Which place’s debt rules apply—and who can help?

S_NJ PASS-01 — New Jersey provider market access and consumer fees

Baseline requested: October 22, 2026, Pacific. Actual research access/check date: October 23, 2026, Pacific.

Principal findings

The retrieved legal authorities establish a nonprofit licensing system for ordinary, nonexempt debt adjustment, administered by the New Jersey Department of Banking and Insurance (DOBI). They do not establish an ordinary licensing pathway for a nonexempt for-profit settlement company. Paid negotiation can fall within the Act even when the provider never holds consumer money and collects its compensation only after obtaining a settlement. [C001–C005]

There is a consequential attorney exception: the published May 9, 2025 decision in Anchor Law Firm, PLLC v. State invalidated the restriction limiting the exemption to attorneys who were not principally engaged in debt adjustment. The court construed the exemption to cover attorneys lawfully practicing in New Jersey, effective immediately, while leaving the remainder of the statute intact. That does not establish an exemption for a nonlawyer company merely because it employs, refers to, or contracts with an attorney. [C006–C007] business.cch.com+1

For the licensed nonprofit framework, the verified fee provisions are:

• Debt adjustment: no more than 1% of the client’s gross monthly income, capped at $25 in any one month.
• Credit counseling by a licensee: no more than $60 in any one month, including counseling setup and maintenance charges.
• These are ceilings, not authority to collect future fees in advance, charge a separate percentage of savings, or automatically combine the two categories into an $85 monthly allowance. [C018–C025] dspace.njstatelib.org+1

Currentness qualification: the fee findings rest on actual operative text, the subsequent amendment chain, and the 2022 readoption without change, effective March 30, 2022, with an expiration date of March 30, 2029. A freshly readable 2026 consolidated Chapter 3:25 and official current text of N.J.S.A. 17:16G-2 and -6 were not obtained through the permitted public-web routes. Those retrieval gaps, the blocked live license lookup, and the unverified authoritative later history of Anchor remain explicit below. No newly enacted for-profit licensing reform was verified. [C035, C037–C039]

For readability, C001 below means S_NJ-P1-C001, and S001 means S_NJ-P1-S001. The source and claim registers contain the full identifiers.

A. Substantive answers to the seven scope questions

1. What conduct New Jersey classifies as debt adjustment

The statute uses alternative activity tests

N.J.S.A. 17:16G-1(c)(1) reaches either:

1. Acting—or offering to act—for consideration as an intermediary between a debtor and creditors to settle, compound, or otherwise alter payment terms; or
2. Receiving money or property from or for the debtor, for that purpose, to pay or distribute to creditors.

The second limb is not an additional condition that must accompany the first. Accordingly, noncustodial negotiation is not excluded merely because the consumer pays creditors directly or uses an independent account. The 2003 adoption response specifically rejected an attempt to obtain a regulatory distinction that would remove noncustodial settlement from the statutory definition. [C001–C002; S001 §1(c)(1); S005 pp.1–2] 173_.DOC+1

The last two rows are applications of the statutory activity test, not separate categorical exemptions. [C002, C013]

Consumer versus business purpose

The statutory definition of debtor is an individual, or multiple individuals indebted jointly, severally, or jointly and severally. It does not expressly limit the debt to personal, family, or household purposes. Thus, excluding an individual’s debt merely because it financed a business is not supported by the retrieved definition. [C014; S001 §1(d)]

An entity-only corporate or LLC debtor remains a boundary requiring further investigation. The statute says “individual,” while the retrieved regulation uses “person.” This pass did not locate a controlling merits decision resolving that difference for an entity-only commercial settlement model. A personal guarantee also prevents treating the matter as necessarily entity-only.

