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AFSA’s Letter to MA on Debt Collection

AFSA’s Letter to MA on Debt Collection

AFSA’s State Government Affairs team has sent a comment letter to the Massachusetts Joint Committee on Financial Services regarding Senate Bill 2638 and debt collection in the state. In the letter AFSA expresses concerns with S 2638 seeking to impose further restrictions on banks and other entities engaged in debt collection from Massachusetts residents. Additionally, the bill suggests specific alterations to current contracts— particularly those associated with consumer credit agreements statewide — as well as awarding attorney fees to consumers.

AFSA also highlights that the statute of limitations for all consumer loans, including unsecured credit lines, is shortened from six to five years in the bill. Unless a partial payment fully resolves the default and clears any outstanding arrears, it does not restart the limitation period. As a result, a consumer credit consolidation that doesn’t completely resolve the default may be invalidated under Section 3(e) of the amended Chapter 93L.

While intended to benefit consumers, this provision might discourage lenders from extending unsecured consumer credit to certain borrowers, as anything less than full loan repayment after a default could prevent debt pursuit after five years.

This letter, along with SGA’s other recent letters, can be found on the direct advocacy section of AFSA’s website.

March 28th, 2024

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