Consumer Group Urges States to Enact Protections from Debt Collectors

An old adage advises that "one man's pain is another man's gain." As consumers nationwide struggle to recover financially from the Great Recession, this adage is also a truism. Across the country, creditors and debt collectors are taking advantage of archaic laws to extract payments that satisfy court judgments for consumer debts.

Depending upon a given state’s exemption laws, garnished wages are not the only option available to creditors. Many state laws have left loop holes that allow bank accounts, autos, or even household goods to be seized. Now a new research report by the National Consumer Law Center (NCLC) urges states to protect consumer wages and property from aggressive debt collection by creditors and debt buyers. The report also comes at a time when many consumers’ finances remain fragile.

The report — "No Fresh Start: How States Let Debt Collectors Push Families into Poverty" — reveals how these outdated state laws have failed to keep pace with the nation’s economy and its technology. Laws that remain a relic of yesteryear include a Delaware exemption that protects a sewing machine owned and used by a seamstress; or a Vermont law that exempts one cow, two goats and three swarms of bees from being taken to satisfy a judgment. Other exemption laws that protect wages or other personal property have not changed to reflect inflation, protecting less than $500 in personal property in some states.

“It’s a travesty when outdated state laws protect farm animals and their feed but not a living wage, a working car, and a bare bones checking account,” said Robert Hobbs, NCLC deputy director. “This report is a wake-up call for states to update their exempt property laws and stop putting millions of families at risk.”

The inadequacies in state exemption laws only make matters worse for consumers with judgments against them for debts not owed, already paid, or others too old, or the result of identity theft. When creditors and debt buyers obtain wrongful judgments against consumers, they are then able to take advantage of the obsolete exemption laws to extract money from consumers who never owed them in the first place.

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http://washingtoninformer.com/news/2013/oct/17/consumer-group-urges-protections-debt-collectors/