This text has undergone thorough fact-checking to ensure accuracy and reliability. All information presented is backed by verified sources and reputable data. By adhering to stringent fact-checking standards, we aim to provide you with reliable and trustworthy content. You can trust the information presented here to make informed decisions with confidence.
Massachusetts has some of the strictest debt collection laws in the U.S., offering strong protections for consumers while imposing detailed requirements on debt collectors, buyers, and creditors. These laws extend beyond federal standards, covering original creditors and attorneys, and enforcing strict licensing rules. Violations can lead to lawsuits under the Massachusetts Consumer Protection Act (G.L. c. 93A). Here's what you need to know:
Massachusetts enforces these rules through the Attorney General’s Office, courts, and the Division of Banks. Staying compliant requires strict adherence to these regulations and maintaining clear, accurate documentation.
In Massachusetts, anyone involved in third-party consumer debt collection or purchasing and directly collecting consumer debt must secure a license from the Division of Banks (DOB). This requirement covers both collection agencies and entities buying debt portfolios with plans to contact consumers directly.
Applications for debt collection licenses are processed entirely online through the Nationwide Multi-State Licensing System (NMLS). While the application itself is digital, supporting documents must be sent by mail to 1000 Washington Street, 10th Floor, Boston, MA 02118. Before applying, it’s essential to review Massachusetts General Laws Chapter 93 (sections 24–28) and the related regulations under 209 CMR 18.00.
Here’s a breakdown of the associated fees:
All fees are non-refundable.
Organizations that purchase delinquent debt purely for investment purposes and rely on licensed debt collectors or attorneys for all consumer interactions are classified as "passive debt buyers." These entities are not required to obtain a license. This classification was upheld in the 2018 case Dorrian v. LVNV Funding, LLC, where the Massachusetts Supreme Judicial Court confirmed that entities meeting these criteria are exempt from licensure.
However, this exemption comes with strict conditions - passive debt buyers must have no direct contact with consumers. If they start making collection calls or sending letters themselves, they must secure a license. Even without a license, passive debt buyers must still adhere to the Attorney General’s regulations under 940 CMR 7.00 and the federal Fair Debt Collection Practices Act (FDCPA).
Original creditors collecting their own debts are not required to obtain a license from the DOB. However, they must comply with all relevant state and federal regulations governing debt collection. Similarly, attorneys licensed to practice law in Massachusetts are exempt when collecting debts on behalf of their clients.
"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."
– Massachusetts Division of Banks
Other exemptions include government employees acting in an official capacity, nonprofit credit counseling organizations, and entities collecting debts that were not in default when acquired. To verify a collector’s licensing status, you can check through the NMLS or download the approved licensee list from Mass.gov.
With the licensing requirements laid out, the next section will cover prohibited practices in Massachusetts debt collection.
Massachusetts law strictly prohibits debt collectors from using tactics that mislead, harass, or pressure consumers unfairly. Under Massachusetts General Laws Chapter 93, Section 49, collectors are barred from employing "unfair, deceptive or unreasonable" methods when attempting to collect debts. Violations of these rules also fall under the Massachusetts Consumer Protection Act (Chapter 93A), which can lead to serious legal repercussions.
Debt collectors are forbidden from misrepresenting their identity or authority. For instance, they cannot falsely claim to be an attorney, a government official, or affiliated with a government agency. Using fake court documents or fabricated government notices is also off-limits.
If the debt in question is older than the six-year statute of limitations, collectors must inform consumers that making a payment could restart that clock. This disclosure must include the following statement:
"WE ARE REQUIRED BY REGULATION OF THE MASSACHUSETTS ATTORNEY GENERAL TO NOTIFY YOU... THIS DEBT MAY BE TOO OLD FOR YOU TO BE SUED ON IT IN COURT."
Additionally, collectors cannot disclose the existence of a debt to third parties - such as friends, neighbors, or employers - unless the consumer has provided written consent. Other prohibited behaviors include using obscene or profane language and making threats of arrest or imprisonment without any legal authority. The Massachusetts Supreme Judicial Court, in Armata v. Target Corp., ruled that contacting a debtor more than twice in a seven-day period, even without leaving a message or speaking directly, violates these regulations.
