Massachusetts Attorney General Enacts Sweeping Student Loan Legal Protections

Massachusetts Attorney General Maura Healey has issued emergency state regulations in response to the COVID-19 pandemic. These regulations provide student loan borrowers and other consumers with some of the strongest legal rights and protections in the country against debt collectors.

Here’s an overview of what these new regulations do:

• Lenders and debt collectors are prohibited from initiating a new collections lawsuit, or threatening to do so.
• Lenders and debt collectors are prohibited from initiating new legal actions to garnish wages or seize assets or property, or threatening to do so.
• Lenders and debt collectors are prohibited from initiating a collections phone call, either live or recorded, to someone’s home, cell phone, or other phone number provided by the debtor, for purposes of collecting a debt or seeking a payment.

These restrictions apply to federal and private student loan debt, as well as other consumer debt such as credit card debt. If a lender or debt collection agency engages in any of the above actions in violation of these emergency regulations, borrowers can potentially sue the lender or debt collection agency for damages.

The emergency regulations went into effect on March 27, 2020 and will remain in effect for 90 days, or until the conclusion of the declared state of emergency, which is ongoing. Thus if the state of emergency lasts for more than 90 days, the regulations could be extended.

On April 20, 2020, a debt collection trade association representing many debt collection agencies that operate in Massachusetts filed a lawsuit in federal District Court. The lawsuit alleges that the regulations violate a variety of laws and constitutional doctrines (such as First Amendment rights and Due Process). Debt collectors are seeking an injunction, which, if granted, would prohibit the new regulations from being enforceable. No decision has been made by a judge as of this writing, but the case is ongoing.

Read more about new Coronavirus-related student loan protections here.

UPDATE, 5/8/2020: In response to a lawsuit brought by debt collection agencies, a federal court has issued a preliminary injunction, barring enforcement of much of these new regulations.