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Boston has some of the strictest debt collection laws in the U.S., creating a challenging but regulated environment for collectors, debt buyers, and attorneys. Here's what you need to know:
These regulations and updates highlight the importance of understanding Massachusetts's unique legal landscape for debt collection.
Massachusetts Debt Collection Laws: 2025 Legislative Changes and Key Regulations
Navigating debt collection in Massachusetts requires a solid grasp of the state's regulations, which are among the strictest in the country. Governed by MGL c. 93, § 49 and 940 CMR 7.00, these rules apply to original creditors, their attorneys, third-party collection agencies, and debt buyers who hire others for collection efforts.
One standout rule is the two-call limit. Collectors are restricted to no more than two calls to a debtor's personal phone within a seven-day period. For workplace contacts, the limit is two calls in 30 days - even if no one answers or a message isn’t left. In Armata v. Target (480 Mass. 14), the Massachusetts Supreme Judicial Court clarified that this rule applies regardless of whether contact is successful, a strict interpretation that distinguishes Massachusetts from other states.
Other key provisions include:
Violating these rules constitutes a breach of the Massachusetts Consumer Protection Act (G.L. c. 93A), leading to potential penalties. Prohibited actions include threats of arrest, using offensive language, simulating court documents, or implying that transferring the debt erases the debtor's legal defenses.
These foundational rules set the stage for recent updates to Massachusetts debt collection laws.
In July 2025, Massachusetts lawmakers introduced the Debt Collection Fairness Act (DCFA), which added further protections for consumers. The Act made significant changes, including reducing judgment interest rates and shortening the statute of limitations for filing consumer debt claims.
Here’s what changed:
"Families already in the grip of debt should not have to choose between putting food on the table and paying the exorbitant costs charged by debt collection companies - or fear imprisonment."
- Karen E. Spilka, Senate President, Massachusetts
The table below highlights the key updates introduced by the DCFA:
| Provision | Old Rate | 2025 DCFA Update |
|---|---|---|
| Consumer Debt Interest Rate | 12% | 3% |
| Statute of Limitations | 6 Years | 5 Years |
| Wage/Child Support | Limited Exemptions | Expanded Exemptions from Garnishment |
| Imprisonment for Debt | Not explicitly banned | Strictly Prohibited |
| Employment Protection | Varies | Employers cannot penalize for personal debt |
These changes reflect an effort to provide stronger protections for debtors, ensuring fair treatment and reducing the financial burden on individuals and families.
In Boston, debt collectors and buyers must secure a license from the Massachusetts Division of Banks (DOB). This requirement is enforced under MGL c. 93, § 24-24K and 209 CMR 18.00. Anyone involved in third-party consumer debt collection or purchasing debt with the intent to collect directly must hold a valid DOB license.
Applications for licensing are handled online through the Nationwide Multi-State Licensing System (NMLS). The process involves several fees, including a $1,000 collector fee, a $300 investigation fee per license, and charges for FBI background checks ($36.25) and credit reports ($15.00). Additionally, licensed collectors must maintain a $25,000 surety bond with the state treasurer, ensuring financial accountability.
Certain groups are exempt from licensing. For example, attorneys licensed in Massachusetts do not need a separate debt collector license but must adhere to the Supreme Judicial Court's Rules of Professional Conduct and the Attorney General's regulations. Similarly, banks, federal savings associations, and credit unions are generally exempt. Passive debt buyers - those who invest in debt but rely on third-party agencies or attorneys for collection - also don't require a license. This exemption was clarified in the case Dorrian v. LVNV Funding, LLC (479 Mass. 265, 2018), where the Massachusetts Supreme Judicial Court ruled that passive debt buyers are not "debt collectors" under G.L. c. 93, § 24, as long as they avoid direct consumer contact.
Operating without a valid license can invalidate debt collections and lead to severe penalties. Unlicensed agencies may face substantial fines, prohibition from operating in Massachusetts, heightened DOB scrutiny, and potential lawsuits from consumers. To avoid these consequences, licenses must be renewed annually by December 31.
Even for those exempt from licensing, strict regulatory oversight remains a priority.
Although passive debt buyers are not required to obtain a license, they must still comply with regulatory standards. The Attorney General's debt collection regulations (940 CMR 7.00) specifically address unfair and deceptive practices, which apply to these entities. Passive debt buyers must ensure their third-party agencies follow both state and federal laws, including the Fair Debt Collection Practices Act (FDCPA).
