Every state has a set of exemption laws, intended to prevent creditors from pushing families into destitution. But NCLC’s No Fresh Start 2021 report finds that few states’ exemption laws meet even the most basic standards. With weak exemption laws, families struggling to get back on their feet after the COVID-19 pandemic will face seizure of wages and essential property due to a wave of debt collector lawsuits. Weak exemption laws will impede economic recovery and exacerbate the racial wealth gap.

Cover Page of No Fresh Start Report depicting a worried blonde woman holding her young child

Published: November 10, 2021
©National Consumer Law Center, Inc.

Key Recommendations

State exemption laws should be reformed to:

  • Protect a living wage from seizure by creditors.
  • Automatically protect a reasonable amount of money on deposit so that families can meet several months of basic needs such as rent, daycare, utility bills, and commuting expenses.
  • Preserve the debtor’s ability to work, by protecting a working car, work tools and work equipment.
  • Protect the family’s housing and necessary household goods.
  • Protect retirees from destitution by restricting creditors’ ability to seize retirement funds.
  • Be automatically updated for inflation.
  • Close loopholes that enable some lenders to evade exemption laws.
  • Be self-enforcing to the extent possible.

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

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.

Related Publications

Fair Debt Collection book
small collectionactions