Many New Jersey families are holding their breath financially. Layoffs are ticking up and everyday expenses like groceries, utilities and rent keep climbing. For households already stretched thin, even a small disruption can push finances over the edge. That reality is why on Jan. 12, Democrats and Republicans in Trenton came together to approve legislation that would help thousands of constituents climb out of debt.
Gov. Phil Murphy, a Democrat, must now sign this bill, Senate Bill 1310, into law. As one of his final acts in office, Murphy could help many families regain their financial footing and avoid financial free fall. The legislation is a key part of addressing the affordability crisis that is seizing the state.
Simply, S1310 would pave the way for debt settlement services to be offered in the state. Consumers in neighboring states like New York and Pennsylvania already have access to these services, but because of an outdated 1970s law, New Jersey is one of the only states in the country that does not allow consumers to access this effective tool.
S1310 would correct that disparity.
An ‘urgent’ need
Among consumers wrestling with unsecured debt, millions across the country have chosen to enlist a debt settlement provider to negotiate with their creditors, often after months or years of trying to keep up on their own. These services allow consumers to reduce their debt for less than they owe, escape the clutch of high-interest loans and debt collectors, and avoid bankruptcy. Debt settlement saves U.S. consumers nearly $2 billion per year. After graduating from a program, 99% of consumers never need the service again.
The need for debt settlement is urgent since New Jersey’s cost-of-living crisis is causing more consumers to take on unsecured debt, which includes debt from credit cards and personal loans, just to get by. New Jersey saw the sixth-largest increase in credit card debt in the entire country in the third quarter of 2025, with average household balances jumping 6.1% to $9,768. New Jersey families are not alone. According to a Consumer Financial Protection Bureau study, average credit card balances now exceed $5,300 per cardholder.
‘Unsustainable financial burdens’
The CFPB study also found traditional credit cards now have average interest rate of 25.2% APR. The average interest rate for store credit cards is a staggering 31.3%. For many consumers, elevated rates transform manageable balances into unsustainable financial burdens since payments barely touch the principal. The CFPB found 15% of users of major credit cards are now making only minimum payments. (That number is the highest it has been in at least a decade.) In addition, charge-offs by banks, debt written off as unlikely to be collected after six months of nonpayment, surged 65% from 2022 to 2024, a sign that more households are simply running out of options. Consumers are also becoming increasingly more dependent on installment loans and other short-term debt. A crisis unfolding in real-time — and New Jersey consumers are feeling the pressure much more than other states.
Living in the past
The difference between a family living in Trenton, though, and one in Albany or Harrisburg, is that, due to state laws that grant debt settlement companies the license to operate, struggling consumers in New York and Pennsylvania can find relief. New Jersey is one of only two states that still prohibit debt settlement companies from offering services, leaving families with fewer choices at the very moment they need help the most.
More than a decade ago, the Obama administration ushered in a new regime for debt settlement services. Since then, these services have expanded throughout most of the country — but not New Jersey. Instead of evolving, New Jersey is relying on an antiquated 1970s system that offers them little, or no, relief from financial distress.
Gov. Murphy should follow the lead of both chambers of the state legislature on this issue. The Senate and Assembly have each recognized with near unanimous votes that New Jersey families deserve access to safe, transparent options when financial hardship strikes. It is time for Gov. Murphy to finish the job and sign S1310 into law.
Jason Mulvihill is the president and CEO of the Association for Consumer Debt Relief, the leading national association of debt relief companies.
The post OPINION: Consumers are drowning in debt; Gov. Murphy can throw a lifeline appeared first on NJBIZ.
