Even though consumer debt can seem like a private matter, there are specific laws and regulations that govern when and how they can be enforced or disposed of. An example of such laws includes the statute of limitations on debt in New Jersey. The statute of limitations on debt is a period of time in which creditors can file a suit against you for failing to pay your debt. Being aware of this statute of limitations can help you avoid being the subject of a complicated lawsuit and being subject to fines.
New Jersey laws regarding consumer debt can prove to be very complicated to navigate without the help of an experienced New Jersey debt negotiation attorney. At Straffi And Straffi, Attorneys At Law, our team of skilled legal professionals has protected the rights of New Jersey residents from unlawful debt collection practices. We offer quality legal counsel and representation to advocate for our client’s best interests. To learn more about how we can help you, contact us today at (732) 341-3800.
New Jersey’s Statute of Limitations on Debt
There are different statutes of limitations in New Jersey depending on the type of debt you have. For most debts including credit card debt, the limitation is six (6) years. For car loans, the limitation is four (4) years.
The statute of limitations is the time in which the creditor can file a lawsuit against the debtor to compel them to pay their debt. This period initiates at the last interaction the debtor had with the creditor and will reset each time they make contact again. This contact refers to the last time the debtor made a payment on their debt. The statute applies to all types of contracts in New Jersey, be it oral or written contracts, open-ended accounts, or promissory notes.
The statute of limitations in this context only refers to the time when a creditor can sue the debtor for their debt. This means that after the statute of limitations has expired, the creditor can’t file a suit against the debtor. If a creditor takes a debtor to court after the statute of limitations has expired, it is up to the debtor to face them in court and have the suit dismissed on those grounds. After the statute of limitations has expired, any legal claim the creditor has to the debt is time-barred. However, this does not mean that the creditor can’t continue using other means to pursue the debtor for payment.
When a creditor tries to collect on a debt, they may not voluntarily divulge the information that the debt has been time-barred. Even so, they are legally obligated to inform the debtor of the date when the statute of limitations will expire on the debt under the Fair Debt Collection Practices Act.
This does not mean that the creditor is going to provide accurate information. Consulting with your own personal records is important. You may also request verification of when the last activity or payment on the debt happened within 30 days of receiving the notice of the debt.
It is important to remember that the statute of limitations can reset when activity is recorded on the debt and this can reopen the debtor to the possibility of being sued for the debt. Even a statement that you intend to pay the debt or acknowledgment that the debt exists can be considered an activity that can reset the clock.
Getting the assistance of an experienced attorney can be beneficial in making sure that your rights are protected. If you have been notified by a debt collector regarding a debt you supposedly owe, consulting a skilled attorney can help you avoid any legal complications and help you navigate the situation. Whether you intend on paying the amount as is or would like to negotiate a repayment plan, our team of experienced New Jersey debt negotiation attorneys at Straffi And Straffi, Attorneys At Law may be able to help. Call us today to learn more about how we can assist you.
Judgment on Debts in New Jersey
One important thing to keep in mind is that creditors are also afforded the same legal means to collect on a debt. Creditors can file a case to obtain a judgment to collect on a debt as long as the statute of limitations has not expired.
It is crucial that you respond to the lawsuit as not acknowledging it can provide the creditor with a default judgment giving them the legal backing to proceed with the collection. There are a few ways that creditors can use to collect on a debt and the type of collection they use can depend on the circumstances of the case.
Under wage garnishment, the judgment creditor can take a percentage of the judgment debtor’s wages as repayment until the court-awarded amount the judgment was issued on is paid in full. According to federal law, a judgment creditor can collect the lesser amount between:
- 25% of the judgment debtor’s disposable earnings
- Disposable earnings less than 30 times the federal minimum wage
Disposable earnings in this context refers to wages you earn after the deductions required by law. Also specific to New Jersey law, $48 dollars is exempt from being seized in wage executions and the judgment creditor can only garnish wages not exceeding 10% of the judgment debtor’s income if they earn less than 250% of the federal poverty level for their household size. When this method is used, the judgment debtor’s employer will be required to withhold the wages and pay them to the assigned special civil part officer on the case.
Any military benefits and wages cannot be claimed in a judgment for wage garnishment.
With a bank lien, a judgment creditor can freeze the judgment debtor’s bank accounts to be able to get payment on the judgment amount through a Motion to Turn Over Funds.
As with bank accounts, the judgment creditor can also apply a lien on the judgment debtor’s real estate properties or personal properties.
Writs of execution
With the help of law enforcement such as the Sheriff’s Office, creditors can obtain the judgment creditor’s personal assets and property – not including real property – as payment for the judgment award.
It is unwise to try and hide any funds you have in an attempt to avoid payment as it can be considered fraudulent behavior and carry additional legal consequences. Once a judgment on the debt is issued, a judgment debtor can be left with few options other than paying the award without the help of a skilled attorney. The statute of limitations on a debt judgment in New Jersey is 20 years.
|Methods of Debt Collection in New Jersey||Description|
|Wage Garnishment||The judgment creditor can collect a portion of the judgment debtor’s wages until the court-awarded amount is paid in full. The amount collected is determined based on federal law, typically the lesser of 25% of disposable earnings or disposable earnings less than 30 times the federal minimum wage. Specific New Jersey exemptions apply.|
|Bank Liens||A judgment creditor can freeze the judgment debtor’s bank accounts to access funds through a Motion to Turn Over Funds.|
|Liens||Creditors can place liens on the judgment debtor’s real estate or personal property.|
|Writs of Execution||Law enforcement, such as the Sheriff’s Office, can help creditors seize the judgment debtor’s personal assets and property (excluding real estate) to satisfy the judgment award.|
Debt Collection Statute of Limitations
The debt collection statute of limitation refers to the timeframe within which a creditor can legally compel a debtor to pay off their debt through filing a lawsuit. In New Jersey, the statute varies based on the type of debt. For most debts such as credit card debt, the statute is six years, while for car loans, it’s four years.
This period starts with the debtor’s last interaction with the creditor, which typically involves a debt payment. Each new interaction resets the clock. The statute applies to all contracts, whether oral or written, open-ended accounts, or promissory notes.
However, it’s important to clarify that the statute only pertains to the period during which a creditor can sue the debtor for non-payment. Once the statute expires, the creditor can no longer initiate a lawsuit. If a creditor attempts to sue after this period, the debtor has the right to have the case dismissed on the grounds that the claim is time-barred. Yet, this doesn’t mean that the creditor can’t pursue other means to collect the debt.
Under the Fair Debt Collection Practices Act, creditors are required to inform the debtor of the debt’s expiration date. However, they may not provide this information voluntarily or accurately. Therefore, it’s crucial to maintain your own records and request verification of the last payment or activity on the debt within 30 days of receiving a debt notice. Despite the statute of limitations, the responsibility to manage and verify debt records primarily rests with the debtor.
Consulting an experienced New Jersey debt negotiation attorney is crucial to avoid any potential issues. Our team of legal professionals at Straffi And Straffi, Attorneys At Law can help you understand your rights under the law and fight for your best interests. We understand the toll financial vulnerability can have on a person and work hard to help our clients have a chance at a new start. Contact us today at (732) 341-3800 to schedule a consultation.