If you've ever struggled with significant debt, you're probably acutely aware of the problems that can result when a debt is passed from one collection agency to another. A lot of information gets lost along the way, and consumers are too often treated unfairly or asked to pay debts they do not owe.
Legislation working its way through the New Jersey General Assembly is seeking to provide some relief for debtors who are being harassed, manipulated or otherwise mistreated by debt collectors. The Consumer Credit Fairness Act would regulate the actions of third-party debt collectors - those that purchase delinquent or charged-off credit card debt and other consumer debts and attempt to collect on them for profit - and would limit the steps they can take to convince debtors to pay.
The bill was introduced in response to complaints that third-party debt collectors were using intimidation, pressure and even lies to get money from debtors.
Prohibitions on debt buyers
If passed, the legislation would prohibit debt buyers from using any of the following tactics:
- Obtaining affirmations of debt when the debt is noncollectable because of bankruptcy or because the statute of limitations has expired, unless the debtor is clearly informed that he or she is not obligated to pay back the debt.
- Attempting to collect any fees - including debt buyers' fees or service charges - to which the debt buyer is not legally entitled.
- Contacting the debtor directly when the debt buyer has been notified that the debtor is represented by an attorney.
- Attempting to collect a debt - via a lawsuit, arbitration or other means - when collection is barred by the statute of limitations.
- Bringing a lawsuit or arbitration proceeding against a debtor without of both the debt buyers ownership of the debt and the amount owed by the debtor.
- Bringing a lawsuit or arbitration proceeding against a debtor without giving the debtor 30 days written notice of the debt buyer's intent to take legal action.
In addition, the legislation creates a framework that debt buyers must follow when initiating collection actions against debtors. It requires debt buyers to provide significant evidence demonstrating the legitimacy of the debt and establishing their proper ownership of it.
Working with a bankruptcy attorney
The Consumer Credit Fairness Act was passed out of committee in December 2012 and is awaiting further action. In the meantime, debtors should know that they have a number of methods for protecting themselves from unscrupulous debt collectors. In some cases, filing for bankruptcy can be the best option, because the bankruptcy automatic stay requires creditors to immediately halt all collection efforts.
If you are struggling with your debt, don't be afraid to ask for help. Talk to a New Jersey bankruptcy attorney who can evaluate your situation and help you understand your options for moving forward.