the student's aggregate
18    future burden to exceed the limit in subsection (b) at any
19    of the income increments stated in this paragraph. For the
20    purpose of calculating the percentage burden of an
21    educational ISA at a given future income level, the ISA
22    provider shall use the income percentage that would be
23    applicable for the ISA at such income level, or the fixed
24    amount divided by the income level, where applicable. For
25    the purpose of calculating the percentage burden of an
26    educational loan at a given future income level, the ISA



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1    provider shall divide the annual payment obligation by
2    income level using the most affordable payment option that
3    would be available to the student at such income level
4    under such loan. For students enrolled in a Title IV
5    program, as part of this analysis the ISA provider shall
6    assume a federal loan balance equal to the larger of (1)
7    the student's existing federal loan balance, and (2) the
8    maximum amount the student is eligible to borrow under
9    Federal Direct Stafford Loans for his or her status,
10    dependent or independent.
11    (b) Protections during periods of low earnings. The income
12share agreement must state that when a consumer has income
13that is equal to or below the income threshold set forth in the
14income share agreement that the consumer's payment obligation
15is zero dollars. The income threshold at the time of
16origination must be high enough such that the consumer's gross
17income minus any income share agreement obligation must leave
18the consumer with gross income equal to at least 200% of the
19federal poverty guidelines for a single person.
20    (c) Required payment relief pauses. An income share
21agreement must offer at least 3 months of voluntary payment
22relief pauses, so long as a consumer's current income at the
23time of requesting the payment relief pause is equal to or less
24than 400% of the federal poverty guidelines for a single
25individual, for every 30 income-determined payments required
26under the income share agreement.



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1    Section 85. Maximum effective annual percentage rate. An
2income share agreement must specify that the maximum amount
3that a consumer could be required to pay based on the
4consumer's income under the income share agreement will not
5result in a consumer ever being required to pay an effective
6annual percentage rate that is greater than 36%. If at any time
7the consumer makes payment of an amount that would cause the
8limit in this Section to apply, all further obligations under
9the income share agreement shall cease.
10    Section 90. Limits on duration of income share agreements.
11    (a) An income share agreement shall specify that the
12maximum number of payments may not exceed 240 monthly
14    (b) An income share agreement shall specify that the ISA
15duration may not exceed 360 months, except in the case of a
16payment relief pause requested by the consumer.
17    Section 95. Risk sharing.
18    (a) A licensee may not contract for income share agreement
19terms that would result in a consumer having income that is
20less than or equal to 300% of the federal poverty guidelines
21for a single person for the ISA duration being required to make
22a stream of ISA payments that would yield an effective APR
23greater than 8%, or the high yield of the 10-year United States



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1Constant Maturity Treasury Notes auctioned at the final
2auction held before the current calendar year in which an ISA
3offering is made plus 7%, whichever is greater.
4    (b) A licensee may not contract for income share agreement
5terms that would result in a consumer having income that is
6less than or equal to 400% of the federal poverty guidelines
7for a single person for the ISA duration being required to make
8a stream of ISA payments that would yield an effective APR
9greater than 12%, or the high yield of the 10-year United
10States Constant Maturity Treasury Notes auctioned at the final
11auction held before the current calendar year in which an ISA
12offering is made plus 11%, whichever is greater.
13    (c) A licensee may not contract for income share agreement
14terms that would result in a consumer having income that is
15less than or equal to 500% of the federal poverty guidelines
16for a single person for the ISA duration being required to make
17a stream of ISA payments that would yield an effective APR
18greater than 15%, or the high yield of the 10-year United
19States Constant Maturity Treasury Notes auctioned at the final
20auction held before the current calendar year in which an ISA
21offering is made plus 14%, whichever is greater.
22    (d) A licensee may not contract for income share agreement
23terms that would result in a consumer having income that is
24less than or equal to 600% of the federal poverty guidelines
25for a single person for the ISA duration being required to make
26a stream of ISA payments that would yield an effective APR



