No Fresh Start


How States Let Debt Collectors Push Families into Poverty

The economic downturn has strained millions of families to the breaking point, and the astronomic growth of the debt buyer industry makes them increasingly vulnerable to seizure of essential wages and property to pay their oldest debts. NCLC surveys the exemption laws of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands. Sadly, not one jurisdiction’s laws meet basic standards so that debtors can continue to work productively to support themselves and their families.


Published: Oct. 10, 2013 ©National Consumer Law Center, Inc.

Report (also  Black/White Printing)
Executive Summary (also Black/White Printing)
State Maps and Information (also Black/White Printing)
Press Release
Model Family Financial Protection Act (model state law)

Media Hits

NPR / Propublica series on how weak state laws favor debt collectors over citizens
Part 1: 9/15/14 “Unseen Toll: Wages of Millions Seized to Pay Past Debts” by Paul Kiel (Propublica) and Chris Arnold (NPR). Read the story.

Part 2: 9/16/14 “Old Debts, Fresh Pain: Weak Laws Offer Debtors Little Protection”. Read the story.

ADP report on paycheck garnishment: the untold story, September 2014


Related Publications

Attorneys: Fair Debt Collection   ||   Collection Actions  
:  Surviving Debt

This report builds on NCLC’s advocacy, training, publications, and public policy work on fair debt collection to promote family financial well-being. Learn more about NCLC’s work.


States’ outdated exemption laws fuel the lucrative and fast-growing debt buyer industry. In 2012, debt buyers purchased (for just a few pennies on the dollar) nearly 90 million consumer accounts with a face value of $143 billion, according to the Federal Trade Commission. Consumers disputed at least one million of these debts, yet only half of the disputed debts were verifiable at all by the debt buyer.

By updating their exemption laws, states can prevent debt buyers from reducing families to poverty. These protections also benefit society at large, by keeping workers in the work force, helping families stay together, and reducing the demand on funds for unemployment compensation and social services.

Key Recommendations

State exemption laws should be reformed to:

arrowPreserve the debtor’s ability to work by protecting a working car, work tools and equipment, and money for commuting and other daily work expenses.

arrowProtect the family’s housing, necessary household goods, and means of transportation.

arrowProtect a living wage for working debtors that will meet basic needs and maintain a safe, decent standard of living within the community.

arrowProtect at least $1200 in a bank account so that debtors can pay commuting costs as well as upcoming rent and utility bills.

arrowProtect retirees from destitution by restricting creditors’ ability to seize retirement funds.

arrowBe automatically updated for inflation.

arrowClose loopholes that enable some lenders (such as payday lenders) to evade exemption laws.

arrowBe self-enforcing to the extent possible so that the debtor does not have to file complicated papers or attend court hearings.

Model Family Financial Protection Act

NCLC has written model language for states to achieve these goals. The model law also includes steps that states can take to reduce the pervasive abuse of the court system by debt buyers. >>>