There is a separate, narrower legal-practice boundary: New Jersey’s Committee on the Unauthorized Practice of Law, Opinion 36, addressed commercial debt-resolution businesses negotiating for business defendants after suit had been filed. It found the described conduct unauthorized practice despite success-based compensation and a disclaimer of legal advice. That is not a holding that every corporate debt is covered by the Debt Adjustment and Credit Counseling Act. [C014–C015; S023, operative discussion and conclusion] dspace.njstatelib.org+1

New Jersey residents and remote providers

The adopted 2009 amendments removed the requirement to maintain a New Jersey office and required licensing of each location from which the provider serves debtors residing in New Jersey. An eligible out-of-state nonprofit can therefore use the licensing route; being remote does not eliminate it. [C016; S007 pp.8–9, §§3:25-2.2(a)13, (b), 2.3(a); S008]

The similar remote-provider language proposed in 2003 was not adopted at that time. The later 2009 adoption, rather than the withdrawn 2003 provision, supplies the operative amendment relied on here. [S005 pp.3–6; S008]

2. Which models are prohibited, licensed, registered, or conditionally exempt

Ordinary licensing route

N.J.S.A. 17:16G-2, as analyzed in the published Anchor opinion, and N.J.A.C. 3:25-2.1(a), 2.2(a) establish the ordinary route:

• The eligible entity is a qualifying nonprofit social service or nonprofit consumer credit counseling agency.
• It must obtain the DOBI license before acting as a debt adjuster.
• A nonexempt for-profit operator cannot cure the prohibition simply by submitting the ordinary application.

The current criminal provision, N.J.S.A. 2C:21-19(f), separately makes acting or offering to act without the license required by the Act, unless exempt, a fourth-degree crime. This pass does not analyze all criminal elements, defenses, or remedies. [C003–C004] dspace.njstatelib.org+2

A nonprofit label alone is insufficient. The statutory definition addresses incorporation and distribution of assets, income, and profits. The rules also require a policy-setting board, with no more than 40% of its members principally employed by institutions offering credit to the public. Foreign nonprofit incorporation and New Jersey authority documentation are contemplated. DOBI expressly declined in 2008 to adopt a proposed federal tax-exemption-proof condition; federal tax status and New Jersey licensure are distinct questions. [C005; S001 §1(a); S004 §§2.1(c), 2.2(a)1; S006 pp.3–4, 11]

Exclusions and their failure conditions

The statutory exclusions are in S001 §1(c)(2); the attorney modification is S003 pp.44–45. The education-only interpretation is S006 p.5. The distinct registration requirements are S004 §3:25-2.1(b), (d). 173_.DOC+3

Important defects in the posted FAQ

The current-access DOBI FAQ is useful for procedure but is not a complete statement of operative exemptions:

• Its exemption list omits the housing-counselor exclusion enacted in P.L. 2009, c.173, effective January 11, 2010.
• Its attorney wording predates the 2025 judicial modification.
• Its statement that HUD approval alone is insufficient should not be mistaken for denial of the three-condition statutory exclusion.

Those discrepancies are resolved by the enacted law and the judicial decision, not by treating the FAQ as controlling. [C006, C012; S015 Questions 3–4]

3. Applicable fee bases, limits, adjustments, and credits

[C010–C011, C018–C022, C026–C028, C040]

Reconciliation of $15, $25, $35, and $60

The official legislative-history materials and the 2026 amendatory bill reproduce a statutory $15 debt-adjustment ceiling accompanied by authority for the Commissioner to provide otherwise by regulation. The actual regulation supplies $25. The 2003 response discussed a request to increase the adjustment cap to $35, but did not adopt that request. It also rejected a proposed automatic six-month CPI adjustment to the $60 counseling cap. [C021; S012, bill §6; S027 §4; S004 §1.2; S005 pp.3–5]

The fee amounts reported here are therefore not an invented inflation calculation. The operative-text chain is:

[C038; S005–S011] nj.gov+2

Income, family units, and cancellation

The regulation defines client as an individual or a group comprising one family unit. Consequently, counting two family members does not automatically double the cap. The retrieved text does not resolve every income question: irregular-income averaging, a nonclient spouse’s income, or a prescribed rounding convention remain unestablished. [C018]

