Report: No States Fully Protect Families from Wage and Asset Seizures as Debt Levels Soar

December 18, 2025 — Press Release

On State Report Cards, Georgia, Indiana, Kentucky, Michigan, Mississippi, Missouri, New Jersey, Utah, and Wyoming Get Fs; No State Receives an A 

WASHINGTON –  In the midst of an affordability crisis, families across the nation are reeling from high inflation, record debt, and a surge in debt collection lawsuits. State exemption laws can provide a critical safeguard, but a new National Consumer Law Center (NCLC) report found that not one state’s laws meet five basic standards for consumer protection, and some fail miserably. 

No Fresh Start 2025: Will States Protect Families from Wage and Asset Seizures as Debt Levels Soar? grades each state on its exemption laws, which protect income and property from seizure by creditors, debt buyers, and the debt collectors they hire.

“As households face rising inflation, increasing layoffs, soaring numbers of debt collection suits, and growing levels of debt, state exemption laws have never been more critical,” said Michael Best, director of state advocacy at the National Consumer Law Center and co-author of the report. “Without adequate laws to protect wages, cars, work tools, gas money, and other essentials from seizure, debt collectors will continue to drain the resources that families need to put food on the table.”

NCLC’s annual survey of exemption laws in the 50 states, District of Columbia, Puerto Rico, and the Virgin Islands finds that not one jurisdiction meets five basic standards:  

• Preventing creditors 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;
• Preserving a modest amount in a bank account; and 
• Preventing seizure and sale of the debtor’s necessary household goods. 

The report details the extent to which states protect families in each of these five areas. It grades the states on each protection and determines each state’s overall average. 

Worst states: Eight states have exemption laws that reflect indifference to struggling debtors. These states allow creditors—or the debt collectors they hire—to seize almost everything a debtor owns, even the minimal items necessary for the debtor to continue working and providing for a family. Georgia, Indiana, Kentucky, Michigan, Mississippi, Missouri, New Jersey, Utah, and Wyoming are the worst states, garnering ‘F’ grades.

Best states: While no states achieve an ‘A’ grade for 2025, Arizona, California, Massachusetts, New Mexico, Puerto Rico, and Texas achieve ‘B’ grades. 

Most improved states: Two states moved from a ‘D’ to a ‘C’ this year: Illinois, because of significant improvements to its laws, and Ohio because triennial inflation increases to its protections for the home, the family car, the family bank account, and household goods finally kicked in.

The report also looks at how the wealth divide creates a bigger debt burden for Black and Latino families. These communities are disproportionately burdened by debt and are disproportionately subject to judgments in collection lawsuits and wage seizure. The persistent wealth divide, the high volume of collection lawsuits, and the soaring costs of necessities are straining families to the breaking point. 

“By updating their exemption laws, states can prevent creditors and debt buyers from pushing  families into poverty,” said Carolyn Carter, senior attorney at the National Consumer Law Center and co-author of the report. “These protections help families regain their financial footing and contribute to the economy, keeping workers in the workforce, reducing the demand on funds for unemployment compensation and social services, and keeping money in local communities.”

Related Resources

• No Fresh Start 2024: Will States Protect Families from Debt Collectors Seizing Wages and Bank Balances?
• Model Family Financial Protection Act
• State Debt Collection Fact Sheets
• Fair Debt Collection and Collection Actions (legal treatises):
• Surviving Debt (consumer book) and Consumer Debt Advice (free articles)