This blog post references a report released earlier this month by the National Consumer Law Center (NCLC), “Still No Fresh Start 2019: How States Still Let Debt Collectors Push Families into Poverty.” View the report for a complete summary on Washington’s consumer protections, as well as analysis for all 50 states, DC, Puerto Rico, and the Virgin Islands.

Rising costs of living coupled with stagnant wages have made it harder for families across Washington to pay their bills while also saving for the future, 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. A new report from the National Consumer Law Center surveys the exemption laws of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands that protect wages, assets in a bank account, and property from seizure by creditors. No Fresh Start in 2019: How States Still Let Debt Collectors Push Families into Poverty finds that not one jurisdiction’s laws meet basic standards so that debtors can continue to work productively to support themselves and their families.

State grades are determined using five elements; protection of a living wage, one’s home, a car, a basic amount in a bank account, and household goods. Washington received a C overall with a D for weak protections of homes and household goods, a C for protections of automobiles and wages that have many gaps and weaknesses, and a B for fairly strong protections of bank accounts. 

Marcy Bowers, Executive Director of the Statewide Poverty Action Network, an anti-poverty advocacy organization based in Washington state, highlighted the importance of strong consumer protections. “We’re very pleased that our state legislature passed a strong package of consumer protection bills last session, including increasing exemption amounts for bank accounts and wage garnishment. Of course people should pay back their debts, but we shouldn’t be condemning people to a life of struggle and poverty. No one wins when we do that, but I’m confident we can find solutions that help families meet their needs while also working to pay off debt,” said Bowers.

“This report serves as a wake-up call for states to update their exempt property laws and stop putting millions of families at risk. Doing so will allow local courts to redirect their focus from the insatiable appetite of a debt machine that churns out millions of undocumented debt collection lawsuits each year,” said Carolyn Carter, National Consumer Law Center deputy director and author of the report.

Key Recommendations

The NCLC report recommends that state exemption laws should be reformed to:

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

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

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

●      Protect a reasonable amount of money in a bank account so that debtors can pay commuting costs as well as upcoming rent and utility bills.

●      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. For example, states that allow payday lending enable these lenders to evade state laws that protect wages and exempt benefits from creditors. States that allow lenders to take household goods as collateral enable these lenders to avoid state household good exemptions.

By updating its exemption laws, Washington can prevent over-aggressive debt collectors from reducing families to poverty. These protections also benefit the state by keeping workers in the workforce, helping families stay together, and reducing the demand on funds for unemployment compensation and social services.