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1greater than 18%, or the high yield of the 10-year United
2States Constant Maturity Treasury Notes auctioned at the final
3auction held before the current calendar year in which an ISA
4offering is made plus 17%, whichever is greater.
5    (e) For the purposes of determining the various tiers set
6forth in this Section, a licensee shall calculate the
7effective APR by determining the various federal poverty
8guidelines tiers at the time the consumer's income share
9agreement is originated and assuming such amounts are fixed
10through the ISA duration.
11    (f) For the purposes of determining ISA duration in this
12Section: in the case of an educational ISA, a licensee shall
13assume the ISA duration started after a period equal to the
14expected length of the program for which a consumer is
15enrolling; or in the case of a non-educational ISA, a licensee
16shall assume the ISA duration started immediately.
17    Section 100. Limits on covered income. An income share
18agreement must specify the definition of income to be used for
19the purposes of calculating a consumer's payment obligation
20under the income share agreement. No income share agreement
21shall include any of the following in its definition of
23        (1) The income of the consumer's children or
24    dependents.
25        (2) Any amount paid by the consumer under Title II or



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1    XVI of the Social Security Act, 42 U.S.C. 401 et seq., 42
2    U.S.C. 1381 et seq.; or under a State program funded by
3    Title IV of the Social Security Act, 42 U.S.C. 601 et seq.
4        (3) Individual retirement account distributions.
5        (4) Pensions and annuities.
6        (5) Social security benefits.
7        (6) Other sources of federal or State aid provided to
8    individuals through any of the following:
9            (A) unemployment programs;
10            (B) disaster relief programs;
11            (C) Medicare or Medicaid benefits;
12            (D) benefits received through the Supplemental
13        Nutrition Assistance Program;
14            (E) economic impact payments; or
15            (F) other income excluded from the definition of
16        taxable income set forth by the Internal Revenue
17        Service.
18    Section 105. Fees permitted. In addition to the ISA
19percentage permitted by this Act, a licensee may contract for
20and receive the following additional charges:
21        (1) Official fees and taxes.
22        (2) A fee, which shall not exceed the sum of $25, for
23    failure to provide documentation to the licensee for the
24    confirmation and reconciliation of the consumer's income.
25        (3) A fee for processing any forms to confirm the



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1    consumer's income with the United States Internal Revenue
2    Service or a State department of revenue or taxation on a
3    dollar-for-dollar, pass-through basis of the expenses
4    incurred by the licensee.
5        (4) A late payment fee in an amount of $20 or 5% of the
6    late payment, whichever is greater, for any payment that
7    is more than 15 days past due; no late payment fee may be
8    charged more than once per late payment.
9        (5) An amount not exceeding $25, plus any actual
10    expenses incurred in connection with a check or draft that
11    is not honored because of insufficient or uncollected
12    funds or because no such account exists.
13        (6) Charges for other benefits conferred on the
14    consumer, if the benefits are of value to her or him and
15    the charges are reasonable in relation to the benefits,
16    are of a type that is not for credit, and are authorized as
17    permissible additional charges by rule adopted by the
18    Department.
19        (7) Before or after default in payment of a scheduled
20    payment of an income share agreement, the parties to the
21    income share agreement may agree in writing to a deferral
22    of all or part of one or more unpaid payments and the
23    licensee may make, at the time of deferral and receive at
24    that time or at any time thereafter, a deferral charge not
25    exceeding an amount equal to 10% of the missed payment.



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1    Section 110. Restriction on security interest. Under no
2circumstances shall a licensee take a security interest in any
3collateral in connection with an income share agreement.
4    Section 115. Discharge of obligations.
5    (a) All further obligations under an income share
6agreement, except those accruing before the date of
7determination by a relevant governmental agency, shall
8terminate if the consumer is deemed totally and permanently
9disabled by the applicable governmental agency.
10    (b) All further obligations under the income share
11agreement, except those accruing before the consumer's death,
12shall terminate upon the death of the consumer.
13    Section 120. Prohibition on co-signers. No income share
14agreement shall include or permit the use of a co-signer in
15connection with any obligation related to an income share
17    Section 125. Limitation on acceleration.
18    (a) Licensees may not attempt to accelerate or otherwise
19liquidate a future payment stream under an income share
21    (b) Notwithstanding subsection (a), nothing in this
22Section shall prevent a licensee from collecting or pursuing
23any other remedy available to the licensee for the collection