To meet these standards, passive debt buyers should implement robust oversight programs. These programs include monitoring third-party agency behavior, maintaining thorough records of all communications, and confirming that any third-party partner holds a valid NMLS license. Importantly, under MGL c. 93A, passive debt buyers can be held accountable for any unfair or deceptive practices carried out by their agents. Effective oversight is not just a best practice - it’s essential to avoid liability.
Navigating debt collection in Boston requires balancing compliance with effective strategies. Massachusetts has some of the strictest regulations in the country, including limitations on communication and potential liability under Chapter 93A, which can lead to double or even triple damages for willful violations. To succeed in this environment, you need to follow the rules while maximizing results in Boston's competitive landscape.
When reaching out to debtors, strict guidelines must be observed:
Additionally, within five business days of your first contact, you must send a written validation notice. This notice should include the debt amount, creditor's name, and the debtor's right to dispute the debt within 30 days. If the debtor disputes the debt in writing, you must pause collection efforts until you provide proof, such as a signed contract or account ledger.
| Tactic | Permitted | Prohibited |
|---|---|---|
| Call Frequency | 2 calls per 7 days (home/cell) | More than 2 calls in a 7-day period |
| 2 calls per 30 days (work) | Repeated calls after a stop request | |
| Identification | Full name and business name | Anonymous or false identification |
| Language | Polite and professional | Profane, obscene, or abusive language |
| Legal Threats | Only threats you intend to follow | False threats of arrest or wage garnishment |
| Third Parties | Contacting for debtor location | Informing others about the debt |
| Documentation | Providing proof upon dispute | Demanding payment without valid documentation |
By adhering to these practices, you can maintain compliance while ensuring effective communication with debtors.
Effective negotiation requires thorough documentation and transparency. Massachusetts Rule 8.1 mandates a clear chain of debt ownership, including affidavits detailing the original creditor, the date of the last payment, and all transfers of the debt. This ensures there’s no ambiguity about who owns the debt.
For debts older than six years, which fall outside the statute of limitations for consumer-related debt in Massachusetts, you must inform the debtor that the debt cannot be pursued in court. The Massachusetts Attorney General requires the following notice:
"WE ARE REQUIRED BY REGULATION OF THE MASSACHUSETTS ATTORNEY GENERAL TO NOTIFY YOU OF THE FOLLOWING INFORMATION. THIS INFORMATION IS NOT LEGAL ADVICE: THIS DEBT MAY BE TOO OLD FOR YOU TO BE SUED ON IT IN COURT. IF IT IS TOO OLD, YOU CANNOT BE REQUIRED TO PAY IT THROUGH A LAWSUIT."
Failing to provide this disclosure when collecting on time-barred debt can result in legal consequences under Chapter 93A.
When negotiating settlements, define terms clearly. While federal guidelines don’t require settlement letters to include deadlines or interest details, providing this information can prevent disputes over unfair practices. Avoid requesting post-dated checks, as this is prohibited. Instead, work with the debtor to create a payment plan they can manage.
Finally, steer clear of banned tactics. Never threaten legal actions you don’t intend to pursue, and avoid public discussions about the debt unless in courthouses or your office. Limit household visits to one every 30 days, and remain outside unless invited in.
Boston's debt trading market operates under strict regulations and a litigation-heavy recovery process, which significantly influences how pricing and transactions unfold. To adapt, the market has leaned toward a "passive debt buyer" model. In this setup, buyers acquire debt portfolios as investments but rely on licensed third-party collectors or attorneys to manage the recovery process. This approach aligns closely with Massachusetts's regulatory demands.
When it comes to pricing, Boston mirrors national trends. For example, banks typically sell defaulted credit card accounts for around 3% to 4% of their face value. On average, debt portfolios across the U.S. trade for about 4 cents on the dollar. However, one persistent challenge is data integrity. Many portfolios are sold "as is" through forward-flow agreements, with minimal documentation - often just basic electronic spreadsheets accompanied by broad disclaimers about accuracy. As Peter A. Holland, Director of the University of Maryland School of Law Consumer Protection Clinic, pointed out:
"Many debt buyers are suing the wrong people, and for the wrong amounts".
Medical debt represents a large portion of the market, making up 57% of all collections tradelines reported on consumer credit reports. Between 2018 and 2022, the total number of collections tradelines dropped by 33%, largely due to changes in how contingency-fee collectors handle medical debt. Despite this decline, the number of debt buyers reporting collections tradelines has remained steady at 33, indicating a competitive yet stable market.
These trends highlight the need for innovative tools and strategies to manage the complexities of the Massachusetts debt trading environment.
