Fair-practice laws on debt collection vary from state to state. Pennsylvania has similar regulations with lesser penalties.

According to David Szuchman, director of the New Jersey Division of Consumer Affairs, the proposed legislation is desperately needed in New Jersey. At the June 4 Assembly Consumer Affairs Committee hearing, Szuchman said 787 debt-collection complaints had come through the division last year, 368 for alleged harassment. In 2007, the division received 753 complaints.

The numbers, Szuchman said, highlight "how widespread a problem this is for our consumers."

"Currently we are virtually powerless to help them because there is no New Jersey law that exists," Szuchman said in his testimony. "New Jersey's consumers deserve better. They need a voice."

Nationally, complaints about the behavior of debt collectors have spiked with the recession.

Sergei Lemberg, who specializes in consumer law at the Connecticut firm Lemberg & Associates, said the current number of debt-collector cases was "tremendous."

"Right now it's a good chunk of our business," said Lemberg, who has been working with Duffy.

According to Lemberg's marketing director, Cheryl Richter, the increase can be attributed to the rising unemployment rate.

"There's a fresh group of people who have never had problems with credit before," Richter said. "All of a sudden, the debt collectors know those are good targets for them to harass and abuse."

In its 2009 report to Congress, the FTC noted an increase in national consumer complaints about in-house and third-party debt collectors from 2007 to 2008. In 2008, the commission received 104,661 complaints, compared with 89,934 in 2007.

In 2008, 34.7 percent of all complaints were claims of harassment by collectors, compared with 19.7 percent in 2007.

Debt-collection agencies say enough is being done at the federal level.

"We are already federally mandated," said Sheryl Gambarella, vice president of the New Jersey Association of Collection Agencies. "There are rules and regulations we have to follow, and if it's not enough, it goes either state or federally to court."

Gambarella testified at the June 4 hearing on behalf of NJACA. In addition to overregulating agencies, Gambarella said, the bill has several problematic parts, such as its provision for punitive damages awarded to victimized debtors.

Other critics, including the New Jersey Business and Industry Association, say the law would make it more difficult for a company to follow existing regulations, as laws vary from state to state.

"For a company that operates in a variety of states, you actually make compliance more difficult," said Christine Stearns, NJBIA's vice president of health and legal affairs. "By adding an additional and slightly different law, you make those compliance efforts more difficult for those companies that are trying to comply with the law."

Lemberg said his firm handled 50 to 100 debt-collection cases a month.

The most common problems clients come to him with are debt collectors who threaten arrest or legal action, make repeated calls at work, call family members and employers, or misrepresent themselves on the phone.

"They basically stalk you," Lemberg said. "They don't have to be nice about it."

Debt collectors often threaten to send a law official to a debtor's home, for example, which Lemberg said is not only a complete bluff, as someone cannot be arrested for not paying a private debt, but also illegal.