Most New Jersey borrowers are unaware of the fact that the debt collection laws in their state don’t require the collection agencies to keep a track of the payments they are making. Some people learn this the hard way. Here is one such case:
Recently, a collection agency in New Jersey denied having received payments from a debtor called Jacqueline Hasley, who, in fact, had already contributed to resolve her debt. The story began towards the end of 2011, when a law firm contacted Hasley to collect a credit card debt. The firm, Hasley said, tried to recover the money by taking her to court.
Hasley offered a payment arrangement that was considered too low by her creditors. However, she started sending money orders to the court as per this plan. Soon enough, the law firm placed a lien on her bank accounts and began to garnish her wage every two weeks. Feeling clueless about the whole thing, Hasley asked the firm to give her a statement of the payments made towards the debt. She was shocked to find out that the debt collectors had no record whatsoever of her wage garnishments and money orders. Also, they claimed that she did not send any money orders through the court. Meanwhile, her wage garnishment continued.
What went wrong? After some thorough digging, Hasley learned that the court had two separate offices to deal with wage garnishments and money order payments. There was no proper tracking of her payments though she had paid off almost all her debt by then and the firm didn’t bother to inform her.
The above case clearly shows the lack of regulation over debt collection process in New Jersey. While Hasley made separate payments to the court, the firm was supposed to add up all the payments. But it was not the firm’s legal responsibility to maintain a record, so they were happy to keep Hasley in the dark.
Fair Debt Collection Practices Act and New Jersey debt collection laws do not mention anything regarding a collection agency’s responsibility to provide account statements to the borrower once the re-payment process has started. This results in a lack of transparency and leaves the debtors at risk.
It’s worth mentioning that the New Jersey debtors who end up paying more through the courts are eligible for refunds. But not all borrowers are aware of this fact. Moreover, the situation is a lot more complex for debtors who make payments directly to the collectors. Avoiding over-payments is a major challenge in such cases. Are the lawmakers listening?
Debasubhra Banerjee is an editor with PricewaterhouseCoopers. He is also a columnist and a financial advisor. Debasubhra’s interests include politics, economy, and debt related issues.