No express general cancellation-proration formula was found in the retrieved chapter. Neither a half-month refund nor full retention follows merely from a midmonth cancellation. Refund entitlement must be tested against performance, the agreement, other applicable law, and any applicable federal or attorney rule. [C025–C026, C031]

4. When fees may be requested or received

New Jersey requirements established

Before services: N.J.A.C. 3:25-1.2(b) requires a written statement of fees before any debt-adjustment or counseling service. This is a disclosure deadline, not an express grant of advance-collection authority. [C023]

When handling debtor money: N.J.S.A. 17:16G-9(a) and N.J.A.C. 3:25-2.6(a)1 require distribution to creditors within ten days of receipt, less permitted fees. DOBI rejected a requested extension because the ten-day requirement came from the statute. A custodial license therefore does not establish permission to warehouse settlement savings indefinitely. The ten-day period is not a rule that a fee becomes earned after ten days. [C024; S013 §3(a), pp.1–2; S006 pp.8–9] pub.njleg.gov+1

State-only advance collection: the retrieved provisions do not supply a universal settlement/first-payment trigger equivalent to the federal TSR, but their silence does not affirmatively authorize advance settlement fees or prepaid future monthly charges. The exact non-TSR earning and collection point remains held for a specified agreement and service model. [C025]

Attorney fees

The retrieved Rules of Professional Conduct reprint states:

• RPC 1.5(a): fees must be reasonable.
• RPC 1.5(b): the basis or rate must generally be communicated in writing before or within a reasonable time after representation begins, and changes must be written; the stated exception concerns a new representation for a previous client with the same fee structure.
• RPC 1.5(c): a permissible contingent-fee agreement must be written and specify its calculation.
• RPC 1.16(d): termination requires return of advance fees not earned or incurred.

The official current court-hosted rules PDF was blocked. These propositions were read from the rule text in a publisher’s reprint, including the amendment note making the current reproduced §1.5(b) effective April 1, 2025. No particular attorney success-fee percentage or advance-retainer arrangement is cleared by this pass. [C026] gannlaw.com+1

Housing-counseling fee conditions incorporated by New Jersey

N.J.A.C. 3:25-4.2(b) incorporates HUD Handbook 7610.1 as amended and supplemented. The actual current HUD transmittal makes Revision 7 effective May 1, 2026, superseding Revision 6-1. The March 2026 footer is not the legal effective date. [C027; S031–S032]

The relevant HUD provisions and 24 C.F.R. §214.313 require reasonable, customary, service-commensurate charges without financial hardship; advance fee disclosure; no client-intake fee; free counseling where the client cannot afford fees; and no duplicate consumer charge for a HUD-funded service. Revision 7 additionally prohibits fees for education or counseling concerning mortgage delinquency, default, or homelessness. Credit-report reimbursement is limited to direct cost, with discounts passed through and no hardship. [C027–C028] hud.gov+2

New Jersey separately prohibits another-source fee for the particular certification if the borrower pays for it, while preserving other contractual funding arrangements. Certification must follow completion of the required counseling. These provisions do not establish a general advance-fee permission, a cancellation-proration formula, or an automatic combined $85 allowance. [C028, C040; S004 §§4.1(c), 4.2(b)–(c), 4.4(f)]

Independently applicable federal TSR — common context only

Where the TSR applies, 16 C.F.R. §310.4(a)(5)(i) prohibits requesting or receiving a debt-relief fee until:

1. At least one debt has been altered pursuant to a valid settlement agreement, DMP, or comparable agreement executed by the customer;
2. The customer has made at least one payment under that agreement; and
3. For debts handled individually, the fee satisfies either the enrolled-balance proportional allocation method or a consistent percentage-of-savings method.

