Massachusetts 2025-2026 Regular Session

Massachusetts Senate Bill S735 Compare Versions

Only one version of the bill is available at this time.

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1	1	1 of 1
2	2	SENATE DOCKET, NO. 1209 FILED ON: 1/15/2025
3	3	SENATE . . . . . . . . . . . . . . No. 735
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	James B. Eldridge
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act relative to fairness in debt collection.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :James B. EldridgeMiddlesex and WorcesterAttorney General Andrea Joy
16	16	Campbell
17	17	One Ashburton Place Boston, MA
18	18	02108
19	19	Michael J. BarrettThird Middlesex2/11/2025 1 of 10
20	20	SENATE DOCKET, NO. 1209 FILED ON: 1/15/2025
21	21	SENATE . . . . . . . . . . . . . . No. 735
22	22	By Mr. Eldridge, a petition (accompanied by bill, Senate, No. 735) of James B. Eldridge,
23	23	Attorney General Andrea Joy Campbell, and Michael J. Barrett for legislation to establish the
24	24	Debt Collection Fairness Act. Financial Services.
25	25	[SIMILAR MATTER FILED IN PREVIOUS SESSION
26	26	SEE SENATE, NO. 2713 OF 2023-2024.]
27	27	The Commonwealth of Massachusetts
28	28	_______________
29	29	In the One Hundred and Ninety-Fourth General Court
30	30	(2025-2026)
31	31	_______________
32	32	An Act relative to fairness in debt collection.
33	33	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
34	34	of the same, as follows:
35	35	1 SECTION 1. The General Laws are hereby amended by inserting after chapter 93L the
36	36	2following chapter:-
37	37	3 CHAPTER 93M.
38	38	4 DEBT COLLECTION FAIRNESS ACT.
39	39	5 Section 1. As used in this chapter, the following words shall have the following meanings
40	40	6unless the context clearly requires otherwise:
41	41	7 “Charge-off”, a declaration by a creditor that a delinquent consumer loan, consumer
42	42	8credit account or other consumer debt has been removed from a creditor’s books as an asset and
43	43	9treated as a loss or expense. 2 of 10
44	44	10 “Consumer”, a natural person.
45	45	11 “Consumer form contract”, a contract in writing between a business and a consumer
46	46	12involving goods or services, including, but not limited to, credit or financial services, primarily
47	47	13for personal, family or household purposes, that has been drafted by the business for use with
48	48	14more than 1 consumer, unless the only other consumer is the spouse of the first consumer.
49	49	15 “Consumer debt”, an obligation or alleged obligation of a consumer to pay money arising
50	50	16out of a transaction in which the money, property, insurance or services that are the subject of the
51	51	17transaction are primarily for personal, family or household purposes, whether or not the
52	52	18obligation has been reduced to judgment; provided, however, that “consumer debt” shall not
53	53	19include a common expense or charge levied under chapters 183A or 183B,an obligation or
54	54	20alleged obligation to pay common expenses or charges levied pursuant to a covenant or
55	55	21agreement running with the land or a residential mortgage loan.
56	56	22 “Creditor”, a person or entity to whom a debt is owed, including a judgment creditor and
57	57	23any other person or entity that obtains an execution on a debt; provided, however, that “creditor”
58	58	24shall not include an organization of unit owners as defined in section 1 of chapter 183A, a time-
59	59	25share association under chapter 183B or a homeowner association or entity to whom debt is
60	60	26owed pursuant to a covenant or agreement running with the land.
61	61	27 “Debt buyer”, a person or entity that is engaged in the business of purchasing delinquent
62	62	28or charged-off consumer loans, consumer credit accounts or other delinquent consumer debt for
63	63	29collection purposes, whether the person or entity collects the debt itself or hires a third party for
64	64	30collection or an attorney for litigation in order to collect the debt. 3 of 10
65	65	31 “Debt collector”, a person or entity that uses an instrumentality of interstate commerce or
66	66	32the mails in any business the principal purpose of which is the collection of a debt, or who
67	67	33regularly collects or attempts to collect, directly or indirectly, a debt owed or due or asserted to
68	68	34be owed or due another.
69	69	35 “Earnings”, gross compensation paid or payable for personal services, whether
70	70	36denominated as wages, salary, commission, bonus, payment for skilled, personal or professional
71	71	37services or otherwise, and whether earned as an employee or independent contractor.
