Maybe it’s time the National Consumer Law Center (NCLC) lowers its standards. For the fifth year in a row, not one of the 50 states met all five of the advocacy group’s standards for protecting consumers and their property from asset seizures and garnishments. On top of that, the only state that earned a “A” grade last year had its mark slip to a B+ because of inflation.
The Background: Each each, the NCLC issues a report it calls “No Fresh Start” which grades each state on its exemption laws. See reports from 2022, 2021, 2020, and 2019. Each state is graded on how their judgment laws protect consumers in five different areas:
- Preventing creditors from seizing so much of the debtor’s wages that the debtor is pushed below a living wage;
- Allowing the debtor to keep a used car of at least average value;
- Preserving the family’s home — at least a median-value home;
- Preserving a basic amount in a bank account so that the debtor’s funds to pay essential costs such as rent, utilities, and commuting expenses and to weather income and expense shocks are not cleaned out; and
- Preventing seizure and sale of the debtor’s necessary household goods.
Top of the Heap: Arizona, the only state to have earned an “A” grade last year, still ranked at the top of the list this year, albeit with a B+, because its homestead exemption has been overtaken by inflation and no longer protects a median home in the state, according to the NCLC.
- Nevada was the only other state to earn a B+.
- Three other states — New Mexico, North Dakota, and Washington — all studied hard and improved from “C” grades in 2022 to “B” grades this year.
Bottom of the Barrel: The same five states — Georgia, Kentucky, Michigan, New Jersey, and Utah — all ranked at the bottom of the list for the fifth year in a row.
