Debt Collection for Massachusetts Consumers
The Division of Banks licenses debt collectors and other individuals or companies attempting to collect a debt. In Massachusetts several laws and regulations are in place to ensure consumers are treated fairly throughout the debt collection process.
- Who Can Collect a Debt in Massachusetts
- Who Requires a License from the Division of Banks to Collect a Debt
- What Consumers Should Know About Debt Collectors
- Tips for Dealing with Debt Collection in Massachusetts
- Relevant Statutes & Regulations for Debt Collection
- Additional Debt Collection Resources for Consumers
Who Can Collect a Debt in Massachusetts
There are several categories of those who may contact consumers in Massachusetts in an attempt to collect a debt:
- Creditor, is the "owner" of the debt being collected. A creditor can be either a person or company to whom money is owed. Banks and credit unions who have lent money to consumers or companies that have provided services may be classified as creditors. Creditors do not need to be licensed by the Division as a debt collector, however; the creditor must follow the Massachusetts Attorney General's Debt Collection Regulations and the Fair Debt Collections Protections Act (FDCPA).
- Debt Collector, is a third party agent collecting money on behalf of a creditor. Often times debt collectors are companies performing collections for a number of different creditors. Debt collectors do not "own" the debt being collected. Debt collectors require a license through the Division. Attorneys licensed to practice law in Massachusetts are exempt from the debt collector licensing requirement.
- Debt Buyer/Passive Debt Buyer, purchases of already delinquent debt from creditors and may attempt collections. Passive debt buyers also purchase already delinquent debt, but use a debt collector or attorney to collect; they do not have direct contact with the consumer. Debt buyers and passive debt buyers "own" the debt being collected. Debt buyers do not need to be licensed, but remain subject to the restrictions of the Fair Debt Collection Practices Act (FDCPA),as well as the debt collection regulations of the Office of the Attorney General. However, a debt buyer attempting to collect a debt without the use of a debt collector or attorney require a license by the Division.
- Attorneys, often collect on behalf of creditors in lieu of a debt collector. Attorneys do not "own" the debt being collected. An attorney licensed to practice law in the Commonwealth is not required to be licensed by the Division to collect debt on behalf of a client. While attorneys collecting debt are not subject to the Commonwealth's Debt Collection Law, they are subject to the Supreme Judicial Court's Rules of Professional Conduct, the disciplinary oversight of the Board of Bar Overseers, restrictions of the FDCPA, and the Debt Collection Regulations of the Office of the Attorney General.
Who Requires a License from the Division of Banks to Collect a Debt
- Creditors do not need to be licensed by the Division as a debt collector. However, the creditor must follow the Massachusetts General Laws and the Fair Debt Collections Protections Act (FDCPA).
- Debt buyers attempting to collect a debt without the use of a debt collector or attorney require licensure from the Division.
- Debt collectors require a license through the Division.
- Attorneys licensed to practice law in Massachusetts and attempting to collect a debt do not require a license from the Division and are not subject to the Commonwealth's Debt Collection Law. However, attorneys are subject to the Supreme Judicial Court's Rules of Professional Conduct, the disciplinary oversight of the Board of Bar Overseers, restrictions of the FDCPA, and the Debt Collection Regulations of the Office of the Attorney General.
What Consumers Should Know About Debt Collectors
Anyone attempting to collect a debt must adhere to certain guidelines set by 209 CMR 18.00.
A creditor or debt collector must:
- Disclose in the initial communication that a debt is attempting to be collected and any information obtained will be used for that purpose;
- Disclose the amount of the debt and the name of the creditor, company, or individual to whom it is owed during the initial communication or within five days of contact;
- Disclose the name and address of the original creditor if you request that information in writing within 30 days of initial contact;
- Within 30 days notify consumer in writing of the initial contact and the right to not have collection telephone calls made to your place of work; and
- Communicate directly with a consumer's attorney if provided with such information.
A creditor or debt collector can:
- Assume a debt is valid if it is not disputed within 30 days of contacting the consumer;
- Contact any person, including family and friends, for the sole purpose of acquiring information on a consumer's address and/or contact information;
- Call a consumer's home and come to the consumer's residence during normal working hours (8:00 am to 9:00 pm), twice in any seven day period; and
- Collect expenses in excess of the amount owed, such as fees or interest, if such charges are expressly authorized by the agreement or permitted by law.
A creditor or debt collector cannot:
- Discuss a consumer's debt with third parties, such a friends or neighbors, without direct prior consent or judicial authority;
- Falsely represent or imply they are affiliated with the federal government or any state or distribute any documents which simulate or falsely represent the authority by any court or government agency;
- Use or threaten to use violence or criminal means to cause physical harm, or harm to a consumer's reputation or property; and
- Seize certain funds and property to satisfy an outstanding debt. There are also additional protections in place for consumers who are over 60 years of age or consumers who are handicapped. These protections ensure that financially distressed Massachusetts residents are able to maintain the basic necessities of life.
Tips for Dealing with Debt Collection in Massachusetts
- Do not give out any personal information (account numbers, social security numbers, etc.) if contacted by someone attempting to collect a debt;
- Request verification of the disputed debt in writing;
- Create a paper trail by keeping a record of the date, time, and name of the individual attempting to collect the debt and respond to requests in writing; and
- If the debt is valid and owed by a consumer, he/she should plan to repay any undisputed obligations, determine a feasible payment plan, and provide the plan to the creditor or debt collector in writing.
Relevant Statutes & Regulations for Debt Collection
- Massachusetts General Laws Chapter 93, § 24-28: Regulation of Trade & Certain Enterprises
- Division of Banks 209 CMR 18.00: Conduct of the Business of Debt Collectors & Loan Servicers
- Office of the Attorney General Regulation 940 CMR 7.00: Debt Collection Regulations
- Fair Debt Collection Protections Act (FDPCA)
Additional Debt Collection Resources for Consumers
- File a complaint or concern regarding a debt collection company with the Division of Banks
- File a complaint or concern regarding a debt buyer with the Office of the Attorney General
- File a complaint regarding the conduct of a Massachusetts attorney with the Board of Bar Overseers:
Board of Bar Overseers
99 High Street
Boston, MA 02110
- Help for consumers currently in foreclosure
- Verify a debt collector's license through the Nationwide Multistate Licensing System (NMLS)
- Download a List of Approved Licensees
- Division of Banks Selected Opinions Relative to Debt Collection