Mass. Senate Passes Debt Collection Fairness Act, Protecting Struggling Families

April 3, 2024 — Press Release

Bill limits wages that can be seized and ensures no one can be imprisoned for consumer debt

BOSTON – Last week, the Massachusetts Senate unanimously passed the Debt Collection Fairness Act, which would protect thousands of Massachusetts families struggling with debt from excessive seizure of wages and demands for outrageous interest on consumer debt. It also makes clear that no one can be imprisoned or issued an arrest warrant because they cannot pay a 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 to do just that, and thankful to Chair Rodrigues, Chair Feeney, and Senator Eldridge for their work.”

If signed into law this bill will have a particularly important impact on communities of color. In Massachusetts, 31 percent of residents in communities of color have a debt in collection, compared to 14 percent of residents in predominantly white communities. 

“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). “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.”

“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.” 

The Debt Collection Fairness Act would reduce the interest on judgments on consumer debts to 3 percent. Currently the rate is 12 percent – the highest interest rate on consumer debts in the nation. 

It also protects $975 per week from garnishment. Under current law, any income over $750 per week is subject to wage garnishment. MIT’s Living Wage Calculator indicates that a living wage for an adult with two children in Massachusetts is $2,463.20 per week.

It also ensures that no one in the Commonwealth will be imprisoned for failure to pay a consumer debt. In 2016 (the most recent data available), four Massachusetts small-claims courts issued 1,325 civil arrest warrants for alleged debtors. The use or threat of use of such warrants can terrify consumers into making payments, even if all of their income is exempt.

“The Senate took important action to provide common-sense protections for families working hard to pay their rent and put food on the table,” said Michael Best, senior attorney for the National Law Center. “We’re grateful to Senate leadership for working to build consensus for its passage and to Sen. Eldridge for sponsoring the bill and speaking out for fairness and equity.”

“After working on this bill for over eight years, Greater Boston Legal Services is thrilled to see that, if this bill is signed into law, low-income consumers will no longer have to pay high interest rates on consumer debt judgments and that more of their hard-earned wages will be protected from garnishment,” said Nadine Cohen, an attorney with Greater Boston Legal Services.  “We are grateful to the Senate for passing these important consumer protections.”

Related Resource

Issue Brief: Debt Collection Fairness Act 2024