New Jersey Administrative Code
Title 3 - BANKING
Chapter 25 - DEBT ADJUSTMENT AND CREDIT COUNSELING
Subchapter 2 - LICENSING OR REGISTRATION REQUIREMENTS, BONDING, AUDITS AND DUTIES OF A DEBT ADJUSTER
Section 3:25-2.4 - Bond
Current through Register Vol. 56, No. 18, September 16, 2024
(a) A licensee shall maintain a bond in an amount not less than $ 50,000 for the first office and $ 25,000 for each additional office from a surety company authorized to do business in this State. The bond shall run to the State, pro rata, for its benefit and for the benefit of all consumers injured by the wrongful act, omission, default, fraud or misrepresentation of the licensee in the course of activity as a debt adjuster or credit counselor and for the benefit of the Department for unpaid assessments, unpaid penalties and any other obligation of the licensee to the Department, including, but not limited to, returned items submitted to the Department in payment of bills, penalties, charges or fees. The bond shall not be payable for claims made by business creditors. No bond shall comply with this section unless it contains a provision that it shall not be cancelled for any reason unless notice of intention to cancel is filed with the Department at least 30 days before the day upon which cancellation shall take effect.
(b) The amount of the bond required by (a) above shall be considered as attributable to the first 250 debtors serviced at any office and the first $ 250,000 in funds held in the trust account of the licensee. The amount of the bond required by (a) above shall be increased based on information regarding the number of New Jersey debtors serviced by and the balance held in the trust accounts of licensees as set forth below:
For example, if a licensee had three offices and serviced 800 debtors at the first office, 300 at the second and 180 at the third and had an average trust account balance of $ 400,000, the bond would be increased by $ 125,000, comprised of $ 75,000 for the first office, $ 25,000 for the second office and zero additional for the third office, and by $ 25,000 for the increased trust account balance.
(c) The surety company shall pay consumers claims based on the damages directly incurred by the wrongful act, default, fraud or misrepresentation of the licensee.
(d) Attorney's fees, pre- or post-judgment interest, court costs and similar charges are not recoverable through the bond, unless such charges are included in a final judgment against the licensee and the surety company was given prior notice of the court action and an opportunity to respond.
(e) The bond shall not be payable for treble damage claims pursuant to the Consumer Fraud Act or any other State or Federal law.
