Credit cards scattered on rug next to open laptop

Debt in all forms – medical debt, tax debt, student loan debt, consumer debt – is more pervasive in communities of color due to a longstanding gap in the accumulation of wealth. This debt leads to harassment by debt collection companies, unfair garnishment of bank accounts, reduced credit scores, the suspension of driver’s licenses, and enormous stress in the lives of people living on low incomes.

At the same time that the global pandemic has been a boon to Washington’s tech giants, renters and homeowners have become increasingly vulnerable: in late 2020, it was revealed that 437,000 Washingtonians were using credit cards and short-term loans to pay their rent. Similarly, many homeowners—burdened by a state tax code that relies primarily on sales and property taxes—have fallen into property tax delinquency.

Tax delinquency disproportionately impacts people of color and low-income families, potentially resulting in the loss of home equity and even foreclosure. Displacement resulting from tax delinquency has been an instrument of racist policy for decades. George Floyd’s great-great-grandfather acquired five hundred acres of land during Reconstruction after the Civil War, only to have it later seized by white farmers who used property tax laws to dissolve Black land holdings and wealth.

 What We’re Doing About It

Poverty Action supports consumer protections that mitigate the very real costs of an unequal economic system. We can build a more equitable Washington with a few achievable policy measures.

  • Prevent home foreclosures due to property tax delinquency by reducing harsh penalties on unpaid property taxes and funding foreclosure prevention assistance programs.
  • End the practice of suspending driver’s licenses as a punishment for an inability to pay a debt.
  • Prevent insurance companies from using credit scores to calculate premium pricing. This policy results in people of color paying disproportionately higher insurance prices.
  • Automatically protect bank accounts from garnishment. Currently, collectors must leave at least $2000 in a person’s bank account when collecting on a debt. However, that protection is not automatic; a person must go through a court process to get their money returned if the collector garnishes more than allowed under state law.