Debt Collection Halted for 90 Days in MA, Is This an Opportunity to Get a Debt Settlement to Your Advantage

Effective immediately, debt collectors operating in Massachusetts are prohibited for 90 days from taking any steps to collect consumer accounts. A good settlement often occurs by taking advantage of opportune circumstances – is this a good time for consumer debtors to use to their advantage this pressure on debt collectors? Is this a good time to settle debts for less than is owed?

Because of the economic effects of the novel coronavirus (COVID-19), broad regulations have been issued by the Massachusetts Attorney General which state that any debt collector how collects debt in violation of these regulations is liable under the Massachusetts Consumer Protection Act, G.L. c. 93A. The press release about the Coronavirus Debt Collection Regulations was issued on Friday, March 27, 2020. The regulations are titled Unfair and Deceptive Debt Collection Practices During the State of Emergency Caused by COVID-10, (for short, the Coronavirus Debt Collection Regulations). The Coronavirus Debt Collection Regulations are enacted at 940 Code Mass. Regs. 35.00, et seq. A summary of the essential provisions will be provided in this post. The ban on debt collection lasts for 90 days from the date it was issued.

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Time vs. Money Saved

One very important thing to note is that the Coronavirus Debt Collection Regulations do not say what happens once debts can again be collected. What our office has heard so far is that many debt collectors, creditors, and mortgage companies may be suspending payments, but they are requiring the unpaid amounts to be repaid once the coronavirus pandemic ends. This means that many consumers may have a large lump sum payment due once the pandemic ends. Unless there is some other governmental action, the courts are likely to be flooded with debt collection lawsuits. This may be the time for some consumers to make sure some of those lawsuits aren’t filed against them. Using this advantage against debt collectors could result in favorable settlements and help you avoid the long-term disadvantages of larger debts owed and lawsuits.

Anyway, as we all know by now, the novel coronavirus pandemic has brought the economy to a screeching halt. This means that many Massachusetts residents’ paychecks have also been brought to a screeching halt. Businesses are shuttered — hopefully temporarily — and millions of people have learned the definition of terms like social distancing and sheltering in place. As of the writing of this post, we have entered the third week of an almost total shutdown except for some essential services. This has caused many Massachusetts consumers to worry what will happen to debts that they owe like credit cards, medical bills, and other loans.

Debt collectors, too, are going to worry about their own solvency. Logic and common sense dictate that debt collectors may be more willing than ever to accept less than the accounts are worth to settle in full. This may be the time to turn obstacles into opportunities and trials into triumphs.

Who can’t collect debts? The Coronavirus Debt Collection Regulations apply to companies who meet the definition of “debt collector” or “creditor.” Debt collectors are third parties who collect debts on behalf of someone else. This includes companies called debt buyers, companies who buy bad debts in order to collect on them. A creditor is the person to whom the money was originally owed or who owns the account now. The prohibition is thus extremely broad and includes almost everyone.

Who can keep collecting debts? Mortgage companies and landlords can keep collecting debts. The Coronavirus Debt Collection Regulations specifically carve out any bank, mortgage servicer, or lessor collecting on a consumer account. And, debts that are not more than 30 days past due may still be collected.

Additionally, debt collectors and creditors can talk to you if you call them yourself. In fact, they’ll probably be glad to hear from you if you want to try to settle.

What is prohibited?

The Coronavirus Debt Collection Regulations prohibit almost any type of debt collection, everything from phone calls to letters to debt collection lawsuit. It also includes garnishments of wages or other executions on personal property. The Attorney General’s list of prohibitions says it is prohibited to do any of the following:

  • initiate, file, or threaten to file any new collection lawsuit;
  • initiate, threaten to initiate, or act upon any legal or equitable remedy for the garnishment, seizure, attachment, or withholding of wages, earnings, property or funds for the payment of a debt to a creditor;
  • initiate, threaten to initiate, or act upon any legal or equitable remedy for the repossession of any vehicle;
  • apply for, cause to be served, enforce, or threaten to apply for, cause to be served or enforce any capias warrant;
  • visit or threaten to visit the household of a debtor at any time;
  • visit or threaten to visit the place of employment of a debtor at any time; and
  • confront or communicate in person with a debtor regarding the collection of a debt in any public place at any time.

One important distinction is that while debt collectors may not make phone calls, creditors may do so.

How long do the Coronavirus Debt Collection Regulations last for? The regulations last for the shorter of either 90 days from March 27, 2020, or when Governor Baker lifts the emergency order.

We’re here to help

Culik Law has represented consumers against creditors and debt collectors throughout Massachusetts. We have filed lawsuits for debt-collection violations, and defended lawsuits against our clients. We have been consistently representing consumers since the economic meltdown of the late 2000’s, and we never represent big business against consumers. If you have a question about your rights with regard to a debt in collections or you would like to pursue a debt settlement, contact us at 617-830-1795 to see if we can help.

Joe Culik

Joe Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.