These protections are key elements of the Massachusetts Consumer Protection Act.
Massachusetts law also imposes strict limits on how often and when debt collectors can contact consumers. For example, calls to a consumer's home, cell phone, or personal number are capped at two per seven-day period for each debt. Calls to workplaces or other non-residential locations are limited to two per 30-day period.
Collectors must make contact only during "normal waking hours", generally defined as between 8:00 A.M. and 9:00 P.M. local time. If a consumer has a different schedule, they should notify the collector, who must then adjust their contact times accordingly.
Consumers can also request that collectors stop calling them at work. An oral request is valid for 10 days, while a written request remains in effect until the consumer revokes it. Furthermore, creditors are allowed only one home visit per 30-day period for each debt, and these visits must occur during normal waking hours.
| Communication Type | Frequency/Time Restriction |
|---|---|
| Calls to Home/Cell | Max 2 per 7-day period |
| Calls to Workplace/Other | Max 2 per 30-day period |
| Standard Calling Window | 8:00 A.M. – 9:00 P.M. |
| Home Visits | Max 1 per 30-day period |
These rules are designed to shield consumers from excessive or intrusive collection efforts.
Finally, if a debt collector knows that a consumer is represented by an attorney concerning the debt, all communications must go through the attorney. Contacting the consumer directly is only allowed if the attorney fails to respond or explicitly permits it. These measures, enforced by the Massachusetts Attorney General, aim to prevent harassment, oppression, or abuse during the debt collection process.
Massachusetts Debt Collection Statute of Limitations by Debt Type
In Massachusetts, most consumer debts - including credit cards, personal loans, medical bills, and oral or written contracts - are subject to a six-year statute of limitations. This period begins on the date of the first missed payment that remains unpaid.
Once the six years are up, the debt becomes "time-barred." This means collectors can no longer take legal action against you to recover the debt. However, the debt itself doesn’t vanish. Collectors can still ask for voluntary payments, but they lose the ability to enforce repayment through a lawsuit.
Some debts fall under a 20-year statute of limitations. These include contracts labeled "under seal", promissory notes signed in the presence of a witness, and court judgments. After 20 years, Massachusetts law assumes the debt has been paid and resolved.
| Debt Type | Statute of Limitations | Legal Authority |
|---|---|---|
| Credit Card Debt | 6 Years | MGL c. 260, § 2 |
| Medical Bills | 6 Years | MGL c. 260, § 2 |
| Oral & Written Contracts | 6 Years | MGL c. 260, § 2 |
| Contracts Under Seal | 20 Years | MGL c. 260, § 1 |
| Court Judgments | 20 Years | MGL c. 260, § 20 |
The statute of limitations can reset if you take certain actions, like making a small payment, acknowledging the debt in writing, or agreeing to a new payment plan. Even a small "good faith" payment can restart the six-year clock, so proceed cautiously with old debts.
When a debt collector first contacts you, they are required to send a debt validation notice within five business days. This notice must outline the debt amount, the creditor’s name, and your right to dispute the debt within 30 days.
If you dispute the debt in writing during this 30-day window, the collector must pause all collection efforts until they provide proper documentation. Under Massachusetts law, collectors must supply the following:
The Attorney General’s Office expects collectors to act responsibly and make a genuine effort to gather these materials. If they cannot provide the required verification, they must cease collection activities until the information is obtained.
For debt buyers pursuing legal action, Rule 8.1 requires them to file an affidavit detailing the chain of ownership from the original creditor to the current holder. This affidavit must include account numbers and other specifics to confirm legal standing.
Proper debt verification not only ensures compliance with the law but also helps debt portfolio managers evaluate risks when trading debt. Once verified, collectors must also follow strict rules for handling time-barred debts.
