New Law Protects Cars, Wages, Bank Accounts from Debt Collectors

BOSTON, Jan. 7, 2011 /PRNewswire-USNewswire/ -- Creditors collecting debts in Massachusetts can no longer take assets that consumers need for work and to survive, including automobiles worth up to $7,500, bank accounts containing up to $2,500 or more than 15 percent of wages.

The new protections for consumers come from legislation passed Dec. 30 and signed into law on Jan. 7 by Gov. Deval Patrick that updates the state's outmoded and inadequate personal property exemptions. The revised exemptions, which restrict what creditors can collect to settle debt claims and in some bankruptcy proceedings, will take effect April 7.

"This new law will protect thousands of struggling Massachusetts residents, and allow them to house, feed and support their families and continue to work as they struggle to pay debts and get back on their feet after an economic setback," said Robert J. Hobbs, deputy director of the National Consumer Law Center.

In recent years, some Massachusetts consumers have been left stranded after creditors or constables seized automobiles. That was permitted by the old law, which exempted only cars worth less than $750. In the future, automobiles worth up to $7,500 will be exempt, while owners who are 60 years old or disabled will get a $15,000 car exemption.

The amended law also raises the exempt amount for monthly rent from $200 to $2,500 and for utility payments from $75 to $500, and raises the value of furniture, books, work tools and materials and cash savings exempt from collection orders.

The passage of the bill, which was sponsored by Sen. Patricia Jehlen, was the culmination of four years of effort by consumer advocates and legislators. Press coverage, including the Boston Globe's award-winning "Debtor's Hell" investigative series, helped raise public awareness of the state's outmoded personal property exemptions.

"This legislation is a victory in a long endeavor to secure protection, not for corporate America, but for the struggling families in Massachusetts who face uncertain and difficult economic times," said Alex Mitchell-Munevar, a staff attorney for Greater Boston Legal Services.

The law, which has been on the books since the colonial era, maintains some old personal property exemptions, including two cows, 12 sheep, two swine and four tons of hay, but was amended to allow each family to keep a computer and a television.

The National Consumer Law Center is a non-profit organization that seeks marketplace justice on behalf of vulnerable Americans. NCLC works with, and offers training to, thousands of legal-service, government and private attorneys, as well as community groups and organizations representing low-income and elderly families. Our legal manuals and consumer guides are standards of the field. Learn more on our Web site: http://www.nclc.org.

SOURCE National Consumer Law Center