The Massachusetts State Senate passed two bills today designed to modernize our debt collection laws and provide important protections for those struggling with debt from unscrupulous debt collectors – An Act to Remedy Unlicensed Debt Collection Activity, which I sponsored, and An Act Further Regulating Debt Collection, which was sponsored by Senator Pat Jehlen (D-Somerville) and which I was proud to co-sponsor.
According to a May 14th report from the Administrative Offices of the US Courts, bankruptcy filings rose 30% in the past 12 months, with more than 22,000 Massachusetts businesses or individuals filing for bankruptcy.
Even in these difficult economic times, the reality is that most Americans pay their bills on time. Most folks who do fall behind are current with their payments until some sort of catastrophe such as illness, unemployment or disability. These people, and their families, deserve to be treated fairly.
No one wants to be in debt. When people fall on hard financial times, it’s generally because of circumstances out of their control, like those I’ve already mentioned. However, right now, financially-distressed families struggling with debt are susceptible to unfair, abusive tactics at the hands of debt collection agencies. Seniors, people with lower incomes and the disabled are particularly at risk.
The bill I filed, An Act to Remedy Unlicensed Debt Collection Activity, is one step towards preventing these unscrupulous tactics. By specifying that unlicensed debt collectors shall be liable to victims for restitution, the act ensures that victims of unlicensed debt collection are assured of a remedy and that violators will not profit from their unlicensed debt collection activity.
(A second bill I’ve filed, An Act to Regulate Debt Collection Activity, would go further to protect consumers from abusive practices; that bill is currently before the Judiciary Committee.)
The second bill that passed today, Senator Jehlen’s An Act Further Regulating Debt Collection, will update and modernize our general laws regulating debt collection by increasing the value of property, earnings and savings exempt from seizure during debt collection. Because our current debt exemptions are decades out of date, families struggling with debt are often left with almost nothing to live on – making it difficult for them to maintain a job to continue paying their debt. This bill would deal with the serious unintended consequences of the current law.
Key provisions of the bill including updating the law to allow a debtor to keep $2500 in a bank account (up from $500) at any one time – a provision of particular importance for seniors, who often receive their Social Security checks directly deposited into their bank account. It would also help debtors continue to be able to work by including child care in the definition of basic necessities and increasing the value of an exempt car from $700 to $7500.
In addition, it would increase a number of other living expense exemptions, such as raising the rent exemption from $200 to $2500 per month and increasing the utility allowance from $75 to $500 for month, so that no family has to choose between accumulating more debt and paying for heat.
As I’ve met and spoken with people throughout the district, I’ve heard from so many who are struggling to make ends meet or to find work at all. These two bills are exactly the sort of relief people need from economic woes, and I look forward to working with my colleagues toward its passage. As always, if you have any questions or concerns about this issue, or any other, please feel free to contact my State House office at firstname.lastname@example.org, or by calling us at 617-722-1120.