The law change passed as part of a ballot initiative Nov. 8 that will add protections against wage garnishment and increase the amount of assets in homes, vehicles, bank accounts and household goods protected from being sold to pay debt collectors. The broad implications of the law will increase the cost of credit and limit access.
11/15/2022 1:40 P.M.
1.5 minute read
The impact Arizona’s Proposition 209 initiative will have on the cost of and access to credit was reported in American Banker (a subscription may be required) based on statements from ACA International and the American Bankers Association.
Andrew Madden, ACA’s vice president of state unit and government affairs, said in a statement to American Banker that the measure will harm those it’s intended to help by making credit less available and more expensive.
“This overly broad, one-size-fits-all approach without any consideration of a consumer’s needs, or their unique financial situation, will have long-term unintended consequences on Arizona’s credit-based economy,” Madden said.
He added “that the measure’s supporters depicted it to voters as a way to address high medical debt, even though it affects all types of consumer debt.”
Arizona’s Proposition 209 initiative on the “Predatory Debt Collection Protection Act” was passed by voters on Nov. 8, with 72% voting yes and 28% voting no.
The law will add protections against wage garnishment and increase the amount of assets in homes, vehicles, bank accounts and household goods protected from being sold to pay debt collectors.
It will also reduce maximum interest rates on medical debt from 10% to 3% annually, increase the amount of certain assets exempt from debt collection, annually adjust exemptions for inflation beginning 2024, and allow courts to reduce the amount of disposable earnings garnished in cases of extreme economic hardship.
Proposition 209 increases the income exemptions and will also reduce the rate of withholding of the remaining nonexempt earnings from 25% to 10%.
Depending on the timing of the vote certification by the Arizona Secretary of State, the proposition should become law in early December 2022.
The American Banker article is available online.
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