TRENTON, N.J. – New Jersey may soon fall in line with the majority of states by making for-profit debt adjusters eligible to receive licenses to operate. Assemblywoman Victoria Flynn’s bill amending the law that limits debt adjuster licenses to nonprofit agencies passed the Assembly State and Local Government Committee on Thursday.
“It’s time to ease restrictions on the types of businesses that can offer debt settlement services, because in the end it burdens residents and hurts legitimate companies that help consumers who often earn too much income to qualify for Chapter 7 bankruptcy. Consumers in over 40 other states have a choice and this bill ensures New Jersey residents are afforded the same opportunity to hire licensed for-profit debt adjusters,” Flynn (R-Monmouth) said.
A debt adjuster is a person or company that helps consumers in debt by working with creditors to significantly reduce debt load. In order to conduct business in the state, nonprofit debt adjusters must obtain a license through the Department of Banking and Insurance to provide credit counseling.
Flynn’s bill (A1739) allows for-profit debt adjusters to apply for a license provided they are regulated by the Federal Trade Commission and do not hold consumer funds in a company-owned account. For-profit debt adjuster companies will be subjected to the same rules and restrictions as nonprofit entities unless they conflict with federal law.
“Twenty-two percent of New Jersey residents have debt in collections, which cripples their credit and can result in lawsuits and garnished wages. Those in desperate need of financial assistance should have options because the best route to settling or compounding debt depends on a variety of factors including type of debt, income, assets, and more,” Flynn explained.
According to a Federal Reserve analysis, households in New Jersey hold $1.54 in debt for every $1 of income. Additionally, New Jersey’s personal bankruptcy rate of 108.89 per 100,000 residents is the highest in the Northeast.
The Senate passed the companion bill (S2989) unanimously.