Sen. Jehlen Files Debt Relief Bill

The Senate this week engrossed (passed for the first time) a bill to bring the state’s debt collection laws out of the 18th century and into the 21st. Senator Patricia Jehlen filed the bill after reading a Globe Spotlight series “Debtor’s Hell” on professional debt collectors’ abusive practices.

State law shields certain property necessary for the debtor to work and survive from seizure. For example, it provides that a debtor can keep 2 cows and 4 sheep. However, the value of a car that a debtor can keep was set in 1975 at $700. As a result the Globe reported, collectors seize thousands of cars a year, leaving people with no transportation to get to work, additional costs for towing and storage and other fees and often no return of the car or the $700 they are due. This bill increases the value of an automobile exempt from collection to $7,500. It also raises the allowance for rent from $200 a month to a much more reasonable $2,500 a month.

The bill would not mean that debtors will be able to avoid paying their debts but it will eliminate some abuses. It will also reduce the need for many people to file for bankruptcy in order to protect basic assets.

This bill also reinforces federal protection of Social Security and disability benefits. Seniors and people with disabilities have had their bank accounts frozen and have been unable to pay for rent or medications even when the only money in their accounts was from Social Security or disability checks. This legislation also increases the value of a bank account a debtor is exempt from turning over to a creditor from $125 to $2,500.

“I filed this bill to protect my constituents and citizens across the Commonwealth who are struggling to make ends meet in this difficult economy,” Senator Jehlen said. “The intent of the process of debt collection should be to devise a fair and feasible plan for consumers to pay off their debt, not to leave hard-working residents destitute, abused and caught in a vicious cycle that is nearly impossible to escape.”

The bill now goes to the House of Representatives.

– Information from State Senator Patricia Jehlen (D-Somerville, Medford)