Consumers advocates are pushing for a new state law to protect low-income residents facing a deluge of lawsuits from big companies in small claims courts in Massachusetts — a problem recently detailed in an eye-opening report issued by the state trial court. Supporters hope the bill will pass before December, during the Legislature’s informal sessions, since recent compromises on the bill led many debt collection companies to drop their opposition.
State Rep. Christine Barber, a Democrat from Somerville and co-author of the Debt Collection Fairness Act, said the legislation would help residents by protecting more of their wages from garnishments, reduce interest rates on court judgments and shield debtors from arrests, among other things.
The new report, filed by the Massachusetts Trial Court in July, included data showing 85% of small claims cases are consumer debt, which she says adds to the pressure to make change.
“That was a surprise to me, seeing how much of it is clogging up our courts,” Barber told GBH News this week. “The data is really important because it raises the issue for us. But it’s also important to say Massachusetts can do something about this.”
The report showed more than half of all consumer debt cases are filed by three out-of-state debt buying companies, and 97% of defendants in all consumer debt cases are representing themselves in court without an attorney.
The vast majority of cases were filed in the state’s small claims courts, touted by state officials as the “people’s court” for its more informal rules meant to help private citizens settle low-cost claims. The trial court analyzed state data following a request from the GBH News Center for Investigative Reporting.
Barber says lawmakers are hopeful the legislation will pass this fall during the state’s informal session that ends in December, a period when a lone “no” vote can halt legislation’s passage. A version of the bill was approved in March by the Senate and now is pending in the House with amendments that are supported by the debt collection industry.
“We’ve worked to get compromise and get a lot of the debt collection agencies on board on this bill because they do realize some of the most egregious pieces should not be happening in Massachusetts,” Barber said.
In June, consumer advocates and a California-based nonprofit called the Receivables Management Association International, which represents many major debt collection firms, sent a joint letter to lawmakers supporting the bill.
“This is a bill that works for industry, is good for consumers, and will illustrate to working families how hard the legislature is working for them,’’ the authors said, including the management association, the National Consumer Law Center and Greater Boston Legal Services.
Mike Becker, executive director of the trade association, confirmed his support.
“RMAI was one of many parties involved in extensive negotiations on this bill,” he wrote to GBH News on Monday. “Ultimately, common ground was found and RMAI no longer opposes the bill’s adoption.”
State Sen. Jamie Eldridge, a Democrat from Acton and co-author of the Senate bill, says he also hopes the legislation will pass by the end of the year. He too was surprised by new trial court data and wondered if even more changes are necessary.
Eldridge said he’s concerned that attorneys for debt collectors may appear to be court employees who can dole out assistance, as detailed in a GBH News investigation earlier this month.
“I think we need to think about making some changes,’’ Eldridge said. “Should we actually be providing an attorney or someone in court who could provide some guidance for defendants in the courts for small claims?”
Consumer law advocates have been working for years to bolster protections for defendants in debt cases.
The legislation would reduce the automatic time a court judgment remains on the books from 20 to 10 years. It would limit the ways a person could be arrested for failing to pay a debt and eliminate the possibility of jail time. After Jan. 1, 2025, the interest rate for a new court judgment would be reduced from 12% to 3%.
Nadine Cohen, former managing attorney of the Consumer Rights Unit at Greater Boston Legal Services, said she’s optimistic the bill will pass now because of the recent agreements with debt collecting companies.
She said consensus emerged after lawmakers brought opposing parties into a room to talk. Among debates, she said, were how much to reduce the statute of limitations for when a debt can be collected — agreeing to a drop from six to five years.
Cohen said the legislation would make a particular difference to people of color, who are disproportionately affected.
“It really, really makes such a big difference to low-income consumers who have debt in collection,” Cohen said.
Michael Best, a senior attorney for the National Consumer Law Center, said he too is optimistic the legislation will pass this year, largely because of compromises that provided wins for both sides of the table.
Best also is cognizant of the challenges of passing legislation in informal sessions and said he won’t stop fighting for change.
”I will keep pushing for this legislation for as long as it takes to get it done, but I think right now in the informal session while we have a compromise with industry — compromises are fragile things — is the time to pass this bill that will help a lot of struggling families.“
