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Report: Many States Put Families at Mercy of Debt Collectors

No state adequately protects families from debt collectors, according to a new report from the National Consumer Law Center (NCLC). The report, entitled No Fresh Start: How States Let Debt Collectors Push Families into Poverty, examined state exemption laws which control what assets and income a judgment creditor can seize to satisfy its judgment. The authors concluded that no state offers basic creditor protections to allow debtors to continue to work productively to support themselves and their families. Without adequate protections for earnings, household goods, and a car to get to work, a family can be pushed into poverty or joblessness.

No state received an “A” grade from the NCLC for protecting working families from debt collectors. Alabama, Delaware, Kentucky and Michigan received grades of “F”. The report finds that not one state meets all five of their basic standards:

  • Preventing debt collectors from seizing so much of the debtor’s wages that the debtor is pushed below a living wage;
  • Allowing the debtor to keep a used car of at least average value;
  • Preserving the family’s home—at least a median-value home;
  • Preventing seizure and sale of the debtor’s necessary household goods; and
  • Preserving at least $1200 in a bank account so that the debtor has minimal funds to pay such essential costs as rent, utilities, and commuting expenses.

Massachusetts, which recently modernized its archaic exemption laws, and Iowa each rated highest among states with a B+ grade. States earning a solid B are Nevada, New York, North Carolina, Oklahoma, South Carolina, Texas, and Wisconsin. The worst states allow debt collectors to seize nearly everything a debtor owns, even the minimal items necessary for the debtor to continue working and providing for a family. The report found that many states cling to outdated exemptions, such as Vermont which protects a resident’s cow, two goats, and three swarms of bees, but not a car worth more than $2500. Or Delaware, which protects a seamstress’s sewing machine.

The National Consumer Law Center is an American nonprofit organization specializing in consumer issues on behalf of low-income people. For more information or a free consultation, please contact the experienced bankruptcy attorney’s at Fears Nachawati Law Firm by calling 1.866.705.7584 or sending an email to