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1of amounts that were due from the consumer under an income
2share agreement but that were not paid or properly remitted to
3the licensee. These amounts may include projected future
4payments as provided in the income share agreement if the
5consumer does not provide contractually obligated
6documentation of income.
7    (c) Notwithstanding subsection (a), an income share
8agreement may contain a provision that allows a consumer to
9terminate his or her income share agreement before the events
10terminating further obligations under the income share
11agreement. The early termination mechanisms, such as total
12caps on payments due to the licensee or other rights to
13partially or fully terminate further obligations under the
14income share agreement, must be optional to the consumer and
15within the consumer's control. In such circumstances, such
16mechanisms will not be deemed a form of acceleration, early
17termination penalty, or prepayment penalty.
18    Section 130. No assignment of wages.
19    (a) A licensee may not take an assignment of earnings of
20the consumer for payment or as security for payment of a debt
21arising out of an income share agreement. An assignment of
22earnings in violation of this Section is unenforceable by the
23assignee of the earnings and revocable by the consumer. This
24Section does not prohibit a consumer from authorizing
25deductions from his or her earnings in favor of a licensee if



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1the authorization is revocable, the consumer is given a
2complete copy of the writing evidencing the authorization at
3the time the consumer signs it, and the writing contains on its
4face a conspicuous notice of the consumer's right to revoke
5the authorization.
6    (b) A sale of unpaid earnings made in consideration of the
7payment of money to or for the account of the seller of the
8earnings is deemed to be a loan to the seller secured by an
9assignment of earnings.
10    Section 135. Limitations on garnishment.
11    (a) Before entry of judgment in an action against a
12consumer for a payment arising from an income share agreement,
13a licensee may not attach unpaid earnings of the consumer by
14garnishment or like proceedings.
15    (b) The maximum part of the aggregate disposable earnings
16of an individual for any workweek which is subjected to
17garnishment to enforce payment of a judgment arising from an
18income share agreement may not exceed the lesser of:
19        (1) 25% of the individual's disposable earnings for
20    that week; or
21        (2) the amount by which the individual's disposable
22    earnings for that week exceed 40 times the federal minimum
23    hourly wage prescribed by Section 6(a)(1) of the Fair
24    Labor Standards Act of 1938, 29 U.S.C. 206(a)(1), in
25    effect at the time the earnings are payable.



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1    In case of earnings for a pay period other than a week, the
2Department shall prescribe by rule a multiple of the federal
3minimum hourly wage equivalent to the amount set forth in
4paragraph (2).
5    (c) No court may make, execute, or enforce an order or
6process in violation of this Section.
7    (d) At any time after entry of a judgment in favor of a
8licensee in an action against a consumer for a payment arising
9from an income share agreement, the consumer may file with the
10court a verified application for an order exempting from
11garnishment pursuant to that judgment, for an appropriate
12period of time, a greater portion or all of the consumer's
13aggregate disposable earnings for a workweek or other
14applicable pay period than is provided for in subsection (b).
15The consumer shall in the application designate the portion of
16earnings not exempt from garnishment under this Section and
17other law, designate the period of time for which the
18additional exemption is sought, describe the judgment with
19respect to which the application is made, and state that the
20designated portion as well as his or her earnings that are
21exempt by law are necessary for the maintenance of the
22consumer or a family supported wholly or partly by the
23earnings. Upon filing a sufficient application under this
24subsection, the court may issue any temporary order necessary
25under the circumstances to stay enforcement of the judgment by
26garnishment, shall set a hearing on the application not less



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1than 5 nor more than 10 days after the date of filing of the
2application, and shall cause notice of the application and the
3hearing date to be served on the judgment creditor or the
4creditor's attorney of record. At the hearing, if it appears
5to the court that all or any portion of the earnings sought to
6be additionally exempt are necessary for the maintenance of
7the consumer or a family supported wholly or partly by the
8earnings of the consumer for all or any part of the time
9requested in the application, the court shall issue an order
10granting the application to that extent; otherwise it shall
11deny the application. The order is subject to modification or
12vacation upon further application of any party to it upon a
13showing of changed circumstances after a hearing upon notice
14to all interested parties.
15    (e) An employer may not discharge an employee because a
16licensee has subjected or attempted to subject unpaid earnings
17of the employee to garnishment or like proceedings directed to
18the employer for the purpose of paying a judgment arising from
19an income share agreement.
20    Section 140. Use of multiple agreements. A licensee may
21not use multiple agreements with respect to a single income
22share agreement with intent to violate any limitations of this
24    Section 145. Required disclosures.



