Tens of thousands of people facing lawsuits from debt collectors in small claims courts in Massachusetts will soon have more protections to assure they aren’t being forced to spend money they can’t afford.
New regulations, which go into effect on Feb. 3, require courts to hold payment hearings to make sure low-income people aren’t tapping into legally protected income like disability payments or social security to pay their creditors.
The regulations were prompted by a 2017 lawsuit filed by consumer advocates claiming many people were forced to pay debts with money they needed for basic expenses. The chief justice of the Trial Court, Heidi Brieger, sent the proposed rules to the state’s top court in October.
“The amendments are intended to ensure that courts do not inadvertently issue or enforce small claim payment orders that require debtors to pay using income or an asset that is exempt from collection under state or federal law,’’ Brieger wrote in the letter. “Simply put, the court must always hold a payment hearing before issuing a payment order.”
The Massachusetts Supreme Judicial Court approved the rules in December, and the Trial Court announced the changes on a government website.
Several consumer advocates told GBH News that the new rules are a long-awaited improvement in a court system swamped with consumer debt cases.
Alexa Rosenbloom, a consumer advocate who works at the Legal Services Center of Harvard Law School, said she hopes the rules represent increasing efforts to protect low-income people being sued by large companies in state courts.
“Someone shouldn’t be forced to choose between eating and paying a creditor or paying the rent and paying a creditor,’’ she said. “This is a good start about putting some protections for people, and hopefully we’ll see more in the future.”
The state’s small claims courts were launched as a so-called people’s court with informal procedures to make it easier to bring a claim. But recent court data shows that about 85% of all cases filed in 2023 in these courts — where claims are limited to $7,000 or less — were to collect consumer debts. That’s more than 70,000 cases, according to the data provided to GBH News as part of an ongoing investigation.
More than 70% of the cases filed in small claims and other civil courts originated from just nine major companies, including out-of-state businesses that purchase old credit card debt and major banks, court data shows. The vast majority of people being sued lack legal representation, court data shows.
Trial court officials declined to comment for this story. Some advocates, like retired judge Raymond Dougan, say they are skeptical about seeing any real change in a system that has long marginalized poor people. Only about 10 of the 70 district and municipal courtrooms in the state have a regular volunteer lawyer program to help defend alleged debtors.
Dougan, a longtime volunteer in the courts, said he doesn’t believe that clerks will follow rules in courts where there are no volunteer lawyers to watch over the system. He said too often courts are informally run by attorneys working for the credit card and debt buying companies.
“On paper, it’s terrific,’’ he said, “but in the 60 courts where there aren’t any legal services lawyers, this stuff will go up in smoke, it won’t happen. You’ll get the same ugly negative practices by debt collector lawyers as it has existed ever since the small claims courts have been used for debt collection.”
