Massachusetts Legal professional Basic Enacts Sweeping Pupil Mortgage Authorized Protections

Massachusetts Legal professional Basic Maura Healey has issued emergency state rules in response to the COVID-19 pandemic. These rules present scholar mortgage debtors and different customers with among the strongest authorized rights and protections within the nation towards debt collectors.

Right here’s an summary of what these new rules do:

• Lenders and debt collectors are prohibited from initiating a brand new collections lawsuit, or threatening to take action.
• Lenders and debt collectors are prohibited from initiating new authorized actions to garnish wages or seize property or property, or threatening to take action.
• Lenders and debt collectors are prohibited from initiating a collections telephone name, both stay or recorded, to somebody’s house, cellular phone, or different telephone quantity supplied by the debtor, for functions of accumulating a debt or searching for a cost.

These restrictions apply to federal and personal scholar mortgage debt, in addition to different client debt similar to bank card debt. If a lender or debt assortment company engages in any of the above actions in violation of those emergency rules, debtors can probably sue the lender or debt assortment company for damages.

The emergency rules went into impact on March 27, 2020 and can stay in impact for 90 days, or till the conclusion of the declared state of emergency, which is ongoing. Thus if the state of emergency lasts for greater than 90 days, the rules could possibly be prolonged.

On April 20, 2020, a debt assortment commerce affiliation representing many debt assortment companies that function in Massachusetts filed a lawsuit in federal District Courtroom. The lawsuit alleges that the rules violate a wide range of legal guidelines and constitutional doctrines (similar to First Modification rights and Due Course of). Debt collectors are searching for an injunction, which, if granted, would prohibit the brand new rules from being enforceable. No choice has been made by a decide as of this writing, however the case is ongoing.

Learn extra about new Coronavirus-related scholar mortgage protections right here.

UPDATE, 5/8/2020: In response to a lawsuit introduced by debt assortment companies, a federal courtroom has issued a preliminary injunction, barring enforcement of a lot of those new rules.