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1    (a) A licensee shall disclose the following information to
2each consumer, clearly and conspicuously, in a form that the
3consumer can keep at the time the transaction is consummated:
4        (1) The date of the contract.
5        (2) The dollar amount of the amount financed.
6        (3) The ISA percentage, expressed as a percentage, and
7    an explanation of whether the ISA percentage is fixed or
8    will vary; and any limitation on the ISA percentage
9    adjustments or lack of limitations if the ISA percentage
10    will change after consummation of the income share
11    agreement. The ISA percentage shall be rounded to the
12    nearest one-hundredth of 1% if the ISA percentage is not a
13    whole number.
14        (4) The maximum number of payments expressed as a
15    whole number.
16        (5) The maximum duration expressed as a whole number
17    of the period of time.
18        (6) The income threshold expressed as a dollar amount
19    and a statement that payments will only be required during
20    periods when the consumer's income is equal to or exceeds
21    the income threshold.
22        (7) An itemization of the amount financed; if the ISA
23    provider is a seller of goods or services, then the amount
24    of any down payment and any additional fees or costs shall
25    be itemized.
26        (8) The definition of income to be used for the



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1    purposes of calculating the consumer's obligations under
2    the income share agreement.
3        (9) A description of the terms under which the
4    obligations of the consumer under the income share
5    agreement will be extinguished before the full ISA
6    duration.
7        (10) A payment schedule that shows the date on which
8    the first payment will be due and reflecting each date
9    thereafter during the ISA duration that a payment may be
10    due.
11        (11) An itemization of any permissible fees associated
12    with the ISA.
13        (12) A description of the methods used by the ISA
14    provider to engage in a process of reconciliation and
15    verification to determine if the consumer's payments are
16    more than, equal to, or less than the payments owed by the
17    consumer under his or her income share agreement; this
18    description shall include the following:
19                (i) a description of the frequency or triggers
20            for the commencement of the income verification
21            process;
22                (ii) a description of the requirements and
23            timing of the process in which the consumer must
24            participate in order for the ISA provider to
25            verify the consumer's income; and
26                (iii) a description of any records or forms,



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1            including tax records, that the consumer may be
2            required to execute or submit.
3        (13) The name and address of the ISA provider.
4        (14) A table displaying the dollar amounts of each
5    payment, the number of payments, the effective annual
6    percentage rate, and the sum total of all payments that a
7    consumer would be required to pay under the income share
8    agreement at a range of annual income levels based on the
9    ISA duration. The comparison table shall include a
10    statement that "This Comparison Table is for illustrative
11    purposes only and may not reflect the amounts that you are
12    likely to pay under this income share agreement. This
13    table assumes you have the same income over the entire
14    term of your income share agreement. It does not take into
15    account changes in income. Your income will likely change
16    over time. This table does not represent the income or
17    range of incomes that you are likely to earn in the
18    future.". In computing the APR, the ISA provider shall use
19    the amount financed and may assume that the income share
20    agreement will be disbursed in the amount and with the
21    disbursement schedule that it reasonably expects to follow
22    for such income share agreement and that payments would
23    commence on the date set forth in the income share
24    agreement. The income used in this disclosure shall
25    include, at minimum, the obligations at the following
26    incomes:



