New Jersey Debt Adjuster Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain New Jersey Debt Adjuster Bonds
At a Glance:
- Lowest Cost: $750 per year or $75 per month based on the applicant’s credit
- Bond Amount: $50,000 plus $25,000 for each additional office location
- Who Needs it: All debt adjusters operating in New Jersey
- Purpose: To ensure the public will receive compensation for any damages should the debt adjuster violate licensing law
- Who Regulates Debt Adjusters in New Jersey: The New Jersey Department of Banking and Insurance
Background
New Jersey statute 17:16G-2 requires all debt adjusters operating in the state to obtain a license with the Department of Banking and Insurance. The New Jersey legislature enacted the licensing laws and regulations to ensure that debt adjusters engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, debt adjusters must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the New Jersey Debt Adjuster Bond?
New Jersey requires debt adjusters to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the debt adjuster fails to comply with the regulations set forth in the New Jersey Debt Adjustment and Credit Counseling Act. Specifically, the bond protects the public in the event the debt adjuster engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the debt adjuster breaks licensing laws.
How Can an Insurance Agent Obtain a New Jersey Debt Adjuster Bond?
BondExchange makes obtaining a New Jersey Debt Adjuster Bond easy. Simply login to your account and use our keyword search to find the “debt” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the New Jersey Debt Adjuster Bond?
Surety companies will run a credit check on the owners of the debt adjustment company to determine eligibility and pricing for the New Jersey Debt Adjuster bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the New Jersey Debt Adjuster Bond Cost?
The New Jersey Debt Adjuster Bond can cost anywhere between 1.5% to 5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $50,000 bond requirement.
$50,000 Debt Adjuster Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $750 | $75 |
| 650 – 799 | $1,000 | $100 |
| 600 – 649 | $2,000 | $200 |
| 450 – 599 | $2,500 | $250 |
How Does New Jersey Define “Debt Adjuster?”
New Jersey statute 17:16G-1 defines a debt adjuster as any business entity who provides one or more of the following services:
- Acts as an intermediary between a debtor and his/her creditors for the purpose of settling, compounding, or otherwise altering the terms of payment of any debts
- Receives money from the debtor and pays these funds to the creditor(s)
Exemptions to the above definition include all:
- Licensed attorneys
- Full time employees of a debtor
- Individuals acting under a court order
- Creditors of the debtor providing debt adjustment services free of cost
- Individuals who makes loans to a debtor
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Debt Adjusters Apply For a License in New Jersey?
Debt adjusters in New Jersey must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.
License Period – The New Jersey Debt Adjuster License expires on June 30 of every odd numbered year (2023, 2025 etc) and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Debt adjusters must purchase a surety bond with a limit of $50,000 plus $25,000 for each additional office location
Step 2 – Complete the Application
All New Jersey Debt Adjuster License applications must be mailed to the following address:
NJ Department of Banking and Insurance
Licensing Services Bureau
P.O. Box 473
Trenton, NJ 08625
Debt adjusters must complete the application in its entirety, and submit the following items:
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- Company formation documents
- Personal Certifications and 2 X 2 passport style photos of all company owners with a 10% interest or higher
- Audited company financial statements, prepared by a CPA, indicating the company’s net worth
- Schedule of the types and amounts of the company’s insurable risks
- Names and addresses of company contributors (if majority of funds are obtained from outside sources)
- List of salaries/compensation paid to all company officers
- Proof of the establishment of a separate trust account for all debtors
Debt adjusters must pay a license fee based on the type of license being applied for, as referenced in the table below:
| License Type | License Fee |
|---|---|
| Insurance Premium Finance Co | $500 |
| Non-Profit Debt Adjuster | $300 |
| Foreign Money Transmitter | $700 |
| Money Transmitter | $700 |
| Home Finance Agency | $400 |
How Do New Jersey Debt Adjusters Renew Their License?
Debt adjusters will be mailed renewal instructions on April 1 of the year in which their license expires. Debt adjusters should mail their completed renewal application to the following address:
NJ Department of Banking and Insurance
Licensing Services Bureau
P.O. Box 473
Trenton, NJ 08625
The New Jersey Debt Adjuster License expires on June 30 of every odd numbered year (2023, 2025 etc) and must be renewed before the expiration date.
What Are the Insurance Requirements for the New Jersey Debt Adjuster License?
New Jersey does not require Debt Adjusters to purchase any form of liability insurance as a prerequisite to obtaining a business license. Debt adjusters must purchase and maintain a surety bond with a limit of $50,000 plus $25,000 for each additional office location.
How Do New Jersey Debt Adjusters File Their Bond?
Debt adjusters should mail the completed bond form, including the power of attorney, to the following address:
NJ Department of Banking and Insurance
Licensing Services Bureau
P.O. Box 473
Trenton, NJ 08625
The debt adjuster surety bond requires signatures from both the surety company that issues the bond and a representative from the debt adjustment company. The surety company should include the following information on the bond form:
- Name and state of incorporation of entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can New Jersey Debt Adjusters Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt adjusters in New Jersey must follow all license regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Debt Adjusters in New Jersey?
New Jersey does not require debt adjusters to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for New Jersey Debt Adjuster Customers?
New Jersey conveniently provides a public database to search for active debt adjusters in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.