Clothing, a Bible, school books, sewing machines not held for resale, military uniforms and $300 of other property. That's a list of the assets that Pennsylvania allows people who owe money to protect from seizure by debt collectors, according to a new report, "No Fresh Start: How States Let Debt Collectors Push Families into Poverty," by the National Consumer Law Center, an advocacy group in Boston.
Pennsylvania also protects debtors' wages to a large extent, but everything else can be seized to settle an unpaid debt.
Vermont protects one cow, two goats, three swarms of bees and a car worth less than $2,500 from seizure to settle debt, while Delaware protects a seamstress' sewing machine, $75 of work tools and an additional $500 of property unless the debtor files bankruptcy, according to the report.
These and other archaic state laws generally allow debtors to protect some wages, assets or property from seizure by debt collectors. But not one state allows people who owe money to continue to work productively without fear of being impoverished by creditors' seizures, the report found.
Other states that had some of the weakest protections, according to the report, were Alabama, Arkansas, Delaware, Georgia, Kentucky, Michigan New Jersey, Utah and Wyoming. States that were better, though not as excellent as the NCLC would like, included Iowa, Massachusetts, Nevada, New York, North Carolina, Oklahoma, South Carolina, Texas and Wisconsin, according to the report.
In a statement, NCLC Deputy Director Robert Hobbs called it a "travesty" that these outdated laws protect farm animals and their feed from seizure by creditors but don't protect a living wage, working car or basic checking account.
Instead, these laws fuel a "lucrative and fast-growing debt buyer industry," the report said.
The report includes real-life stories of people who've been harmed by Draconian and dubious debt collection judgments; state ratings; information about exemptions in all 50 states plus Washington, D.C., Puerto Rico and the Virgin Islands; and recommendations for minimum exemptions that the NCLC believes would allow debtors to continue to work to support themselves and their families.
"By updating exemption laws, states can prevent over-aggressive debt buyers from reducing families to poverty," the NCLC stated.
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