A new report from the National Consumer Law Center says no state in the country meets five basic standards for protecting consumers’ income and property from seizure by creditors, debt buyers, or collection agencies. The No Fresh Start 2025 report, released this week, evaluates exemption laws across all 50 states plus the District of Columbia, Puerto Rico, and the Virgin Islands, assigning letter grades to each jurisdiction.
The findings come as households face rising living costs, increased debt burdens, and a surge in debt collection lawsuits. According to the report, exemption laws are intended to preserve a minimum level of income and essential property, such as wages, a car used for work, a modest bank balance, household goods, and the family home.
Overview: The report concludes that not one state meets all five core standards, which include:
- Preventing wage seizure that drives a worker below a living wage
- Allowing families to keep a used car of at least average value
- Protecting a median-priced home
- Safeguarding a basic amount in a bank account
- Preventing seizure and sale of essential household goods
Grades were assigned by averaging performance across these categories.
States with the weakest protections: Nine states received overall F grades for offering what the report describes as “extremely weak protections”:
- Georgia
- Indiana
- Kentucky
- Michigan
- Mississippi
- Missouri
- New Jersey
- Utah
- Wyoming
According to the report, these states allow creditors to seize nearly everything a debtor owns, including essential items needed to maintain employment and basic household stability. Examples cited include very low homestead exemptions, minimal protection for vehicles, and limits on bank account balances that fall far below basic living-expense thresholds.
Other grades: No state received an A in the 2025 scoring. However, six jurisdictions earned B grades for offering comparatively stronger protections:
- Arizona
- California
- Massachusetts
- New Mexico
- Puerto Rico
- Texas
These states generally provide higher homestead exemptions, stronger wage protections, or broader coverage of personal property.
Most improved states: Two states improved their scores:
- Illinois moved from a D to a C following changes to its exemption laws.
- Ohio also moved from a D to a C due to triennial inflation adjustments applied to its exemption thresholds.
Racial wealth gap and impact on collections: The report also highlights disproportionate impacts on Black and Latino consumers, who more frequently face judgments, wage seizures, and limited financial cushions. According to the authors, weaker exemptions deepen existing wealth gaps and increase pressure on financially vulnerable households.
