HOUSE DOCKET, NO. 5014        FILED ON: 4/6/2020

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No.         

The Commonwealth of Massachusetts

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PRESENTED BY:

James M. Murphy

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act to enact emergency financial protections and forebearance for consumers and small business during the COVID-19 pandemic.

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PETITION OF:

HOUSE DOCKET, NO. 5014        FILED ON: 4/6/2020

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No.         

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-First General Court
(2019-2020)

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An Act to enact emergency financial protections and forebearance for consumers and small business during the COVID-19 pandemic.

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to establish forthwith a Moratorium on debt collection during the Governor’s COVID 19 emergency declaration, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public peace, safety, health and convenience.
 

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. 

(a) Definitions in this bill:

(1)The term “consumer”

(A) Means any natural person obligated or allegedly obligated to pay any debt; and

(B) Includes a Small business 50 or less full-and part-time employees, including nonprofits obligated or allegedly obligated to pay any debt.  

(2)“Creditor” means a person or entity to whom a debt is owed, including a judgment creditor and any other person or entity that obtains an execution on a debt. Creditors shall include but not limited to; Financial Institutions, Banks, Credit Unions, Mortgage lenders, Mortgage brokers, Mortgage loan originators, Consumer finance companies, Money service businesses, Debt collectors and Loan servicers chartered or licensed in the Commonwealth of Massachusetts and subject to examination under section 2 of chapter 167.

(3)“Crediting Reporting Agency” means any entity which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

(4)The term “Debt” means any obligation or alleged obligation of a consumer to pay money

(A) arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, household, or commercial purposes ,whether or not such obligation has been reduced to judgment;

(B) owed by a business as defined in Section 1(a)(1)(B)

(C) owed to a governmental entity.

(D) “Mortgage loan” as defined in section 1 of chapter 255E

(E) “Student Loans” as defined in section 19A of chapter 15A

(F) “Credit Cards” as defined in section 37A of chapter 266

(G) “Motor Vehicles” as defined in section 1 of chapter 90

(H) “Consumer Lease” as defined in section 93 of chapter 90

(I) Without limitation, included in the definition of “debt” are all obligations secured by real property; mortgages, whether commercial or residential; all obligations secured by personal property, including but not limited to motor vehicles and manufactured homes; student loans; credit card or other payments pursuant to a revolving credit agreement; and payments on any closed-end credit obligation, including small business loans.

(5) “Governmental Entity” means the Commonwealth of Massachusetts, any municipality within the Commonwealth of Massachusetts, any administrative agency or administrative body of the Commonwealth of Massachusetts, and any administrative agency or body of a municipality within the Commonwealth of Massachusetts.

(6) “Execution”, an attachment, levy, garnishment or other disablement, freeze or seizure of property, whether pre-judgment or post-judgment, to satisfy a debt or a creditor’s exercise of a right of setoff to collect a debt; provided, however, that it shall not include self-help repossession of collateral.

(7)“Garnishment”, a legal or equitable procedure through which the earnings, property or funds of a person are required by a court of competent jurisdiction to be withheld by another entity for payment of a debt to a creditor.

SECTION 2: Prohibit Debt Collection, Repossession, and Garnishment of Wages During the Pandemic

(a)A creditor or governmental entity upon a consumer demonstrated financial hardship shall not:

(1)Commence or take any further actions to prosecute any judicial, administrative, or other action or proceeding against a consumer to collect a debt.

(2)Issue or employ any process to or against a debtor in order to collect a debt.

(3)Enforce any judgment obtained against a consumer, including, but not limited to, through wage or bank account garnishment;

(4)Act to obtain or exercise control over any property of a consumer.  This includes without limitation a bar on wage and bank account garnishment, and repossession of chattel.  In addition, it includes a bar on termination of any public utilities, including electricity or gas services. 

(5)Create, perfect, or enforce any lien against property of a consumer.

(6)Act to collect, assess, or recover a claim against a consumer.

(7)Set off any debt owed to the creditor or governmental entity that is owed by the consumer.

(8)Deny relief to any consumer who requests forbearance of payments on residential or commercial mortgages, student loans, car payments, credit card payments, lines of credit or other debts due to hardships caused by the coronavirus crisis.  

(b)Any deadline for any creditor, governmental entity, or consumer to act under any statute, rule, or other law shall be tolled for the duration of this act.

(c)Any writs of execution are stayed. 

(d)Any property garnished or attached after March 10, 2020, shall be returned to the debtor with 15 business days for the enactment of this statute.  

SECTION 3: Preventing default during the state of emergency

(a)No creditor or governmental entity shall demand payment of any debt from a consumer for the duration of this act. Notwithstanding this provision, creditors and governmental entity may send consumers regular monthly statements.

(b)No consumer shall be in default on any debt owed to any creditor or governmental entity for failure to make payments during the duration of this Act.

(c)No creditor or governmental entity shall assess any monetary charge or penalty of any kind—including but not limited to interest and late fees—on any debt owed by a consumer for the duration of this Act.

(d)No interest shall accrue on any judgment entered by a Massachusetts court for the duration of this Act.

(e)Upon termination of this act, no creditor shall require a lump sum payment or assess any monetary charge or penalty of any kind—including but not limited to interest and late fees—on any debt owed by a consumer for the duration of this Act. After forbearance, a servicer must work with the borrower on a permanent workout option to help maintain or reduce monthly payment amounts as necessary, including a loan modification.

SECTION 4: Limiting Communications from Debt Collectors During State of Emergency

(a)For the purposes of this section only, the term “debt” means any obligation or alleged obligation of a consumer to pay money --- arising out of a transaction in which the money, property, insurance or services that are the subject of the transaction are primarily for personal, family household or commercial purposes, whether or not such obligation has been reduced to judgment.

(b)For the purposes of this section only, the term “debt collector” means any person or entity who uses an instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of a debt, or who regularly collects or attempts to collect, directly or indirectly, a debt owed or due or asserted to be owed or due another.

(c)No debt collector shall communicate with any consumer or any member of their household in order to collect a debt, other than in writing.

(d)All written communications from a debt collector to a consumer must include a notice that states the following:

“There will be no enforcement of the debt, including applicable remedies (termination, repossession, eviction, garnishment, bank attachment, lawsuits or threats of lawsuits, etc.) for the period of the COVID-19 emergency plus 90 days. No fees or default interest rates will be assessed during this period. You will be given time after the end of the emergency period (90 days) to repay any past due obligations.”

SECTION 5: Suspension of All Negative Consumer Credit Reporting During the Pandemic.

No creditor or governmental entity shall report any negative consumer information to the Credit Reporting Agencies during the duration of this Act. Credit Reporting Agencies shall be prohibited from lowering a consumer’s credit score during the duration of this Act. 

SECTION 6: Powers

(a)The Attorney General and the Division of Banks shall have the power to enact rules and regulations in furtherance on this act.

This Act shall remain in effect for 90 days after the end of the Massachusetts State of Emergency.