The savings method uses enrollment debt less the amount actually paid to satisfy it. It does not establish a New Jersey-authorized percentage. [C030, C032]

Section 310.4(a)(5)(ii) permits requiring a dedicated account only under its five conditions: insured institution; consumer ownership and accrued interest; independent, unaffiliated administrator; no referral compensation; and withdrawal without penalty, with account funds other than compliant earned fees returned within seven business days of the request. [C031] ecfr.gov

Coverage remains separate: the federal debt-relief definition concerns unsecured debt, and telemarketing jurisdiction and exemptions matter. FTC guidance says bona fide nonprofits are outside the covered for-profit category, while false nonprofit claims do not avoid the rule; attorneys have no blanket TSR exemption. This pass does not assume every New Jersey nonprofit licensee is subject to the TSR. [C029; S025 §§310.2(o), 310.6; S026 coverage and attorney sections]

5. Actual regulator procedure, applications, and public lookup

Debt-adjuster licensing

The actual DOBI debt-adjuster licensing page links main-office and branch applications. The main instructions require nonprofit organizational documentation, foreign-entity authority where applicable, financial statements, leadership information/certifications, insurance information, bond documentation, and a trust-account bank letter. Each relevant service location must be addressed. [C033; S014, S016 pp.1–3, S017]

The main and branch materials identify a $300 nonrefundable application fee. This is a provider’s regulatory application charge, not a consumer enrollment-fee allowance. DOBI’s current-access dedicated-funding FAQ identifies the next nonmortgage/non-student-loan license expiration as June 30, 2027, with electronic renewal and no renewal fee; assessments and reporting are distinct. [C034; S018]

Generic entity-type boxes appearing in a shared banking form do not override the nonprofit eligibility restriction. No application was filed.

Separate high-cost home-loan counseling registration

DOBI’s currently accessible forms index links the actual registration packet. It requires organizational and financial documentation, current HUD approval, and personal certifications, and states a $100 nonrefundable application fee per location. The packet is marked revised March 2008 and contains an old New Jersey-office field. The later 2009 rule amendments control the office-location issue; the old form field cannot restore the superseded rule. [C036; S034–S035]

Public verification and its limit

An actual DOBI consumer page contains a section headed “DOBI Licensed Debt Adjusters”, listing organizations, reference numbers, and locations. This is regulator-issued public listing evidence, not a provider’s marketing claim.

The live-search route did not yield a usable status result:

• https://www.nj.gov/dobi/licenseesearch/licsearch.htm returned a redirect-only page.
• https://www-dobi.state.nj.us/DOBI_LicSearch/ returned 403 Forbidden.

The public list is undated and did not establish current expiration, suspension, or revocation status for a named provider. No named provider’s present authorization is asserted. [C035]

6. Worked fee and boundary examples

The complete calculations appear in D.1. They cover lower income, lower debt, partial settlement, previous charges, counseling setup charges, family clients, a prohibited ordinary for-profit model, cancellation, HUD fee prohibitions, and federal timing.

7. Component coverage and next investigations

The complete coverage and gap tables appear in D.2–D.3. This pass supplies substantial provider-access and fee findings, but does not close the New Jersey dossier or imply state/A066 acceptance.

B. Source register

All entries were accessed or attempted on October 23, 2026, Pacific. “Read” means actual document text was retrieved, not merely a search result. Page references are PDF pages unless a printed page is specified. A source ID is reused for that document’s different sections.

B.1. New Jersey legal authorities and adoption chain

B.2. Operational materials, interpretation, courts, and legislative status

B.3. Federal sources used for the limited timing and incorporated-fee analysis

C. Claim register

Confidence labels: “High” means the identified text or holding was actually read. “Qualified” identifies an interpretation, publication/currentness limitation, or unresolved factual condition. “Held” means the particular permission, amount, or timing conclusion is not established. All current-law conclusions remain subject to the specific retrieval limits in C037–C039.

D. Worked examples and coverage/gap tables

D.1. Plain-text examples

Common assumptions for Examples 1–5: a genuinely eligible, duly licensed nonprofit provides the stated service; client identity and gross monthly income are stipulated; the fee was properly disclosed; any independent collection-timing requirement is satisfied. The outputs are numerical ceilings, not determinations that a fee has been earned. Charges described as occurring in the same month are assumed to fall within the same month for the rule. No unverified rounding or income-averaging rule is used.

