TRENTON – The Senate Commerce Committee today approved legislation sponsored by Senator Joseph Coniglio that would help protect consumer borrowers through strengthening the laws that govern debt adjusters and credit counselors.
“As Americans find themselves taking on more and more debt, particularly through credit cards, the services of debt adjusters and credit counselors will be in even greater demand,” added Senator Coniglio, D-Bergen. “We need to make sure that those individuals providing these services are better regulated so that New Jersey residents can feel confident in seeking their assistance.”
A debt adjuster is someone who acts as an intermediary between a debtor and his creditors for the purpose of settling the amount and terms of payment on any debts and receives a fee for such services. A credit counselor is someone who provides guidance or advice regarding the use of credit and debt management.
The bill, S-1722, would amend the Debt Adjuster Act which currently requires debt adjusters and consumer credit counselors to be licensed in order to provide their services in New Jersey. The bill would require a licensee to make its annual audit report available to the public at each of their New Jersey locations. It would also increase the penalties for violating the act from $500 to $1000 for the first offense and up to $5000 for subsequent offenses.
In addition, the bill would also require a licensee to disburse funds it receives from the debtor within ten days and hold those funds in a separate trust account for each client. The bill would also allow any debtor injured by a licensee’s violations to sue the licensee directly.
“Unfortunately, there will always be those individuals who look to make a dishonest buck by taking advantage of those already in a desperate position. This bill provides consumers with additional protections in this growing industry so that those seeking to improve their credit and decrease their debt are not taken advantage of and can expect an honest deal,” said Senator Coniglio.
The Senate Commerce Committee passed the bill by a vote of 5-0. It now goes to the full Senate for their consideration.