72	72	38 “Execution”, an attachment, levy, garnishment or other disablement, freeze or seizure of
73	73	39property, whether pre-judgment or post-judgment, to satisfy a debt or a creditor’s exercise of a
74	74	40right of setoff to collect a debt; provided, however, that "execution” shall not include self-help
75	75	41repossession of collateral.
76	76	42 “Exempt”, not subject to execution, levy, attachment, garnishment, setoff, self-help,
77	77	43disablement, freeze, seizure or other form of process, court order, creditor or other action for
78	78	44debt collection or restitution or other equitable claim unless otherwise specified.
79	79	45 “Garnishment”, a legal or equitable procedure through which the earnings, property or
80	80	46funds of a person are required by a court of competent jurisdiction to be withheld by another
81	81	47entity for payment of a debt to a creditor.
82	82	48 “Residential mortgage loan” a loan primarily for personal, family, or household use that
83	83	49is secured by a mortgage, deed of trust or other equivalent consensual security interest on a
84	84	50dwelling as defined in 15 U.S.C. section 1602(w) or residential real estate upon which is
85	85	51constructed or intended to be constructed a dwelling as so defined. 4 of 10
86	86	52 “Trustee”, a trustee served pursuant to chapter 246.
87	87	53 Section 2. (a) Notwithstanding section 34 of chapter 235, if a consumer’s earnings are
88	88	54attached to satisfy a judgment for collection of a consumer debt, wages equal to the greater of 90
89	89	55per cent of the debtor's gross weekly wages or 65 times the greater of the federal minimum
90	90	56hourly wage under 29 U.S.C. section 206(a)(1) or the state minimum hourly wage under section
91	91	571 of chapter 151 in effect at the time shall be exempt from the attachment and not subject to
92	92	58garnishment. This exemption shall be adjusted pro rata for a pay period that is more than weekly.
93	93	59 (b) Notwithstanding subsection (a), a consumer debtor subject to a judgement for
94	94	60collection of a consumer debt may seek to exempt additional wages from attachment by filing a
95	95	61form making a claim of undue financial hardship with the court. Such form shall be prepared by
96	96	62the court to allow a consumer debtor to readily identify the basis for the consumer debtor’s
97	97	63request for an additional exemption under this subsection. Upon the filing of the financial
98	98	64hardship form, the court shall hold a hearing as soon as practicable to determine the total amount
99	99	65that shall be exempted from the judgment debtors’ wages.
100	100	66 (c) If more than 1 order of attachment for a consumer debt is served on a trustee with
101	101	67respect to the same consumer, the order of attachment served the earliest shall take priority. If an
102	102	68order of attachment with greater priority consumes the entirety of the earnings that is available
103	103	69for garnishment under the preceding subsections, the consumer’s earnings shall not be garnished
104	104	70pursuant to the order of attachment with lower priority.
105	105	71 (d) The protections for earnings under this section apply to consumers whose physical
106	106	72place of employment is in the commonwealth; provided, however, that such protections shall 5 of 10
107	107	73continue to apply even if such consumer’s employer has corporate offices or other places of
108	108	74business located outside the commonwealth.
109	109	75 (e) This section shall not apply in a proceeding to attach earnings or a pension to satisfy a
110	110	76divorce, separate maintenance or child support order of a court of competent jurisdiction and, in
111	111	77such a proceeding, including an action for trustee process to enforce a support order under
112	112	78section 36A of chapter 208, federal law limiting the amounts that may be trusteed, assigned or
113	113	79attached in order to satisfy an alimony, maintenance or child support order shall apply.
114	114	80 (f) Except as otherwise permitted by law, an amount held by a trustee for a defendant in a
115	115	81pension, as defined in section 28 of chapter 246, shall be reserved in the hands of the trustee and
116	116	82shall be exempt from attachment to satisfy a judgment for collection of a consumer debt.
117	117	83 (g) An employer shall not take adverse employment action against an employee or refuse
118	118	84to hire an individual because of 1 or more garnishments for consumer debts or because of
119	119	85obligations that any garnishments impose against the employer. An employer who violates this
120	120	86section shall be liable in a civil action, action for contempt or other appropriate proceeding to the
121	121	87employee or individual for the wages and employment benefits lost by the employee or
122	122	88individual from the time of the adverse employment action or refusal to hire to the period of
123	123	89reinstatement and an additional penalty of not more than $1,000.
