New Jersey is not a particularly debtor-friendly state, though in 2009 it took steps to change that. Statutes control who can attempt to recover a debt you owe as well as the process, but in general, almost anything you own and a portion of what you earn is susceptible to a collection agency under New Jersey law. Once a collection agency gets a judgment against you for money you owe, it can petition the court for a writ of execution and potentially seize your bank accounts, your personal property and in some cases, even real estate.
New Jersey Fair Debt Collection Practices Act
The state legislature passed the New Jersey Fair Debt Collection Practices Act in 2009. Under the terms of the new act, debtors are entitled to validation of any debt a collection agency pursues them for and it levies substantial fines if the collection agency doesn’t comply. The agency must supply the debtor with written notice that includes the name of the original creditor and what he can do to dispute the debt if he thinks he doesn’t owe it. Collection agencies must post a $5,000 bond with the state to operate in New Jersey. However, the new law pertains only to collection agencies. If the creditor hires an attorney instead to try to collect the debt, the attorney is exempt from many of the provisions of the act. Banks and trust companies are also exempt.
Statutes of Limitations
New Jersey gives creditors a certain number of years to pursue you for a debt. If a creditor misses the deadline and the statute of limitations expires, it can no longer attempt to collect from you. On most credit card debt and car loans, the creditor has six years to file for a judgment against you for the money you owe. Once it gets the judgment, however, it has 20 years to enforce it by applying for a writ of execution.
Writs of execution allow a collection agency to garnish your wages and your bank accounts for repayment of your debt. New Jersey law mandates that a wage garnishment must leave you at least $154.50 per week for your living expenses. If your net take-home pay is $154.50 per week or less, you are exempt from wage garnishment. Otherwise, garnishment is limited to 10 percent of your gross pay before taxes. If you earn $600 per week before taxes, a collection agency can garnish $60 per week, leaving you with $540 to pay your other bills. The law protects a creditor from two agencies garnishing him at the same time. The creditor with the first judgment against you gets priority; any other creditors must wait until that first debt is satisfied before another garnishment can go into effect.
Collection agencies can also seize and sell your personal property to satisfy your debt, including property someone else is holding for you, your automobile and any bequests left to you in a will. New Jersey law prohibits an agency from taking any of your real property until and unless it has seized all other personal property, has auctioned or sold it to repay your debt, and you still owe a balance.