Consumer Group Urges States to Enact Protections from Debt Collectors

National Consumer Law Center's 50-State Review: Horse and Buggy Laws Need Reform

Charlene Crowell | 10/17/2013, 4:02 p.m.
An old adage advises that "one man's pain is another man's gain." As consumers nationwide struggle to recover financially from ...
Charlene Crowell

· Preventing seizure and sale of the debtor’s necessary household goods; and

· Preserving at least $1200 in a bank account so that the debtor has minimal funds to pay essential costs such as rent, utilities and commuting expenses.

The report found that no state met all five standards and only two came close: Massachusetts, which recently modernized its exemption laws and Iowa.

Conversely, Alabama, Delaware, Kentucky and Michigan were rated an “F” for their exemption laws that allowed debt collectors to seize nearly everything a debtor owes. States rated “D-“ were Arkansas, Georgia, New Jersey, Pennsylvania, Utah and Wyoming.

NCLC proposes states update their laws with remedies that include protecting wages, family housing and necessary household goods and transportation; close loopholes that enable some lenders to evade exemption laws; protect retirees from destitution; and allow a reasonable amount of money on deposit. Model language for state legislation is available at www.nclc.org/mffpa.

“By updating their exemption laws, states can prevent debt buyers from reducing families to poverty. These protections also benefit society at large, by keeping workers in the work force, helping families stay together, and reducing the demand on funds for unemployment compensation and social services”, states the report.

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at charlene.crowell@responsiblelending.org.