New Jersey considers bond requirement for debt management service providers

debt

Introduced and referred to the Assembly Financial Institutions and Insurance Committee on October 15, 2012, AB 3392 — called the “Debt-Management Services Act of New Jersey” — would require that debt management service providers in the state post a surety bond or other form of financial security when registering to work in the state.

The bond stipulations under AB 3392 are as follows.

“10. a. Except as otherwise permitted by section 11 of this act, an applicant for a certificate of registration or registration renewal as a debt-management provider shall file a surety bond with the commissioner with its application.  The surety bond shall have payment conditioned upon noncompliance with this act and shall:

(1) be in effect during the period of registration, and for two years after the debt-management provider ceases to provide any further debt-management services to any individual in this State; and

(2) apply to the benefit of this State and to any individuals who reside in this State when executing debt-management agreements with the provider, as their interests may appear.

b. The surety bond shall be in an amount set forth by the commissioner by regulation, as determined by an examination of the financial condition and business experience of the debt-management provider, the history of the provider in performing debt-management services, the risk to individuals with whom the provider makes agreements, and any other factor deemed appropriate by the commissioner.”

Click here to read AB 3392 in its entirety. The bill is still under review in the Assembly Financial Institutions and Insurance Committee.

The federal Bankruptcy Reform Act of 2005 requires that individuals show debt counseling/management was attempted before they can file for Chapter 7 bankruptcy. As such, evolving regulations at the state level strive to improve transparency and accountability within the industry to prevent abuses on the part of debt management service providers.

If you need a surety bond in New Jersey or any other state, call SuretyBonds.com at 1 (800) 308-4358 Monday through Friday between 8 a.m. and 7 p.m. CST. Or, fill out our online contact form 24/7 to speak with an expert surety specialist.