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Massachusetts Debt Relief: Your Guide to State Laws and Managing Debt

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Debt of any kind can feel like a huge weight on your shoulders. That goes double for high-interest loans, credit cards, payday loans and medical bills. Many in Massachusetts deal with the burden of unpaid debts. Debtors in the state have an average of $6,140 in student loan debt, the seventh-highest rate in the U.S., and those with home loans have an average of $47,140 in mortgage debt, also ranking seventh in the nation.

Massachusetts has a number of programs designed to help people free themselves of debt, or at least make it more manageable. In this guide, we’ll cover debt collection practices in Massachusetts, statewide debt relief programs, payday lending laws, filing for bankruptcy, and some tips on how to tackle debt in the state of Massachusetts.

Debt in Massachusetts: At a glance

Massachusetts debt
Type Per capita balance, 2018 Rank out of 50 states* U.S. per capita balance
Credit card debt $3,600 10 $3,220
Student loan debt $6,140 7 $5,390
Auto debt $3,910 44 $4,700
Mortgage debt** $47,140 7 $33,680
*No. 1 is highest

**First-lien debt only

Source: Federal Reserve Bank of New York, March 2019

Debt collection in Massachusetts

The Fair Debt Collection Practices Act of 1978 is a federal law that protects those in debt from abusive practices. The legislation mandates that third-party collectors cannot make harassing, threatening or repeated phone calls or other methods of contact to someone in debt.

In addition, each state has its own set of debt collection laws, including Massachusetts. The state’s laws go hand-in-hand with federal regulations regarding debt collection best practices, as well as what consumers can do to protect themselves in cases of harassment.

The state attorney general’s office regulations apply to original creditors, third-party agencies and those who buy delinquent debt. As laid out by these regulations, debt collectors may not call debtors regarding a single debt more than twice every seven days. They also are prohibited from calling any other location, such as your place of employment, more than two times in 30 days.

Debt collectors also are prohibited from making any threats toward you, using profane language, telling anyone about the debt you owe and calling you at times that are not your waking hours. They are mandated to call you only between the hours of 8 a.m. and 9 p.m., unless you specify otherwise.

Debt collectors must identify themselves every time they contact you, and they are prohibited from contacting you at your place of work if you have asked that they do not call you there. If you make this request verbally, it remains in place for 10 days. Written requests are valid until you indicate otherwise.

Additionally, collectors are also barred from calling you directly if you have gained representation by an attorney.

Responding to collection letters

If a debt collector has contacted you, the first step to take is protecting yourself. Do not provide any personal information to someone on the phone, such as your bank account information or Social Security number. It’s possible that these are scammers looking to gain your information, rather than legitimate debt collectors.

Ask the debt collector to send you a verification of a debt in writing to ensure the debt is valid. A collector is mandated by law to tell you the amount of the debt and the name of the creditor attempting to collect a debt, as well as the name and address of the original creditor. The collector must provide this information within 30 days of a request.

To contest a debt, individuals must dispute the debt within 30 days of first being contacted by a collector.  Once you’ve received confirmation by mail, check that the debt collector is licensed, and start a paper trail. Maintain records of the dates and times you are contacted by phone or mail, and respond to letters in writing.

Remember, debt collectors are not allowed to harass or threaten you, whether by phone or mail. If you need to file a complaint about collection practices, you can submit a consumer complaint form to the Massachusetts Division of Banks or reach out to the Attorney General’s Consumer Advocacy and Response Division. You may reach the hotline at 617-727-8400, or you can file a consumer complaint online.

Understanding Massachusetts’ statute of limitations

Debt collectors may only sue a debtor to attempt to regain what they are owed for a certain period of time, known as the statute of limitations. The statute of limitations differs by state and debt type.

Massachusetts Statute of Limitations on Debt
Mortgage debt 20 years
Medical debt 6 years
Credit card 6 years
Auto loan debt 4 years
State tax debt 10 years

After this period of time has passed, the debt becomes time-barred and collectors may no longer sue a debtor.

Even after the statute of limitations has passed, though, those collectors may still contact debtors by letter and phone.

Take caution with paying or promising to pay off time-barred debts, also called “zombie debts.” You are allowed to ask the creditor if the debt is time-barred, and you have the right to receive an honest answer. While creditors will no longer be allowed to sue you after the statute of limitations has passed, Massachusetts law allows agencies to contact a debtor to seek out voluntary repayment from the debtor, even after the statute of limitations has passed.

Massachusetts Debt Relief Programs

There are many nonprofits and other debt relief programs available to you if you’re in debt in Massachusetts. Here are some of the options available to residents of Massachusetts:

  • American Consumer Credit Counseling offers financial counseling services for those in debt. It provides educational services and counseling to help manage debt, understand bankruptcy, debt consolidation, paying back student loans and more.
  • Cambridge Credit Counseling Corporation is a nonprofit organization dedicated to helping consumers get out of debt and making debt repayment more manageable. It also offers free credit counseling, housing counseling, debt consolidation services and more.

Before you contact a credit counseling agency, make sure it is approved by the Department of Justice. You can find a list here.

There are also nationwide programs to help you learn more about how to manage debt. Again, be careful when selecting a debt relief program, as scams do happen. The Federal Trade Commission warns against any companies that ask for payment before they’ve completed any services for you. These scammers are also likely to contact you directly via phone.

