For Immediate Release - October 27, 2015

AG Healey's Office Urges Greater Protection for Consumers Against Abusive Debt Collection Practices

Testifies in Favor of The Family Financial Protection Act

BOSTON – Attorney General Maura Healey’s Office offered support today for proposed legislation that would provide greater protections and relief for consumers in Massachusetts who are pursued by abusive debt collectors.

The AG’s Office testified before the Joint Committee on Financial Services today in favor of the Family Financial Protection Act (FFPA), filed by Senator James Eldridge and Representative Paul Brodeur. The bill addresses a number of problematic practices in the debt collection industry that have resulted in consumers being sued on the basis of inaccurate information for debts they do not owe. 

“The Act provides desperately needed relief to the poorest and most vulnerable Massachusetts citizens,” said Consumer Protection Division Chief Max Weinstein who offered today’s testimony pdf format of Testimony on Family Financial Protection Act
before the committee.

When a borrower has not made a payment in months, or years, the original creditor declares the account a loss. Debt buyers purchase old debts for pennies on the dollar, and pursue payments of the entire amount supposedly due on the account.

“Debt buyers pursue consumers for debts they do not owe, or seek to collect more than a consumer actually owes. Debt buyers pursue consumers for debts that are beyond our statute of limitations. Perhaps most troubling of all, debt buyers target the most vulnerable of our fellow citizens, the elderly, the disabled, and the desperately poor,” according to the testimony.

The AG’s Office regularly receives complaints from Massachusetts residents about the debt collection industry, and since 2006, has averaged approximately 1,300 complaints annually. A recent analysis by the Urban Institute demonstrated that 23 percent of Massachusetts residents – more than one and a half million people – have a debt in the collection process on their credit report.

In just the past few years, collectors have sued hundreds of thousands of Massachusetts consumers, many of whom work minimum wage jobs, live on a fixed-income, are disabled, or are elderly. Some of them cannot appear in court to dispute the debt, and many cannot afford legal representation. 

Existing law provides a six-year statute of limitations on debts, allows consumer payments to “revive” the limitations period (leading collectors to pursue debts that are sometimes more than 10 years old), calls for the charging of 12 percent interest post-judgment, and enables judgments to be enforced for up to 20 years. 

The FFPA’s key protections would address these problems:

  • Statute of limitations: The statute of limitations would be decreased to three years on consumer debt actions.
  • Protecting consumer income: The amount of net earnings protected from wage garnishment would be increased to $720 per week. Presently, state law exempts wages of only $450 a week from garnishment by debt collectors.
  • Expiration of right to collect: The right to collect on a debt after the statute of limitations has expired would be extinguished.  
  • Period for collection on judgment: A collector would only have five years to execute and collect upon a judgment. 
  • Post-Judgment Interest Rate: Instead of allowing current 12 percent post-judgment statutory interest rate for consumer debt collection cases, the FFPA would be fixed to reflect current interest rates, which are now at historic lows. Massachusetts currently has one of the highest post-judgment rates in the country.
  • Arrest warrants: The Act would prohibit debt collectors from seeking civil arrest warrants.