AFN Strategic Communication Director Sara Bishop, drawing on an interview with John Bouman, Executive Director of Legal Action Chicago
SEPTEMBER 2025

In August 2025, Illinois Governor JB Pritzker signed Senate Bill 1738 into law, expanding the protections for a household’s income and assets through the state’s debt collection exemptions. The purpose is to give families a stronger chance to hold onto their homes, savings, and essential property even as they pay off debt or manage through a financial crisis.

Before this reform, Illinois’ protections were very weak, joining 30 other states vying to be the weakest in the nation, receiving a “D” or worse grade from the National Consumer Law Center. In practice that meant creditors could freeze a bank account before a debtor even knew a lawsuit had been filed, leaving families unable to pay rent, buy groceries, or fill prescriptions.

“People would suddenly find their debit card declined,” said John Bouman, Executive Director of Legal Action Chicago (LAC). “They didn’t even know they’d been sued, and all of a sudden they had no money for rent, groceries, or prescriptions. It pushed them from a short-term setback into a long-term spiral.” Bouman’s colleague, Daniel Schneider, a consumer debt policy specialist, previously was a front line legal aid lawyer who encountered these client stories every day.

And homeowners were not protected either. The Illinois homestead exemption — the portion of home equity shielded from creditors — was just $15,000 for an individual, far too low to safeguard a reasonable portion of home value for the family to replace its housing or retain a significant asset for other purposes.

The consequences extended beyond individual households. Credit harm, savings and asset losses drained community vitality and wealth, disproportionately affected families of color, and increased demand on already strained public programs. Reforming these rules was about creating a real financial buffer — enough to recover from a crisis without losing the building blocks of long-term stability.

From Stalled Bill to Statewide Win

For several years, Bouman, Schneider and another colleague, Samantha Tuttle, engaged in advocacy and messaging to modernize Illinois’ exemptions law. An ambitious reform bill modeled on national best practices generated early interest, but quickly hit a wall, confronting deep opposition from entrenched interest groups, including credit industry, financial institutions, and collection attorneys. “The other side was there every day,” Bouman recalled. “They had longstanding ties to lawmakers and were used to getting their way.”

“We realized the only way to get this done was to negotiate. That meant knowing what we couldn’t compromise on and being strategic about the rest.”

The coalition LAC assembled — grassroots organizations, policy shops like the Woodstock Institute, and statewide partners, including AARP Illinois — brought both data and lived experience to the table. “It was important that we had people who could speak to the research and others who could speak to the day-to-day impact,” Bouman explained. “That combination made us harder to dismiss.”

Philanthropy kept the effort alive when momentum slowed. The Chicago Community Trust became the first funder to invest, aligning the work with its asset-building strategy and signaling legitimacy to others. “That early commitment kept us at the table,” Bouman noted. “And it told other funders this was worth backing.” Among those funders were the Steans Family Foundation, and AFN member RRF Foundation for Aging, as well as other general operating funders.

Some of that funding supported market research to sharpen the campaign’s moral framing. “When people hear ‘debt,’ they think of someone living beyond their means,” Bouman said. “But often, it’s someone who got sick, had an accident, or was caught in aggressive debt buying. That’s a systemic problem, widely seen as undeserved and unfair.” By centering medical debt and debts purchased by corporate buyers, the coalition made the issue harder to dismiss.

Grassroots engagement shifted too. Instead of relying on personal testimony — a big ask for people navigating debt — the coalition, spearheaded by Schneider, held “Know Your Rights” sessions. “Nobody had to stand up and share their story if they didn’t want to,” Bouman said. “But they left informed, connected, and ready to act.”

By early 2025, after a year of back-and-forth with opponents, the coalition had an agreed bill. SB1738 passed both chambers unanimously, delivering a package of reforms that included:

  • raising the homestead exemption to $50,000 for individuals and $100,000 for couples,
  • adding an automatic $1,000 protection for every bank account after a judgment,
  • expanding personal property protections, and
  • eliminating filing fees for defendants in small claims debt cases.

“These changes don’t erase debt,” Bouman emphasized. “But they stop people from losing the very things they need to recover — their home equity, their savings, their car to get to work. That’s a huge step forward.”

Turning Lessons into Action for Funders

Illinois’ debt crisis is far from unique. Across the country, families face rising housing, health care, and child care costs, while wages lag and safety nets shrink. In this climate, the loss of a modest home, savings account, or vehicle doesn’t just set a family back — it can dismantle years of progress and make recovery far harder.

For funders committed to building and preserving wealth, reforming asset protection laws is a high-impact strategy. It strengthens the gains of other investments in homeownership, workforce development, and financial capability; addresses racial wealth gaps; and reduces pressure on public programs. AFN’s Justice Out of Balance brief highlights how debt lawsuits — often tied to medical or consumer debt — disproportionately impact low-income households and communities of color, and offers additional strategies for philanthropic engagement.

As a companion to this blog, AFN and Legal Action Chicago have developed a practical one-page checklist for funders with actionable entry points at every stage of engagement.

Illinois’ experience shows there are ways to engage at every stage:

  • Start by building knowledge and relationships: Learn how your state’s protections compare to others. Meet with legal aid groups, consumer advocates, and grassroots organizations to hear about the local impact. Engage with court system leaders and fund research to map the volume and outcomes of debt lawsuits in your state. Pew, for example, has done strong work on this front, engaging bar leaders, court administrators and advocates in many states. Support community “Know Your Rights” events that build understanding without requiring people to share personal details. Join peer funder conversations to learn how others are navigating this work.
  • Move into power-building and advocacy support: Support a lead advocacy organization with policy expertise and grassroots credibility. Invest in message development, data with compelling illustrative examples, and sustained coalition-building. Commit to multi-year support, recognizing that most campaigns take more than one session. Build advocacy comfort within your institution, including your board, by clarifying the difference between lobbying and permissible advocacy funding.

“Even modest early investments can lay the groundwork for bigger wins,” Bouman reflected. “In Illinois, it took years of persistence, strong partnerships, and the right funders leaning in at the right time. That combination can work anywhere.”

Asset building is not only about helping families grow wealth; it is about ensuring they can keep their nest egg when crisis strikes. Illinois’ win shows that with targeted advocacy, coalition strength, and philanthropic investment, states can modernize and create fairer rules in today’s economic realities that protect household assets today and preserve opportunity for the future.