Instead of working with someone who contacts you, consider reputable debt relief companies that you can approach instead. Here are a few:

  • Freedom Debt Relief has helped more than 450,000 consumers settle their debt since 2002. You’ll pay the organization through a percentage of your monthly payments to creditors. Debtors start with a free evaluation by a certified debt consultant, and from there, settlement usually takes 24 to 60 months to complete.
  • New Era Debt Solutions has settled more than $200 million worth of debt since it launched in 1999. It helps those with a minimum of $750 in debt per account. Consumers can expect the program to take an average of 27.73 months to complete.
  • ClearOne Advantage specializes in helping consumers settle credit card debt and other unsecured debts. The program typically takes 24 to 48 months to complete, and it requires a minimum payment of $250 per month to creditors. Debtors are required to have $10,000 or more in unsecured debt to participate.

Payday lending laws in Massachusetts

Massachusetts effectively does not allow payday lenders to operate within the state, which is why it’s one of the 11 jurisdictions or states in the United States that does not have specific interest rate caps or financial limits for payday loans.

The Massachusetts Division of Banks specifies that payday lending itself is not prohibited in the state. Rather, the state government has put regulations in place that make payday loans illegal due to the high interest rates that these lenders charge, effectively barring traditional payday lenders from operating within the state.

It is still possible for you to get a payday loan out of state, but be warned: We do not recommend these short-term, high-interest loans. It’s easy for borrowers to get stuck in the payday loan trap, borrowing sums of money to pay a bill using one loan, only to have next payday roll around and still be unable to afford other bills. This often leads to more borrowing or paying an additional fee to extend the life of the loan, costing you more upfront.

Tips to tackle debt in Massachusetts

Whether you have hundreds or hundreds of thousands of dollars in debt, there are ways for you to find debt relief. You can work to consolidate your debt, refinance a loan or use a balance transfer card, all of which can help you pay off your debts more quickly and efficiently.

Consolidate your debt

A debt consolidation loan is one way that borrowers can pay off a group of loans more easily. This may be an option for you if you have several debts you need to pay off, but are having trouble managing them individually.

With debt consolidation, borrowers apply for a personal loan, hopefully with better terms and interest rates than their original debt. They then use this new loan to pay off a group of debts. This will leave you with just one due date each month to worry about, which can be helpful if you’re juggling payment dates and a variety of interest rates.

However, debt consolidation is not for everyone, particularly those with poor credit. You’ll need to have decent credit to be considered for a new loan, so if you’ve fallen behind on your current debts, consolidation may not be an option for you. Furthermore, if you extend the repayment term of the new loan to reduce monthly payments, you’ll extend the life of the loan, which means that over time, you’ll pay more toward the original debt.


Refinancing is another relief option for those in debt, although it does come with both pros and cons. When you refinance, you replace one loan with a new one, hopefully with better terms such as lower interest rates, monthly payments. It could also mean switching from an adjustable rate to a fixed-rate loan.

This is a strong option for those who have taken out loans at high interest rates, only to find new, lower interest rates available. Refinancing to a new loan can help lower your monthly payments.

You can also consider a cash-out refinance. In this process, for example, you can apply for a new mortgage loan that is larger than the current value of your home. You then take the remainder in cash and can use that sum to pay off medical bills, credit card bills and other debts.

Keep in mind that there are some cons to refinancing, too. By refinancing to a loan with lower monthly payments, that debt may be more manageable for now. Over time, however, it will extend the length of your loan, and with that, increase interest you’ll pay during the length of the loan.

You can also refinance your student loan debt, but once you do so, it cannot be reversed. By refinancing, you’ll lose the option of participating in income-based repayment plans, student loan forgiveness plans, forbearance options and deferment options.

Use a balance transfer card

Balance transfer cards may be right for you if you have significant amounts of high-interest credit card debt. When using this debt relief strategy, you shift high-interest credit card debt to a low- or no-interest card. Often this card will offer a 0% APR promotional period (usually 12 to 21 months), though these offers are typically reserved for those with good credit.

If you can focus on aggressively paying off the credit card debt during this period, you may be able to save significantly. However, if you miss any payments during that low- or no-interest rate period or fail to pay off the balance before the period ends, you may be penalized and hit with a new, much higher rate, so keep this in mind when considering using a balance transfer card.

Filing for bankruptcy in Massachusetts

If you’re considering filing for bankruptcy in Massachusetts, you have a couple of options: Chapter 7 or Chapter 13. Both types of bankruptcy are specifically designed for consumers, rather than corporations, but they work a little differently.

With Chapter 7 bankruptcy, your assets will be liquidated, or sold off, to pay off your debts. While Chapter 7 bankruptcy laws usually do not allow individuals to hold onto their property, it does provide a fresh start.

Chapter 13 bankruptcy, on the other hand, allows individuals to develop a court-approved payment plan to pay off their debts within a three- to five-year period. With this option, debtors can typically keep their property.

Bankruptcy comes at a cost, both literally and figuratively. It will not only take a toll on your credit, but it will cost also cost, on average, between $1,309 and $1,414 to file for Chapter 7 bankruptcy, and an average of $1,809 to file for Chapter 13 bankruptcy, according to the American Bankruptcy Institute.

However, there are solid reasons why so many file for bankruptcy. If you’re in over your head financially with what feels like an insurmountable amount of debt and are overwhelmed by the number of payments you’re required to make each month, you may wish to consider bankruptcy.

As soon as you file, you will be assigned a court-appointed counselor to help you navigate the bankruptcy process. You may also find some relief in knowing that as soon as you proceed with bankruptcy filings, you will be protected from debt collectors, meaning no more phone calls and letters demanding repayment.

If you’re considering filing for bankruptcy in Massachusetts, visit the Massachusetts state government website, which offers guides and contact information for those exploring bankruptcy.

The bottom line

Debt can be overwhelming, but there is always hope. Whether you’re considering working with a debt-relief program or using a balance transfer to a low-interest credit card, there are options to help you work your way out of debt for good.

The information in this article is accurate as of the date of publishing. 


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