INDIANAPOLIS– New federal rules weaken protections for borrowers. Some states have updated laws designed to help families falling behind on debts but Indiana is not one of them.
It used to be debt collectors would only call or send you bills in the mail. Now, they can legally e-mail, text, or even message you on social media as well.
“Really stressful and really damaging to Hoosier consumers,” said Erin Macey, Senior Policy Analyst at the Indiana Institute for Working Families. “We wanted to get the word out and we also want our lawmakers to act to provide more financial support so people don’t fall behind.”
The Indiana Institute for Working Families is seeking a COVID-19 relief package from Congress and a national interest cap at 36%. They’d like state lawmakers to act on this too.
“Exemption laws in Indiana and many other states desperately need to be updated,” said Carolyn Carter, Deputy Director, for the National Consumer Law Center.
The center gave Indiana a “D” letter grade when it comes to the strength of state protections for family finances. That’s because debt collectors in the Hoosier state can seize wages and property worth the minimum dollar amount required by federal law, which is less than poverty level.
“Individuals need to meet their basic needs while they are trying to pay off old debts,” added Macey.
Many other states have updated exemption laws and the National Consumer Law Center said those areas have seen success.
“The exemption laws force creditors to collect their money in a more reasonable way; it also may force creditors to be a little more careful about making sure that they are not making loans to people who don’t have the ability to repay them,” explained Carter.
So far, Indiana lawmakers have yet to commit to proposing an exemption law this upcoming session but it could come up as they work to address COVID-19 issues. In the meantime, Macey said struggling families should avoid loans as much as possible.
“Going to sources of support you know will be helpful, like a township trustee, your community action agency, your church,” explained Macey.