While collectors can request voluntary payments on time-barred debts, Massachusetts law mandates that they provide clear disclosures about the debt’s status. They must inform you that the debt is likely too old to be enforced in court and that making a payment could reset the statute of limitations.
Collectors are also required to repeat these disclosures as part of their communication practices. For written notices, the disclosure must appear in at least 8-point type. During phone calls, the disclosure must be given immediately before or after the first request for payment.
If you’re sued for an old debt, don’t ignore the court date. The court won’t automatically dismiss the case based on the expired statute of limitations. You’ll need to actively raise this as an affirmative defense. It’s also worth checking your old contracts for clauses like "under seal", which could extend the timeframe for legal action from 6 to 20 years.
Massachusetts law goes beyond setting limits on debt collection practices by offering additional safeguards, such as income protection and assessments of a debtor's ability to pay.
Certain income sources are shielded from debt collection efforts under Massachusetts law. These include Social Security, unemployment benefits, workers' compensation, pensions, and Child Tax Credit payments. Wage garnishment is also restricted to the lower of 15% of gross wages or the amount exceeding 50 times the minimum wage. For instance, if you earn $800 weekly and the minimum wage is $15 per hour (resulting in a threshold of $750), only $50 can be garnished from your wages.
Even if a judgment creditor levies your bank account, funds from protected sources remain exempt after being deposited. Additionally, personal property and real estate covered under M.G.L. c. 235, § 34, cannot be seized or threatened to satisfy debts.
To ensure fairness, courts in Massachusetts also evaluate a debtor's financial capacity to pay. If you're sued for a debt and cannot afford to pay, it's crucial to inform the court. Judges are prohibited from ordering payments from protected income sources.
"If you can't afford to pay a debt let the court know. You can't be ordered by a court to pay a debt from certain types of income, such as Unemployment Benefits, Workers Compensation Benefits, and Social Security Benefits." – Massachusetts Attorney General's Office
Attending your court date is essential. Missing it could lead to a default judgment or even a warrant for your arrest. Before agreeing to any payment plan, ensure the terms are manageable and always request written documentation. Creditors are not allowed to ask for details about your accounts or assets unless they have a reasonable basis to believe it will help them collect the debt. If a collector requests information about exempt income, you are not obligated to provide it. Violations of these rules fall under the Massachusetts Consumer Protection Act (G.L. c. 93A), which allows you to pursue damages if your rights are breached.
Building on the legal framework discussed earlier, ensuring strict adherence to enforcement and compliance practices is critical for maintaining effective and lawful debt trading operations.
Failing to comply with regulations can lead to serious consequences under the Massachusetts Consumer Protection Act (G.L. c. 93A). Consumers have the right to file private lawsuits for damages, and violations can result in hefty financial penalties and damage to a company's reputation.
A notable case highlighting this is Armata v. Target Corporation (2018). The Massachusetts Supreme Judicial Court ruled that Target breached the law by attempting to contact a debtor more than twice within a seven-day period. Importantly, the court clarified that even unsuccessful call attempts - where no voicemail is left - count toward the two-call limit. Additionally, creditors and debt buyers can be held accountable for the actions of their attorneys if those actions are deemed unfair or deceptive under Chapter 93A. These stringent enforcement measures underscore the need for actionable compliance strategies.
To navigate regulatory requirements effectively, debt buyers should prioritize strong internal controls and thorough documentation. These measures not only ensure compliance but also reduce risks associated with debt trading.
"The Attorney General's Office expects that creditors will act in good faith and exercise due diligence to produce documentation sufficient to confirm that the amount demanded is due to the creditor from the debtor." – Office of the Attorney General
Debexpert provides a platform tailored to Massachusetts' strict debt collection laws, offering tools that simplify compliance for debt buyers and sellers during portfolio trading. By aligning with the state's legal framework, Debexpert ensures every step of the process adheres to the rules.
Debexpert's analytics tools incorporate Massachusetts' 6-year statute of limitations for consumer debt and Rule 8.1 requirements into their portfolio evaluations. These tools flag accounts that might be time-barred, helping buyers assess potential risks before bidding. This proactive approach minimizes the chances of acquiring accounts that can't be enforced.
