Summary: This bill would provide important protections for consumers, particularly the elderly and disabled, from the often abusive practices of debt collectors. It also includes measures to make it easier for financially-distressed households to pay off their debts and reach financial stability.

Why This Matters: The vast majority of American households pay their bills on time.  Nearly all of those who do fall behind on their bills were current until they faced a financial catastrophe such as unemployment, illness, or disability. Financially-distressed families struggling with unmanageable debt deserve to be treated fairly.

However, increasingly brazen elements of the debt-collection industry are going after hundreds of thousands of Americans who have fallen behind on their debts, often using incredibly abusive tactics: intimidation, including talking with relatives, friends, and employers about a consumer’s debt without his permission, making harassing or abusive telephone calls, and threatening to take actions that are illegal or not intended. The wave of harassment by debt collectors is especially tough on low-income people who are often — but by no means exclusively — its targets.

What this Bill Would Do: This bill would provide greater protections for consumers in debt, including:

• Provide greater protections for consumers from abusive practices: This bill would extend to elder and disabled consumer the right to be free from collection calls and threats but allow creditors to provide them with legal notices. Additionally, it would enhance consumer’s private remedies against debt collectors by modeling them on an enhanced version of the federal remedies, and allow consumers to recover reasonable attorney fees if he or she prevails in a collection action.

• Requiring debt collectors to provide and obtain certain information: This bill would require creditors to provide debtors with basic information, such as a copy of the contract a consumer has allegedly violated if the collector is bringing suit against them, notice to a consumer if their debt has been purchased by another party, and written notice to a consumer when a debt has been paid in full. It will also require debt collectors to have basic information about debt they are collecting on so that they have the information necessary to answer consumer’s questions and disputes.
• Help financially-distressed households pay off their debts and reach financial stability: Currently, interest on judgments in Massachusetts courts is calculated at 12% per year.  That is a very high interest rate that causes an unpaid judgment to double every six years — another hurdle keeping financially distressed families from returning to financial viability and stability.  The amendment would lower the rate to the rate of one year Treasuries if the judgment is not paid after the first year, which is usually about 3%.