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1                (i) no income;
2                (ii) income equal to the annual equivalent of
3            the income threshold;
4                (iii) various income scenarios with at least
5            calculations at annual incomes of $40,000,
6            $60,000, $80,000, $100,000, $125,000, $150,000,
7            $175,000, and $200,000; and
8                (iv) if known by the ISA provider, the
9            consumer's current income.
10        (15) A statement that the income share agreement is
11    not a fixed payment installment loan and that the amount
12    the consumer will be required to pay under the income
13    share agreement:
14                (i) may be more or less than the amount
15            financed by the ISA provider; and
16                (ii) will vary in proportion with the
17            consumer's income.
18    (b) The disclosures required by this Section shall be
19grouped together and segregated from all other information.
20    (c) The disclosures required by this Section may be
21provided to a consumer in electronic form, subject to
22compliance with the consumer's consent and other applicable
23provisions of the Electronic Signatures in Global and National
24Commerce Act, 15 U.S.C. 7001 et seq., and applicable State
26    (d) If model documents are established pursuant to any



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1federal law covering income share agreements, compliance with
2those forms shall be considered compliance with this Act with
3respect to the disclosure requirements contained in this Act.
4    Section 150. Early completion. An income share agreement
5shall specify the terms and conditions by which the consumer
6may extinguish his or her obligations under the income share
7agreement before the end of the income share agreement's
8duration. An income share agreement may include any method to
9determine the early completion payment; however, a consumer
10may always cancel an income share agreement by making
11aggregate payments, excluding payments to fees, equal to the
12ISA payment cap. The consumer is entitled to this early
13completion regardless of whether the consumer makes this early
14completion payment by making regularly scheduled payments or
15by making a single lump sum payment in the amount of the early
16completion payment.
17    Section 155. Assumption of increase in future income.
18    (a) If a consumer fails to provide income documentation as
19reasonably required by an income share agreement, a licensee
20may assign an amount of income to the consumer and compute the
21consumer's monthly payment amount by any of the following
22methods, to the extent disclosed in the income share
24        (1) assigning an income amount obtained from a



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1    reasonably reliable third party or a credit reporting
2    agency;
3        (2) if the consumer previously provided income
4    documentation or has had an income assigned in the prior
5    12-month period that has increased by an amount not to
6    exceed 10%, but such increase may not be applied more than
7    once per 12-month period;
8        (3) contacting the consumer's employer, or any person
9    or entity reasonably believed to represent the consumer's
10    employer, to obtain, verify, or update the consumer's
11    income information;
12        (4) contacting the Department of Revenue or the
13    Internal Revenue Service to obtain the most recent
14    information available about the student's income; or
15        (5) for licensees providing educational income share
16    agreements, assigning a reasonable qualified income based
17    on the incomes of:
18            (A) the nearest reasonably relevant quantile of
19        income for individuals working in the profession for
20        which the consumer's educational program was intended
21        to prepare the participant, as determined by
22        information published by the Bureau of Labor
23        Statistics or other reasonably reliable publicly
24        available data sources; or
25            (B) the nearest reasonably relevant quantile of
26        income of consumers who attended the same or a



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1        reasonably comparable covered educational program or
2        course of study, as determined by information
3        published by the Bureau of Labor Statistics or other
4        reasonably reliable publicly available data sources.
5    (b) If a licensee assigns an income to a consumer's income
6share agreement, it shall:
7        (1) notify the consumer in the monthly billing
8    statement, and in each billing statement thereafter while
9    the assigned income remains applicable to the consumer's
10    income share agreement, that income has been assigned and
11    of the consumer's rights under this Section;
12        (2) if the consumer does provide income information as
13    reasonably required by the income share agreement within
14    one year of the date on which the licensee notified the
15    consumer that assigned income will be applied to the
16    income share agreement, then, within 15 days after the
17    licensee's receipt of such information, the licensee shall
18    update each prior instance in which assigned income was
19    applied using the income information provided by the
20    consumer; and
21        (3) if the consumer provides income information more
22    than one year after the licensee first assigned income to
23    the consumer's income share agreement, then the licensee
24    may, but is not obligated to, update each prior instance
25    in which assigned income was applied using the income
26    information provided by the consumer.