Additionally, the platform ensures buyers can verify that portfolios include complete documentation, such as the full chain of ownership from the original creditor to the current owner, with references to specific account numbers. This transparency reduces the likelihood of purchasing portfolios that could face legal challenges in Massachusetts courts.
Under 940 CMR 7.08, Massachusetts requires creditors to supply detailed documentation within 30 days of a debtor's written dispute. Debexpert addresses this by offering an encrypted file-sharing system where sellers can securely upload all required documentation. This allows buyers to confirm compliance with documentation standards before completing a purchase, ensuring smoother transactions.
The platform also prioritizes data privacy, safeguarding sensitive debtor information throughout the process. This reduces compliance risks related to data handling and privacy violations.
Debexpert’s auction capabilities complement its analytics and secure documentation tools, enhancing both compliance and efficiency. The platform supports various auction formats - English, Dutch, Sealed-bid, and Hybrid - allowing for flexible and efficient portfolio trading. Real-time bidding tools provide buyers with access to critical data, like address verification and chain-of-title documentation, enabling informed decisions before placing bids.
For passive buyers - those who invest in debt without direct consumer interaction - Debexpert simplifies the transfer process to licensed collectors. While Massachusetts case law may exempt passive buyers from licensing requirements, these buyers must ensure their third-party collectors are properly licensed. Debexpert’s system facilitates this by enabling the direct transfer of accounts to licensed agencies or attorneys, maintaining compliance while preserving the passive buyer status.
Massachusetts has some of the strictest debt collection regulations in the country, designed to safeguard all involved parties. Any violation of these rules is automatically considered a breach of the Massachusetts Consumer Protection Act (G.L. c. 93A), opening the door to private lawsuits and hefty penalties.
Given these legal requirements, maintaining rigorous operational practices is non-negotiable. Restrictions on communication, proper documentation, and adherence to the statute of limitations are critical for staying compliant. For debt portfolio managers, ensuring accurate and detailed documentation is a must. This includes keeping account-specific records, updated debtor addresses, and affidavits certified by attorneys. As the Attorney General has stated, collectors are expected to "act in good faith and exercise due diligence to produce documentation sufficient to confirm that the amount demanded is due".
To help meet these demands, Debexpert provides compliance-oriented solutions tailored to Massachusetts regulations. The platform integrates state-specific requirements into its portfolio analytics, secure documentation management, and real-time auction tools. Whether you're a passive debt buyer leveraging the Dorrian v. LVNV Funding exemption or an active, licensed collector, Debexpert offers the resources needed to ensure compliance throughout the debt trading process.
Successfully navigating Massachusetts debt collection laws requires a sharp eye for detail and a firm grasp of the regulatory framework. With the right tools and expertise, debt buyers can effectively manage their portfolios while prioritizing consumer protections and avoiding costly missteps.
To find out if a debt collector is licensed in Massachusetts, you can check with the Division of Banks. Search for their name on the list of approved licensees or confirm that they possess a valid license or registration. It's also important to verify that they have secured a license from the Massachusetts commissioner, as mandated by state law.
If you're approached about a time-barred debt in Massachusetts, it's important to understand that such debts are no longer enforceable in court because the statute of limitations has expired. For most consumer debts, this period is typically six years. To protect yourself, notify the debt collector in writing that the debt is time-barred and keep a copy of all correspondence for your records.
Debt collectors are prohibited from using unfair or deceptive tactics. If you experience harassment or improper behavior, consider seeking legal advice or filing a complaint with the Massachusetts Attorney General’s Office.
If you challenge a debt in writing, the collector is obligated to verify it by sharing key details. This includes the amount you owe, the name of the creditor, and any supporting documents, such as invoices, contracts, or court judgments. These steps are in place to promote clarity and adhere to state laws.
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.
.svg){kind=icon}
.svg){kind=icon}
.svg){kind=icon}
