As families in New Jersey face financial difficulties due to high inflation and increasing consumer debt, a recent report highlights the inadequacies of state laws in protecting family finances. The National Consumer Law Center (NCLC) released its annual report titled "No Fresh Start 2024: Will States Protect Families from Debt Collectors Seizing Wages and Bank Balances?" which grades states on their exemption laws. These laws are meant to safeguard family income and property from creditors.
New Jersey received an "F" grade for its exemption laws, failing to protect residents' homes, vehicles, belongings, and finances adequately. Beverly Brown Ruggia from New Jersey Citizen Action commented, “No one should be left destitute because they have debt.” She emphasized the need for stronger protection laws by passing S1746/A3538 to help families manage debts while retaining essential property.
David McMillin of Legal Services of New Jersey pointed out that debt collectors often freeze bank accounts to collect debts, even when funds are exempt. He advocated for automatic exemptions similar to those in other states and called for a homestead exemption to protect family homes.
Renee Steinhagen from NJ Appleseed also urged legislative action, stating, "It is long past time for us to strengthen those protections for the most economically vulnerable people of this state."
The NCLC report examines various areas where New Jersey's laws fall short: maintaining a basic bank account balance for essential costs, preventing wage seizure below a living wage, allowing retention of an average-value car, and preserving median-value homes. The updated rating scale reflects inflation adjustments and introduces new criteria regarding self-executing bank account protections.
The report also discusses how racial wealth disparities result in greater debt burdens for Black and Latino/Hispanic families who often lack financial safety nets during economic hardships.
Michael Best from the NCLC stressed the importance of strong exemption laws: “State exemption laws provide critical protections... New Jersey’s exemption laws need to be strong enough to protect families from poverty.”
Effective exemption laws not only prevent destitution but can stimulate local economies by discouraging predatory lending practices. They also aim to protect residents from impoverishment while saving taxpayer money.
New Jersey Citizen Action continues its advocacy work as part of a statewide coalition focused on social justice issues. Since 1969, the National Consumer Law Center has worked towards consumer justice through policy analysis and advocacy efforts.