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Time to reform horse and buggy debt collector laws

Charlene Crowell | 10/23/2013, 10:04 a.m.
The report found that no state met all five standards and only two came close: Massachusetts, which recently modernized its ...

• Preserving at least $1,200 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 owns. States rated “D-“were Arkansas, Georgia, New Jersey, Pennsylvania, Utah and Wyoming.

NCLC urges states to 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,” the report states. “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.”

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