Senate Passes Pair of Bills to Protect Consumers from Debt Collectors

BOSTON – 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, sponsored by State Senator Jamie Eldridge (D-Acton), and An Act Further Regulating Debt Collection, sponsored by Senator Pat Jehlen (D-Somerville) and co-sponsored by Senator Eldridge.

“No one wants to be in debt — but more and more Massachusetts families find themselves in this situation as the economic crisis continues. Many of those who fall behind on payments are struggling with an unexpected event, such as a long illness, unemployment, or disability. In these difficult economic times, we need to do more to help financially-distressed families get on their feet, and these bills will help do that,” said Senator Jamie Eldridge.

An Act to Remedy Unlicensed Debt Collection Activity will help victims of unlicensed debt collectors to seek damages. 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

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 Because our current debt exemptions are decades out of date, families struggling with debt are often left with almost nothing to live on – making it difficult for them to maintain a job to continue paying their debt.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.

“At a time when Massachusetts is facing significant budget cuts across the board, this is a rare bill that will provide much needed support, at no cost to the Commonwealth, to residents who are facing extraordinary economic hardships, often through no fault of their own,” said Eldridge. “I’m pleased to have been a co-sponsor, and I hope to see it passed into law this session.”

The bills now move to the House for that body’s approval.


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