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March 29, 2024

Senate agrees to new protections on debt collection

Photo | Courtesy of Commonwealth of Massachusetts Massachusetts State House

The Senate on Thursday passed a "compromise" version of legislation affecting debt collection practices in Massachusetts, and according to its sponsor, the bill has a shot at final passage thanks to industry representatives collaborating on the rewrite.

The bill, which would increase the amount of a person's paycheck that is protected from wage garnishment and impose a five-year statute of limitations on debt collections, is based on language the Senate passed in 2016 and 2018.

Sen. Jamie Eldridge offered "thanks for the debt collectors, their representatives that I often disagree with, but their willingness to come have a seat at the table and work out what is a consensus bill."

The Marlborough Democrat said he hoped the measure would pass the House and make it to Gov. Maura Healey's desk, "given that this is a full consensus bill."

The Senate Ways and Means Committee authored the redraft (S 2713) this week, based on a draft from the Joint Committee on Financial Services (S 2638) co-chaired by Sen. Paul Feeney.

Feeney said the bill would protect the state's "most vulnerable residents from financial ruin."

The bill would limit the interest rate on a debt to between 2 and 5 percent, rather than a current rate of 12 percent, Eldridge said on the Senate floor. It would also prohibit imprisoning someone for their failure to pay a consumer debt, he said, adding that "we should not have debtors' prisons here in Massachusetts."

Pointing to a Blue Cross Blue Shield report released last week, Feeney said many Bay Staters refrain from seeking care at a hospital or calling an ambulance because they fear going into debt as a result of the medical bills.

The BCBS report found four out of 10 Massachusetts residents either regularly or occasionally put off medical care due to costs, including 51 percent of people under age 45 and 20 percent of people 65 or older, as the News Service reported last week.

"Which means, because of debt in Massachusetts, not only will you go broke, but you could get sicker, you could die," Feeney said.

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