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Federal debt collection rules applicable in New Jersey

In June of this year, we discussed a case involving the Federal Trade Commission punishing a subprime lender for illegal debt collection practices. In that post, it was noted that the lender had to pay millions of dollars in fines for various violations regarding their debt collection practices.

In this post, we are going to look at what a person’s legal rights are when seeking relief from a creditor. We are also going to examine what lines creditors cannot cross when demanding payment in New Jersey.

A central source of authority in terms of debt relief is the Federal Debt Collection Practices Act (also referred to as the Act). The Act prohibits debt collectors from harassing debtors when demanding repayment, and covers the conduct of debt collectors hired by third party debt collection agencies. The Act does not, however, cover debt collectors directly hired by the original creditor.

The Act requires that debt collectors follow some rules when they contact a debtor. These rules include:

  • Collectors must identify themselves, and also state that they are debt collectors;
  • The debtor has the right to dispute a debt, and a debt collector must make the debtor aware of this;
  • The collector must provide verification of the debt if the debtor asks for it in writing;
  • Debt collectors must inform the debtor that they may use any information gained during the conversation to seek repayment.

Recognizing that financial difficulties make for stressful times, the Act outlaws certain practices. For one, the debt collector has to stop communicating if the debtor so asks in writing. The debt collector also must stop all communication demanding repayment when the debtor declares bankruptcy. Additionally, debt collectors cannot lie to induce repayment, name the debtor in a bad debt list or ask for amounts not stipulated in the initial contract.

Many debt collection agencies are well aware of these rules and abide by them. However, it is not uncommon for a collector to cross the line and violate a person’s rights in an attempt to collect payment. Knowing your rights and being aware of the legal protections in place can be important for those who are already in a difficult financial spot. Those who are seeking relief from debt or creditor harassment may want to speak with an attorney to better understand their rights and explore potential solutions.


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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.