124	124	90 (h) Income from child support payments shall be exempt from collection under this
125	125	91chapter.
126	126	92 Section 3. (a) Notwithstanding section 2 of chapter 260, an action for the collection of a
127	127	93consumer debt shall be commenced not more than 5 years after the cause of action accrues.
128	128	94Notwithstanding any applicable statute of limitations of the commonwealth or other jurisdiction, 6 of 10
129	129	95said limitations period shall apply to a claim for a consumer debt, whether the claim sounds in
130	130	96contract, account stated, open account, contract or instrument under seal or other basis.
131	131	97 (b) Notwithstanding section 14 of chapter 260, a payment on a consumer debt that is
132	132	98made before or after the limitations period under subsection (a) has expired shall not revive or
133	133	99extend the limitations period or bar the consumer from asserting a defense to the collection of a
134	134	100consumer debt.
135	135	101 (c) No creditor, debt buyer or debt collector shall bring a suit or initiate an arbitration or
136	136	102other legal proceeding to collect a consumer debt if the applicable limitations period under
137	137	103subsection (a) has expired.
138	138	104 (d) A waiver by a consumer of a protection or right under this section shall be void and
139	139	105unenforceable.
140	140	106 (e) Notwithstanding section 20 of chapter 260 or any other general or special law to the
141	141	107contrary, an action for the collection of a consumer debt arising from a judgment or decree,
142	142	108including an execution upon or trustee process based on said judgment or decree and other
143	143	109activity to collect on the judgment, shall be commenced not more than 10 years after the entry of
144	144	110said judgment or decree. If such an action has commenced within 10 years, said judgment or
145	145	111decree may be renewed one time for 10 years. A judgment or decree shall not be revived or
146	146	112renewed after the limitations period under this subsection has expired.
147	147	113 Section 4. (a) A plaintiff who has obtained a judgment on a claim for the collection of a
148	148	114consumer debt shall provide written notice to the consumer debtor not less than 30 days prior to
149	149	115a supplementary process in a civil action for the examination of said consumer debtor pursuant to
150	150	116section 14 of chapter 224 or a payment review hearing in a small claims action pursuant to 7 of 10
151	151	117Uniform Small Claims Rule 7(i). Such notice shall inform the consumer debtor of the
152	152	118opportunity to submit a financial affidavit in a form prescribed by the court and signed under the
153	153	119penalties of perjury. If the consumer debtor indicates through the financial affidavit that all
154	154	120income and assets are exempt from collection and files the affidavit as prescribed by the court,
155	155	121the court shall acknowledge receipt and inform both parties that the supplementary process or
156	156	122payment review hearing shall not occur. Upon filing of said affidavit, no further supplementary
157	157	123proceedings or payment review hearings shall be scheduled unless the judgment creditor presents
158	158	124evidence of the judgment debtor’s non-exempt assets or income and the court determines that
159	159	125there is a reasonable basis to believe that there are non-exempt assets or income warranting the
160	160	126scheduling of a new supplementary process or payment review hearing.
161	161	127 (b) Notwithstanding sections 18 and 20 of chapter 224 or any other applicable law, rule,
162	162	128or regulation to the contrary, no capias or other warrant to compel the attendance of an alleged
163	163	129consumer debtor shall be issued for failure of the alleged consumer debtor to appear at a
164	164	130supplementary process in a civil action for an examination pursuant to section 14 of chapter 224
165	165	131or a payment review hearing in a small claims action pursuant to Uniform Small Claims Rule
166	166	1327(i). If the alleged consumer debtor fails to appear, the court shall schedule a show cause hearing
167	167	133to determine whether a capias or other warrant to compel the attendance of the alleged consumer
168	168	134debtor should be issued. No capias or other warrant shall be issued to compel the attendance of
169	169	135the alleged consumer debtor at a show cause hearing without evidence that notice of the said
170	170	136hearing was served on the consumer either by signed return receipt or by a sworn return of
171	171	137service.