Example 1 — Lower income and an earlier fee

Plain text

Inputs: gross monthly client income = $1,200; adjustment fees already charged that month = $10.
Base: $1,200 gross monthly income.
Operator: 1%, then the $25 ceiling, then subtract previous adjustment fees.
Intermediate: $1,200 × 0.01 = $12; minimum($12, $25) = $12.
Result: $12 − $10 = $2 maximum remaining numerical headroom.
Units: US dollars per client for the same month.
Rounding: none; all results are exact.

A second invoice cannot disregard the earlier $10. [C018–C019, C022]

Example 2 — Lower debt does not change the fee denominator

Plain text

Inputs: gross monthly income = $4,000; debt = $900; settlement payment = $600.
Base: gross monthly income, not the $900 debt or $300 savings.
Operator: minimum(1% × income, $25).
Intermediate: $4,000 × 0.01 = $40; savings = $900 − $600 = $300.
Result: adjustment-fee ceiling = minimum($40, $25) = $25 for the month.
Units: US dollars per client per month.
Rounding: none.

The savings calculation does not create a percentage-of-savings allowance. [C019, C022]

Example 3 — Partial settlement does not restart the monthly cap

Plain text

Inputs: gross monthly income = $2,000.
Enrolled debts: Debt A = $4,000; Debt B = $6,000.
Only Debt A has been settled; previous adjustment fees that month = $15.
Base: $2,000 gross monthly income.
Operator: minimum(1% × income, $25), less previous fees.
Intermediate: $2,000 × 0.01 = $20; minimum($20, $25) = $20.
Result: $20 − $15 = $5 remaining monthly headroom.
Units: US dollars for the client/month, not dollars per settled debt.
Rounding: none.

Settlement of Debt B later in the same month would not create another $20 ceiling. Federal timing, if independently applicable, must also be met. [C019, C022, C030]

Example 4 — Counseling setup plus maintenance

Plain text

Inputs: actual counseling setup charge = $45; counseling maintenance charge = $30.
Base: total counseling charges in the same month.
Operator: addition, compared with the $60 monthly cap.
Intermediate: $45 + $30 = $75.
Result: $75 − $60 = $15 above the cap.
After the $45 charge, only $60 − $45 = $15 remains within the numerical ceiling.
Units: US dollars per client/month.
Rounding: none.

This is not a $60 allowance plus an additional setup fee. The exact remedy for an already collected excess is a separate issue. [C020, C025]

Example 5 — One family client

Plain text

Inputs: two people form one client family unit.
Their stipulated gross monthly client income = $3,000.
Base: the single client unit's stipulated income.
Operator: minimum(1% × $3,000, $25).
Intermediate: $3,000 × 0.01 = $30.
Result: $25 maximum for that client unit/month, not $25 × 2 = $50.
Units: US dollars per family client/month.
Rounding: none.

This example does not decide whether a nonclient spouse’s income belongs in the base. [C018–C019]

Example 6 — Ordinary for-profit, noncustodial settlement: classification hold

Plain text

Inputs: nonexempt for-profit provider; debt = $10,000.
Provider negotiates settlement for $6,000 and proposes 20% of savings.
The consumer pays the creditor directly.
Arithmetic base: $10,000 − $6,000 = $4,000 savings.
Arithmetic operator: $4,000 × 0.20.
Arithmetic result: $800.
Legal result: $800 is not an established lawful NJ fee.
Reason: paid intermediary activity is covered, and the ordinary for-profit licensing pathway was not established.
Units: US dollars; arithmetic rounding none.

Waiting until settlement or first payment does not cure the state eligibility problem. [C001–C003, C032]

Example 7 — Midmonth cancellation

Plain text

Inputs: gross monthly income = $2,000; $20 adjustment fee paid.
Client cancels halfway through the month.
Cap calculation: minimum($2,000 × 0.01, $25) = $20.
Proposed proration calculation: $20 × 1/2 = $10.
Legal refund result: HELD.