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1    (c) A licensee that assigns income to an income share
2agreement shall retain all applicable records relating to the
3method and data sources used to make such estimation for 3
4years after the end of that income share agreement.
5    Section 160. Receipts; statements of account; evidence of
7    (a) The licensee shall deliver or mail to the consumer,
8without request, a written receipt for each payment made
9pursuant to an income share agreement. A periodic statement
10showing a payment received by mail complies with this
12    (b) Upon written request of a consumer, the licensee shall
13provide a written statement of the dates and amounts of
14payments made within the 12 months preceding the month in
15which the request is received. The statement shall be provided
16without charge once during each year of the term of the
17obligation. If additional statements are requested, the
18licensee may charge an amount not to exceed $5.00 for each
19additional statement.
20    (c) After a consumer has fulfilled all obligations with
21respect to an income share agreement, the licensee, upon
22request of the consumer, shall deliver or mail to the consumer
23written evidence acknowledging termination of all obligations
24with respect to the income share agreement.



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1    Section 165. Advertising. A licensee may not advertise,
2print, display, publish, distribute, broadcast, or cause to be
3advertised, printed, displayed, published, distributed, or
4broadcast in any manner any statement or representation that
5is false, deceptive, or misleading.
6    Section 170. Penalties.
7    (a) A person who engages in business as a licensee without
8the license required by this Act commits a Class 4 felony.
9    (b) The consumer, before the expiration of 2 years after
10the date of his or her last scheduled payment, may recover such
11reasonable attorney's fees and court costs as a court may
12assess. A bona fide error by a licensee in calculating
13charges, fees, or rebates is not a violation if the licensee
14corrects the error within a reasonable time after discovery.
15    (c) No provision of this Section imposing any liability
16shall apply to any act done or omitted in conformity with any
17rule or written interpretation of a rule by the Division of
18Financial Institutions of the Department of Financial and
19Professional Regulation, notwithstanding that after such act
20or omission has occurred, such rule or interpretation is
21amended, rescinded, or determined by judicial or other
22authority to be invalid for any reason. All interpretations
23must be written and signed by the Department's chief counsel
24and approved by the Director.
25    (d) Notwithstanding any other provision of this Section,



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1if any person who does not have a license issued under this Act
2makes an income share agreement to an Illinois consumer, then
3the loan shall be null and void and the person who made the
4income share agreement shall have no right to collect,
5receive, or retain any amounts related to the income share
7    Section 175. Cease and desist.
8    (a) The Director may issue a cease and desist order to any
9licensee or another person doing business without a required
10license, when in the opinion of the Director, the licensee or
11the other person is violating or is about to violate any
12provision of this Act or any rule or requirement imposed in
13writing by the Department as a condition of granting any
14authorization permitted by this Act.
15    (b) The Director may issue a cease and desist order before
16a hearing.
17    (c) The Director shall serve notice of his or her action,
18designated as a cease and desist order made pursuant to this
19Section, including a statement of the reasons for the action,
20either personally or by certified mail, return receipt
21requested. Service by certified mail shall be deemed completed
22when the notice is deposited in the U.S. mail.
23    (d) Within 15 days after service of the cease and desist
24order, the licensee or the other person may request, in
25writing, a hearing.



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1    (e) The Director shall schedule a hearing within 30 days
2after the request for a hearing unless otherwise agreed to by
3the parties.
4    (f) The cost for the administrative hearing shall be set
5by rule.
6    (g) If it is determined that the Director had the
7authority to issue the cease and desist order, he or she may
8issue such orders as may be reasonably necessary to correct,
9eliminate, or remedy such conduct.
10    (h) The powers vested in the Director by this Section are
11additional to all other powers and remedies vested in the
12Director by law, and nothing in this Section shall be
13construed as requiring that the Director employ the power
14conferred in this Section instead of or as a condition
15precedent to the exercise of any other power or remedy vested
16in the Director.
17    (i) The Department shall have the authority to adopt rules
18for the administration of this Section.
19    Section 180. Civil action. A claim of violation of this
20Act may be asserted in a civil action.
21    Section 185. Application of Act.
22    (a) This Act does not apply to any person, partnership,
23association, limited liability company, or corporation doing
24business under and as permitted by any law of this State or the



