Debt Collection Fairness Act would protect wages and reduce exorbitant interest charges
BOSTON (3/28/2024)—Today, the Massachusetts Senate unanimously passed legislation to protect consumers and help keep people from being pushed into financial ruin if they are sued for financial debt. The new law would make debt collection practices fairer, protect wages, and make clear that no person can go to prison for their debt.
The Debt Collection Fairness Act— S.2713—would protect thousands of families across the state, including many in communities of color, by reducing the interest rate from 12% to 3% on judgments on consumer debt, which is often old debt that has been bought by debt collection companies for pennies on the dollar.
It would also protect at least $975 in wages per week from a person subject to wage garnishment because of a debt and ensure that no one in the Commonwealth is imprisoned for failure to pay a consumer debt. Currently only $750 per week in wages is protected from garnishment. The bill would also reduce, from 6 years to 5 years, the time in which a company can bring suit to collect a consumer debt.
“Families already in the grips of debt should not have to choose between putting food on their table and paying exorbitant costs charged by debt collection companies, or fear imprisonment,” said Senate President Karen E. Spilka (D-Ashland). “It is a story we hear too often, and far too often in our communities of color. An equitable Commonwealth is one where we have people’s backs—I’m proud that the Senate took action today to do just that, and thankful to Chair Rodrigues, Chair Feeney, and Senator Eldridge for their work.”
“In an unsettled economy, the last thing we need is unsavory debt collectors preying upon our most vulnerable population, making it difficult, if not impossible for working families to emerge from financial distress. I’m pleased the Senate has made updating archaic consumer protections laws and instilling fairness in our debt collection practices a priority in this session. With growing increases in technology, we must stay abreast of debt collection companies who remain mired in the onerous debt collection practices of the past, which are no longer relevant,” said Senator Michael J. Rodrigues, (D-Westport), Chair of the Senate Committee on Ways and Means.
“In Massachusetts, no family should have to choose between putting food on the table or making a minimum payment on a ballooning debt,” said Senator Paul Feeney, (D-Foxborough), Chair of the Joint Committee on Financial Services. “Debt collection practices can, at times, be predatory, unlawful, and designed to squeeze every dime out of middle-class and low-income families, especially with the added burden of accumulating interest and additional fees that are designed to push families over a financial cliff. The Debt Collection Fairness Act will not eliminate debt or an obligation to pay, but it will add needed guardrails to protect hard-working families from financial ruin, give a lifeline to those caught in a debt spiral, and help deliver hope to those in a vicious cycle. I thank Senator Jamie Eldridge for his advocacy, the many stakeholders and advocates who brought this bill forward, and the leadership of Chairman Michael Rodrigues and Senate President Karen Spilka for prioritizing and championing this matter in the Massachusetts State Senate.”
“I am excited that the Debt Collection Fairness Act has been passed by the Senate and I’m grateful to the Senate Chairman of the Joint Committee on Financial Services Paul Feeney for his tremendous advocacy for this important consumer protection bill,” said State Senator Jamie Eldridge (D-Marlborough), primary sponsor of the bill. “This bill aims to implement stricter regulations on debt collectors in order to prevent financial mistreatment of Massachusetts residents. It seeks to safeguard consumers’ economic security during debt repayment, prohibit excessively high interest rates, and eliminate the possibility of consumers being sent to ‘debtor’s prison’ when facing legal action. The Debt Collection Fairness Act is a critical consumer protection bill, and I’m grateful to Senate President Spilka and Senate Ways and Means Chairman Rodrigues for their support.”
This is the third time a version of the bill has passed the Senate. It now heads to the House of Representatives for consideration.
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