Debt Collection Law 'Out of Date and Overly Harsh'

ProPublica and NPR published a joint report earlier this month on the problems with a 1968 federal law that allows debt collectors to take 25 percent of debtors' paychecks and every penny in their bank accounts to repay consumer debts, leaving "millions of workers" facing the struggle of how to live when a large part of their pay is diverted to pay a consumer debt. For example, "time has eroded what even then were modest protections [in the Credit Consumer Protection Act]. The law barred creditors from taking any wages from the very poorest of workers, but used a calculation based on the minimum wage to identify them. Since the federal minimum wage hasn't kept pace with inflation, today, only workers earning about $11,000 annually or less— a wage below the poverty line— are protected." The National Consumer Law Center argues that the cap should be reduced to 10 percent to ensure that low-income debtors still earn a living wage.