Seizing of debtors' cars is curtailed

Sheriffs in three Massachusetts counties that once made a business of towing vehicles on behalf of unscrupulous debt collectors have adopted new rules to treat consumers more fairly and have sharply cut back on the common practice of seizing vehicles from beleaguered debtors.

The changes, coming after a Globe Spotlight Team report on debt collection abuses, are now seen in Norfolk, Plymouth, and Worcester counties.

In Norfolk County, deputy sheriffs are no longer seizing vehicles from consumers whose debt results from medical or dental expenses or in cases in which the amount owed is less than $1,500.

"We will no longer seize cars over medical bills, no matter what the amount," Sheriff Michael G. Bellotti said, calling the practice inappropriate because medical services are not a discretionary purchase.

As a result of the changes, confiscating vehicles in the county has dropped by half from September to November, compared with the same three months last year.

A similarly dramatic change has come to Worcester County, where more than 1,000 vehicles had been seized from debtors over the last five years. The number of vehicle confiscations has dropped by two-thirds since two notorious debt collectors -- brothers Daniel and Chad Goldstone -- closed their local offices and left the state after the Globe series, which detailed their practices.

And in Plymouth County, the Sheriff's Department has adopted an even more striking shift: treating debtors with simple consideration. The deputy sheriff now writes to anyone whose vehicle is about to be seized, said spokesman John Birtwell .

The change was made after the Globe reported that many consumers have no idea they are being sued for debt or that a debt collector has a court judgment to seize their property.

"The primary concern was that a lot of these folks had absolutely no idea that their vehicles were being taken," Birtwell said.

Often, in searching for a vehicle to seize, a deputy sheriff or constable successfully finds the address of a person who the debt collector and the court did not previously take the trouble to find, according to the Globe report.

Now, if a deputy sheriff in Plymouth County sends a letter of warning to an address provided by the court, and the letter is returned as undeliverable, the deputy will not hunt further for the vehicle, Birtwell said.

As the three counties shift their practices, some legislators and consumer advocates are working to further limit the seizure of vehicles to satisfy debts, and Bellotti is proposing that his recent policy moves be adopted statewide.

Separately, a task force appointed by the chiefs of the Massachusetts Trial Courts to change the district court system -- where most debt cases are decided -- continues to deliberate on a range of reforms.

The Spotlight Team series, which ran mid summer, documented the extraordinary degree to which the small-claims sessions have become pliant forums for debt collectors. Collectors, who buy delinquent debts for pennies on the dollar, have won court judgments by the thousands -- judgments that allow for the seizures of vehicles and other property.

The report highlighted how remarkably common such cases have become, with ordinary debtors given the sort of harsh treatment once reserved for the most obdurate of deadbeats. The article also showed how little regulatory supervision or interest there has been in reining in the more abusive debt collectors.

Now, however, the climate is shifting.

Jeffrey R. Turco , the Worcester County sheriff's chief deputy, said the big change -- beyond the Goldstones' departure -- has been new rules designed to ensure that deputy sheriffs take more responsibility for these cases and are not acting as street-level enforcers of erroneous court judgments.

For example, if a debtor claims to have filed for bankruptcy protection, Turco said, Worcester deputy sheriffs must not seize the person's vehicle unless they determine the claim is false.

And when seizing vehicles, deputy sheriffs must now consult a catalog of used-car prices to determine whether a vehicle's sale value will cover the debt that is owed. The sheriff doesn't want to take someone's vehicle only to leave them still in debt, Turco said.

The department will no longer seize a vehicle with a large lien against it, Turco said, because in such cases, the lender has first rights to the vehicle. That means the vehicle cannot be sold at a sheriff's auction. If a vehicle cannot be sold, it would effectively be held for ransom, while the debtor comes up with cash to reclaim it.

In cases in which a vehicle is seized and goes to auction, Turco said, the department is trying to attract more bidders to boost the potential sale price. The department has begun posting auction notices in the town hall and at the Police Department in addition to advertising in a local newspaper as it has in the past.

State Senator Robert S. Creedon Jr. , chairman of the Legislature's Judiciary Committee, is among those pressing for change in debt-collection oversight. He said he plans to hold hearings early next year on abusive debt collectors and the free pass they often get in the state's district courts. He said he is particularly concerned about defendants not getting proper notice of court dates and the automatic default rulings against them when they fail to show up in court.

"We don't want these default judgments popping up when nobody knows they're sued," Creedon said.

He has filed a bill that would bar debt collectors from seizing vehicles worth less than $10,000. Current law, which is decades old, aims to protect a consumer's primary mode of transportation but only up to $700. State Senator Marc R. Pacheco also has filed a bill, which he plans to refile in the next session, that would raise the auto exemption to $2,600, with regular increases based on the cost-of-living index.

Robert J. Hobbs , deputy director of the National Consumer Law Center in Boston, said he thinks the exemption should go even further. As part of a package of debt-collection reforms his group is preparing to present to legislators, he suggests that every family ought to be able to keep one vehicle safe from collectors, no matter its value. He proposes protecting other assets as well, including $2,000 in a bank account, household furniture worth up to $4,000, and wages up to 30 times the Massachusetts hourly minimum wage.

"The most important thing is to make sure the property exemptions are modernized," Hobbs said, "so it's not so financially devastating if there is a judgment against you."

Francie Latour of the Globe staff contributed to this report. Healy can be reached at bhealy@globe.com; Rezendes at rezendes@globe.com.