Debexpert provides a technology platform tailored for the challenges of debt portfolio trading in Massachusetts. It offers advanced portfolio analytics to help buyers assess the quality and composition of portfolios, including consumer, medical, and secured debts. Buyers can also benchmark pricing against the typical market rate of 3% to 4% of face value.
To address issues with data integrity, Debexpert employs secure file sharing with end-to-end encryption, ensuring comprehensive documentation is exchanged safely. This reduces the risks often associated with purchasing portfolios traded "as is" through forward-flow agreements.
The platform's auction capabilities - available in English, Dutch, Sealed-bid, and Hybrid formats - make it easier for buyers to acquire portfolios while adhering to Massachusetts's stringent regulations. Additionally, Debexpert's real-time chat and secure communication tools allow seamless coordination with licensed third-party collectors or attorneys who handle the recovery process.
Another standout feature is the platform's notification system for preferred debt types. This is especially useful given the different strategies required for managing medical versus financial collections. By identifying the right debt type early on, buyers can deploy the most effective recovery resources right from the start.
Understanding wage garnishment rules and exemptions is essential for navigating debt collection in Massachusetts, alongside effective communication and negotiation strategies.
Massachusetts law, under MGL c. 246, § 28, restricts garnishment to the lesser of 15% of gross wages or the amount exceeding 50 times the state minimum wage. In contrast, federal law permits garnishment up to 25% of disposable earnings or any amount above 30 times the federal minimum wage.
Before a creditor can garnish wages, they must first obtain a court judgment and initiate a supplementary process to secure a garnishment order. Additionally, garnishment orders from other states cannot be enforced in Massachusetts unless the judgment is domesticated in a local court under Chapter 246, Section 20A.
Certain income sources are entirely exempt from garnishment, including:
Additionally, child tax credit payments are treated as public assistance and are fully protected from debt collection. For bank accounts, Massachusetts law exempts the first $2,500 in any account.
These legal safeguards form the foundation for recent legislative updates designed to strengthen protections for debtors.
The Debt Collection Fairness Act (S.2537), enacted in July 2025, introduced even stronger protections. Under this law, either 90% of a debtor’s gross weekly pay or 65 times the state minimum wage is now shielded from garnishment.
Senate President Karen E. Spilka (D-Ashland) highlighted the significance of these changes:
"Families already in the grip of debt should not have to choose between putting food on the table and paying the exorbitant costs charged by debt collection companies - or fear imprisonment".
Key provisions of the law include:
These updates not only provide greater security for debtors but also reshape collection practices and strategies in Boston. Compliance with these evolving rules is critical for creditors, as is the need for innovative approaches to recovery.
Debt collection in Boston requires a thorough understanding of Massachusetts-specific laws, licensing rules, and the state's evolving legal landscape. Collectors must be licensed, while passive debt buyers - those who hire licensed collectors or attorneys - are exempt from licensing but must still comply with Attorney General regulations.
Strict limits govern call frequency and workplace contacts, with non-compliance resulting in hefty penalties. Rule 8.1 adds another layer of complexity, requiring detailed affidavits that trace the entire chain of ownership - from the original creditor to the current owner. This makes precise documentation a critical factor for success in litigation.
When trading debt portfolios, ensuring a clear chain of title and adhering to Rule 8.1 requirements is non-negotiable. Platforms like Debexpert simplify this process by offering advanced analytics, secure file sharing, and real-time communication tools, helping buyers and sellers assess compliance risks and seize market opportunities efficiently.
If you're in Massachusetts and a debt collector is contacting you too often, you have the right to ask them to stop. Once you make this request, they are legally required to halt all communication with you. However, it's important to note that this doesn't erase the debt - you may still owe it. Massachusetts law is in place to shield you from excessive or harassing contact by debt collectors.
The upcoming 2025 updates to Massachusetts laws, particularly the Debt Collection Fairness Act, introduce several key changes aimed at protecting consumers. These include reducing the interest rate on consumer debt judgments to 3%, limiting the timeframe for legal action on debt to five years, and eliminating the possibility of imprisonment for unpaid debts. Additionally, the new rules offer stronger protections for wages against garnishment. These changes will make it much more challenging for creditors in Boston to pursue old or unpaid debts.
Before initiating a collection lawsuit, a debt buyer needs to have specific documentation in place. This includes proof of the debt amount, the name of the original creditor, and a statement notifying the debtor of their right to dispute the debt within 30 days. If the debtor chooses to dispute it, the debt buyer must then provide verification of the debt. These steps are required to meet Massachusetts regulations.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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