Pew Applauds New Virginia Laws Improving Debt Collection Process

RICHMOND, VA—The Pew Charitable Trusts today commended the Virginia General Assembly and Governor Abigail Spanberger (D) for enacting two bills that update debt collection laws. Both bills passed with broad bipartisan support. The first, H.B. 444, increases transparency by requiring any business filing a lawsuit to provide information that helps consumers identify their debts. The second, H.B. 601 and S.B. 301, automatically protects $1,000 in a consumer’s bank account from being seized by a debt collector so that people can better manage their everyday needs while paying their debts.

Ruth Rosenthal, director of Pew’s courts and communities project, issued the following statement:

“We applaud Virginia leaders for prioritizing the financial futures and well-being of their communities through these new laws that increase transparency in debt claim lawsuits and boost protections for consumers’ bank accounts. And also for ensuring that Virginia’s courts are better equipped to support their communities as they navigate these cases.

“Debt collection lawsuits are the most common types of civil cases filed in state and local courts. When they are sued, Virginians deserve to understand what they are being sued for, and by whom. These reforms help courts create better pathways to participation for people who are sued and ensure that each case is meaningfully reviewed.

“To be clear, these new laws do not forgive a debt owed. They do, however, reduce the risk that consumers must choose between paying off their debt, keeping the lights on, or having food on the table. And they create a better chance that debt owed is actually repaid. At a time when affordability and inflation are top of mind for every U.S. adult, these policy changes are especially profound for families throughout the state.”

Supported by members of both parties, H.B. 444 is based on the Uniform Law Commission’s Consumer Debt Default Judgments Act, a model law developed with feedback from consumer groups, representatives of the consumer financial services and collections industries, court leaders, and researchers.

It was enacted in large part to remedy the fact that consumers often do not recognize who is suing them or where their debts originate. Because nearly half of the state’s 200,000 debt collection lawsuits in 2024 were filed by third parties, the name on the lawsuit is frequently different from the entity that provided the consumer a good or service. When people do not recognize the name on the lawsuit, they are less likely to participate in their cases—and if they don’t participate, plaintiffs automatically win, allowing them to seize money from a person’s wages or bank accounts.

Bills H.B. 601 and S.B. 301 strengthen consumer protections for the nearly 16,000 Virginians who risk having their bank accounts drained entirely to satisfy a debt. Pew’s analysis found that the median amount owed in these debt cases—which are mostly composed of unpaid medical bills, credit card balances, and auto and payday loans—was $2,068. Many states protect some amount of a consumer’s money in a bank account, but typically people must return to court and request the protection of their assets. Pew’s analysis shows that fewer than 1% of consumers ever make this request. Virginia will now join the 13 other states that have automatic bank account exemptions that apply without a consumer having to navigate challenging court processes to claim them.

There was broad support for H.B. 601 and S.B. 301 from organizations such as the Virginia Poverty Law Center, AARP Virginia, the Virginia Credit Union Association, the Virginia Bankers Association, and the Virginia Association of Community Banks. Likewise, H.B. 444 was supported by the Virginia Poverty Law Center, Receivables Management Association International, and Portfolio Recovery Associates.