Bill filed by Senator Eldridge would protect consumers from erroneous, predatory debt collection practices
BOSTON—Senator Jamie Eldridge (D-Acton) voted to pass legislation he filed to address undue and deceptive practices of the debt collection industry in the Commonwealth. Senator Eldridge’s bill, S.2409, An Act Relative to Family Financial Protection, safeguards borrowers against debt collector harassment and empowers consumers to repay debt and take more control over their economic security.
“This bill puts into place better protections to help reign in many of the debt collectors most deceptive predatory practices,” said Senator Eldridge. “The debt collector industry is rampant with abusive practices that undermine the economic security of our poorest and most susceptible populations, including senior citizens, individuals with disabilities and the poor, by ensuring that they have the ability to repay debts without leaving residents on the edge of financial ruin.”
“Abusive debt collection practices often target our most vulnerable residents – our poor, disabled and elderly neighbors and loved ones. This legislation includes meaningful regulation of debt collection activities to protect consumers and ensure they are not subject to harassment or unwarranted financial burden,” said Senate Committee on Ways and Means Chair Senator Karen E. Spilka (D-Ashland).
“The 23% of Massachusetts residents with debt in collections need a path to financially recover without fraudulent lawsuits, snowballing fees, and threats of detainment,” said Margaret Miley Executive Director of the Midas Collaborative. “Most people assume that they would already have these protections in a modern economic system.”
Under the bill, consumers would be allowed to maintain a baseline level of their own income for basic expenses, which gives consumers the ability to pay off their debt without causing financial hardship. In addition, the bill also eliminates the practice of “tolling” which is the deceptive practice of collecting debt from consumers after the statute of limitations expires. Currently, if a consumer makes a payment on debt after the statute of limitation expires, the statute of limitations starts over without the consumer’s knowledge. The bill also limits attorney’s fees and interest that creditors and debt collectors can recover.
Debt collectors would also be prohibited from pursuing court judgments on debts more than 4 years old. The bill would also decrease the period of time to begin collection on a court judgment from 20 years to 5 years. It would also reduce the number of warrants for arrest issued in debt collection lawsuits.
Since 2006, the Office of the Attorney General has received approximately 1,300 complaints a year about the debt collection industry. Their findings revealed that debt collectors seek to collect money consumers do not owe or make errors about the actual amount that is owed.
The bill will be taken up for consideration by the House of Representatives.