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1United States relating to banks, savings and loan
2associations, savings banks, or credit unions. This Act does
3not apply to any income share agreements or the like made with
4business or commercial entities.
5    (b) During the first 90 days after the effective date of
6this Act, any person who has applied for a license under this
7Act or filed written notice of intention to apply for a license
8with the Director and whose application has not been denied,
9shall be subject to all provisions of this Act and may make
10income share agreements as if he or she were a licensee under
11this Act.
12    (c) This Act shall not apply to any contractor transaction
13made before the effective date of this Act.
14    Section 190. Rules. The Department may adopt and enforce
15such reasonable rules, directions, orders, decisions, and
16findings as the execution and enforcement of the provisions of
17this Act require and that are not inconsistent with this Act.
18In addition, the Department may adopt rules in connection with
19the activities of licensees that are necessary and appropriate
20for the protection of consumers in this State. All rules and
21directions of a general character shall be sent electronically
22to all licensees.
23    Section 195. Judicial review. All final administrative
24decisions of the Department under this Act shall be subject to



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1judicial review pursuant to the provisions of the
2Administrative Review Law and any rules adopted pursuant to
3the Administrative Review Law.
4    Section 200. Injunction; civil penalties; costs. If it
5appears to the Director that a person or any entity has
6committed or is about to commit a violation of this Act, a rule
7adopted under this Act, or an order of the Director, the
8Director may apply to the circuit court for an order enjoining
9the person or entity from violating or continuing to violate
10this Act, the rule, or order and for injunctive or other relief
11that the nature of the case may require and may, in addition,
12request the court to assess a civil penalty up to $1,000 along
13with costs and attorney's fees.
14    Section 205. Adjustment of dollar amounts.
15    (a) From time to time the dollar amounts in this Act
16designated as subject to change shall change, as provided in
17this Section, according to and to the extent of changes in the
19    (b) The index for December of the year preceding the year
20in which this Act becomes effective is the reference base
22    (c) The designated dollar amounts shall change on July 1
23of each even-numbered year if the percentage of change,
24calculated to the nearest whole percentage point, between the



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1index and the end of the preceding year and the reference base
2index is 10% or more, but:
3        (1) the portion of the percentage change in the index
4    in excess of a multiple of 10% shall be disregarded and the
5    dollar amounts shall change only in multiples of 10% of
6    the amounts provided in this Act on the date of enactment;
7    and
8        (2) the dollar amounts shall not change if the amounts
9    required by this Section are those currently in effect
10    pursuant to this Act as a result of earlier application of
11    this Section.
12    (d) If the index is revised, the percentage of change
13pursuant to this Section shall be calculated on the basis of
14the revised index. If a revision of the index changes the
15reference base index, a revised reference base index shall be
16determined by multiplying the reference base index then
17applicable by the rebasing factor furnished by the Bureau of
18Labor Statistics. If the index is superseded, the index
19referred to in this Section is the one represented by the
20Bureau of Labor Statistics as reflecting most accurately
21changes in the purchasing power of the dollar for consumers.
22    (e) The Department shall adopt a rule setting forth, on or
23before April 30 of each year in which dollar amounts are to
24change, the changes in dollar amounts required by this
25Section. As soon as practical after the changes occur, the
26Department shall adopt a rule setting forth the changes in the



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1index required by subsection (d), including, if applicable,
2the numerical equivalent of the reference base index under a
3revised reference base index and the designation or title of
4any index superseding the index.
5    (f) A person does not violate this Act with respect to a
6transaction otherwise complying with this Act if he or she
7relies on dollar amounts either determined according to
8subsection (c) or appearing in the last rule of the Department
9announcing the then-current dollar amounts.
10    Section 210. Construction against implicit authority. This
11Act is a general act intended as a unified coverage of its
12subject matter; no part of this Act shall be construed to be
13impliedly repealed by subsequent legislation if that
14construction can reasonably be avoided.
15    Section 215. Application of other Acts. Income share
16agreements and licensees are subject to the Know Before You
17Owe Private Education Loan Act and the Predatory Loan
18Prevention Act and shall comply with their requirements and
19any rules adopted by the Department of Financial and
20Professional Regulation pursuant to those Acts.
21    Section 220. Severability. The provisions of this Act are
22severable under Section 1.31 of the Statute on Statutes.



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1    Section 999. Effective date. This Act takes effect upon
2becoming law.".