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Crushing Debt Alone

Many states have ineffective protection in place for debtors

Florida residents who are dealing with debt may be interested in a report that was released on Oct. 10 by the National Consumer Law Center. The report assessed the mix of state laws called ‘exemption laws” that were designed to help families that are struggling to avoid losing everything they own to creditors. The states of Iowa and Massachusetts are the only two that even come close to meeting the basic standards for the protection of consumers from their creditors. Those standards include allowing them to keep $1,000 or more in their bank account and excluding homes, household goods, vehicles and the majority of wages from seizure.

Where a debtor resides determines whether a debt collector can legally garnish their whole paycheck as well as take their car, home or funds in their bank account. In Washington, D.C., a debtor has a better chance of keeping their vehicle than one who lives in nearby Virginia or Maryland for example. On the other hand, residents of D.C. could find 25 percent of their hard-earned income taken by a creditor.

Virginia and Maryland only earned a D in the report, while D.C. received a B- because it has reasonably effective consumer protections that prevent the seizure of anyone’s home by creditors. Numerous states show that failing to update statutes contributes to inadequate exemption laws. For example, Pennsylvanian law offers protection for sewing machines and Bibles but fails when any household goods are worth more than $300.

The Consumer Financial Protection Bureau reports that approximately 30 million Americans are carrying an average amount of $1,500 in debt that is subject to collection activity. In addition, there has been an ongoing investigation by federal regulators into the possibility that the biggest banks in the country have been using incomplete records and flawed documents when collecting credit card debt that has become delinquent. A Central Florida credit card debt attorney could help with protecting the wages and property of anyone who is dealing with creditors.

Source: Washington Post, “State laws offer consumers varying degrees of protections form creditors, report says“, Danielle Douglas, October 09, 2013

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