SPRINGFIELD, Ill. (CN) - A bill that would put limits on the lawsuit lending industry has been proposed in the Illinois Senate.
The bill would cap at $40,000 the amount a lender can finance for litigants.
It would also limit the interest and fees lenders can charge to 80 percent of a legal claim.
The bill, sponsored by state Sen. Dale Righter, R-Mattoon, awaits a hearing in the Senate Judiciary Committee.
Lawsuit lenders provide consumers with upfront money to cover living or medical expenses while their civil lawsuit is being litigated.
The loans typically have high interest rates - often more than 150 percent, according to the Madison County Record - and must be paid back once the case is decided.
Travis Akin, executive director of Illinois Lawsuit Abuse Watch, told the Record that consumers are charged exorbitant interest rates and that the involvement of third parties has the effect of driving up court settlements and judgments.
Akin said borrowers sometimes end up owing lenders more than the initial settlement offer.
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