The cap calculation is verified; the one-half refund operator is not. Neither a mandatory $10 refund nor permission to retain the full $20 was established from the reviewed state provisions. Applicable contract/performance rules, RPC requirements for a lawyer, or TSR account-return rules require separate application. [C025–C026, C031]

Example 8 — HUD intake and default counseling

Plain text

Inputs: participating housing-counseling agency meeting the relevant NJ conditions.
Proposed intake fee = $35.
Proposed mortgage-default counseling fee = $80.
Operator: apply the applicable fee prohibitions to each service.
Intermediate: allowable intake charge = $0; allowable default-counseling charge = $0.
Result: $0 + $0 = $0 for those two service charges.
Units: US dollars.
Rounding: none.

No credit-report reimbursement or different separately permitted service is assumed. The ordinary $60 counseling ceiling does not override these prohibitions. [C027–C028, C040]

Example 9 — Federal first-payment condition

Plain text

Inputs: an otherwise lawful NJ legal-practice model; TSR coverage is stipulated.
An otherwise valid $100 fee is proposed.
A valid settlement agreement is executed, but the customer has made zero payments under it.
Operator: agreement condition AND first-payment condition.
Intermediate: true AND false = false.
Result: $0 may be requested or received now under the TSR debt-relief fee rule.
Units: US dollars at this stage.
Rounding: not applicable.

This tests federal timing only. It does not adjudicate the $100 fee’s reasonableness or approve an attorney-affiliation arrangement. [C006, C026, C029–C032]

D.2. Coverage and exact remaining investigations within PASS-01

Specific failed-source routes preserved

• Current Title17 / amendment table: the Legislature’s gateway route did not render the needed text.
• Official statutory ZIP: the public index was readable, but opening the archive returned unsupported application/x-zip-compressed.
• 1986 enrolled chapter: the accessible State Library packet was legislative history; the annual1986 session-law PDF lead failed with a retrieval error. The next source is the annual session-law volume at Chapter184, or the official current statutory text archive.
• Current consolidated administrative code: the agency-linked Lexis route produced no operative chapter text.
• Official Anchor opinion/docket and RPC PDF: court-hosted routes returned 403; reproduced primary texts were used with stated limitations.
• Official2026 bill status: returned the Legislature’s navigation shell, not the action history.
• Live DOBI lookup: redirect-only entry page followed by 403 at the search service.

These failures were not bypassed through accounts, APIs, CAPTCHA workarounds, permission changes, or another browser.

D.3. Required later passes remain open

E. Researcher self-check

Actually read: the enacted2009 definitions/exclusions and2005 duties amendment; the current official criminal cross-reference; the archived full Chapter3:25 and relevant later adoption materials; the published Anchor opinion through a mirror of the court-issued PDF; the operative text of Opinion36; the relevant RPC reprint; actual DOBI applications, instructions, FAQ, and public listing; exact TSR fee provisions; and the current HUD fee regulation, relevant Revision7 handbook sections, and complete transmittal.

Not represented as read or verified: an authenticated enrolled1986 chapter; current official§17:16G-2/-6; a freshly retrieved2026 consolidated Chapter3:25; authoritative later Anchor docket history; a named provider’s live status; the official2026 reform action record; or all180 pages and all cross-references of the HUD handbook. Search results, historical proposals, old forms, and reproduced releases were not silently promoted into current enacted permission.

This work used public-web research in this conversation, with parallel internal research tasks and checks of key passages. Those tasks were not separate ChatGPT conversations and are not an independent review. No DeepResearch was used. A UI-selected “actualGPT6Pro” label was not independently verified.

No application, contact, account change, publication, or provider authorization determination was made. This is the provider-access/consumer-fee component only, with the expressly identified holds and all other New Jersey categories still open.

END S_NJ PASS-01