172	172	138 (c) Notwithstanding sections 18 and 20 of chapter 224 or any other applicable law, rule or
173	173	139regulation to the contrary, an alleged consumer debtor that is compelled to attend pursuant to a 8 of 10
174	174	140capias or other warrant shall be brought before the court the same day. The consumer shall be
175	175	141given the opportunity to complete the financial affidavit described in subsection (a). The capias
176	176	142or other warrant shall be satisfied by the consumer’s appearance in court or completion of the
177	177	143financial affidavit indicating that all forms of income and assets are exempt.
178	178	144 (d) Notwithstanding sections 18 and 20 of chapter 224 or any other applicable law, rule
179	179	145or regulation to the contrary, no person shall be imprisoned or jailed for failure to pay a
180	180	146consumer debt, nor shall a person be imprisoned or jailed for contempt of or failure to comply
181	181	147with a court order to pay a consumer debt in part or in full.
182	182	148 Section 5. (a) Except as provided in subsection (b), if a plaintiff prevails in an action to
183	183	149collect a consumer debt, interest computed pursuant to section 6C of chapter 231 or section 8
184	184	150chapter 235 shall be limited to a fixed rate of interest of 12 per cent per annum.
185	185	151 (b) For actions to collect a consumer debt, judgments entered on or after January 1, 2025,
186	186	152or where an application for renewal of judgment is filed on or after January 1, 2025, interest shall
187	187	153be limited to a fixed rate of 3 per cent per annum. Nothing in this subsection shall be construed
188	188	154to require any interest which accrued at a higher interest rate prior to January 1, 2025, to be re-
189	189	155calculated or reduced to the new 3 per cent rate. Judgments issued prior to January 1, 2025, with
190	190	156an interest rate other than 3 per cent per annum shall not be required to be amended or reissued
191	191	157by the courts.
192	192	158 (c) If the plaintiff prevails in an action to collect a consumer debt, the plaintiff may
193	193	159collect attorney’s fees only if the contract or other document evidencing the indebtedness sets
194	194	160forth an obligation of the consumer debtor to pay attorney’s fees; provided, however, that if the
195	195	161contract or other document evidencing indebtedness provides for attorney’s fees in some specific 9 of 10
196	196	162percentage, the provision and obligation shall be valid and enforceable for not more than 15 per
197	197	163cent of the amount of the debt excluding attorney’s fees and collection costs; provided further
198	198	164that if a contract or other document evidencing indebtedness provides for the payment of
199	199	165reasonable attorney’s fees by the consumer debtor, without specifying a specific percentage, the
200	200	166provision shall be construed to mean the lesser of 15 per cent of the amount of the debt,
201	201	167excluding attorney’s fees and collection costs, or the amount of attorney’s fees calculated by a
202	202	168reasonable rate for such cases multiplied by the amount of time reasonably expended to obtain
203	203	169the judgment; provided further, that the documentation setting forth a party’s obligation to pay
204	204	170attorney’s fees shall be provided to the court before a court may enforce those provisions; and
205	205	171provided further, that such documentation shall not include materials that the plaintiff has
206	206	172already filed together with the complaint in compliance with applicable court rules.
207	207	173 Section 6. (a) A violation of sections 2 to 5, inclusive, shall constitute a violation of
208	208	174chapter 93A.
209	209	175 (b) Any portion of a contract, including a consumer form contract, that violates sections 2
210	210	176to 5, inclusive, shall be void and unenforceable.
211	211	177 SECTION 2. Section 28 of chapter 246 of the General Laws, as appearing in the 2022
212	212	178Official Edition, is hereby amended by adding the following paragraph:- This section shall not
213	213	179apply in a proceeding to attach earnings or a pension to satisfy a judgment for collection of a
214	214	180consumer debt as defined in section 1 of chapter 93M, and in such an action, said chapter 93M
215	215	181shall apply.
216	216	182 SECTION 3. Section 3 of chapter 93M of the General Laws shall not apply to a
217	217	183consumer debt for which the cause of action accrued before January 1, 2025; provided, however, 10 of 10
218	218	184that subsection (b) of said section 3 of said chapter 93M shall apply to payments made after the
219	219	185effective date of this act; provided, further, that subsection (b) of section 6 of chapter 93M shall
220	220	186not apply to a contract, including a consumer form contract that is in effect before January 1,
221	221	1872025.
222	222	188 SECTION 4. This act shall take effect on January 1, 2025.