New Jersey Moving Towards Legislation To Protect Consumers From Abusive Debt Collection Practices

21 Apr New Jersey Moving Towards Legislation To Protect Consumers From Abusive Debt Collection Practices

New Jersey, in a move designed to strengthen consumer protections against abusive collection tactics, is moving towards what is being call the New Jersey Fair Debt Collection Practices Act.

The legislation, which mirrors the federal Fair Debt Collection Practices Act, goes a step further by imposing rules on creditors — not just third-party firms that are hired by creditors or buy debt at a discount.

As economic troubles cause consumers to fall behind on their bills, this law could be a welcome reprieve from the constant harassment that many past-due individuals suffer at the hands of creditors.

Consumer credit delinquencies for the fourth quarter of 2007 were at their highest levels since 1992, according to the American Bankers Association.

The bill pending before the Assembly is aimed at prohibiting abusive, deceptive and unfair collection practices. Assemblyman John Burzichelli (D-Glouster), one of the bill’s main sponsors, said while consumers should pay their debts, he wanted debt collectors to operate within boundaries.

Last year, the state Division of Consumer Affairs received 895 complaints about debt collectors, the sixth highest category. Nationwide, consumers filed nearly 71,000 complaints with the Federal Trade Commission about debt collection practices in 2007, a bit more than a 2 percent increase from 2006.

The real kick to the collection industry? A provision that makes violating it a violation of the Consumer Fraud Act, which could mean a fine of $10,000 or more.

Predictably, the collection industry is throwing their weight around as much as possible to keep the proposal from becoming law. Talking heads claim it goes too far, is not necessary, and that debt collectors are somehow nice people just trying to help consumers.

With friends like that, who needs enemies?


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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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