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Credit Counseling, Debt Managem983and Settlem983

Credit Counseling, Debt Management and Debt Settlement State Statues

NCSL Staff Contact: Heather Morton, Denver

Each year millions of consumers turn to credit counseling agencies and debt management services for help in managing their debts. As an alternative to credit counseling, debt settlement offers to reduce consumers' debt through negotiating with creditors.  Credit counselors, debt managers and debt settlement services all provide resources to help consumers get out of debt. State legislators and other policymakers have been raising questions regarding how these services work and whether they really help consumers to get out of debt.

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STATES
STATUTORY CITATION BOND/INSURANCE REQUIREMENT TERMINOLOGY
Alabama

none

Alaska

none

Arizona

Ariz. Rev. Stat. Ann. §6-701 et seq.

A cash or surety bond for the following amounts based on the amounts disbursed by the licensee in the previous license year:

Yearly disbursements - Amount of bond
Less than $100,000 - not less than $5,000
$100,000 - $250,000 - $10,000
$250,001 - $500,000 - $15,000
$500,001 - $1,000,000 - $20,000
More than $1,000,000 - $25,000

Debt Management Companies

Arkansas

Ark. Stat. Ann. §5-63-301 et seq.

Prohibited

Debt Adjusting

California

Cal. Finance Code §12000 et seq.

A licensed bill payer, general prorater, or special prorater who does not qualify to make use of agencies in the conduct of its business at all times shall maintain a surety bond in an amount as required by subdivision (a) of §12206 and assets of at least $10,000 in excess of its liabilities, of which assets at least $5,000 shall be liquid assets. A licensed bill payer, general prorater, or special prorater is qualified to make use of agencies in the conduct of its business if at all times it shall have capital of at least $100,000 and maintain a surety bond in an amount as required by subdivision (a) of §12206 and assets, excluding goodwill and other intangible assets, of at least $100,000 in excess of its liabilities, of which assets at least $25,000 shall be liquid assets.

Prorater

Colorado

Colo. Rev. Stat. §12-14.5-201 et seq.

A surety bond filed pursuant to subsection (a) of this section shall: (1) Be in the amount of $50,000 or other larger or smaller amount that the administrator determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals, and any other factor the administrator considers appropriate; (2) Be issued by a bonding, surety, or insurance company authorized to do business in this state and rated at least A by a nationally recognized rating organization; and (3) Have payment conditioned upon noncompliance of the provider or its agent with this part 2.

(a) Instead of the surety bond required by §12-14.5-213, a provider may deliver to the administrator, in the amount required by §12-14.5-213 (b), and, except as otherwise provided in paragraph (2) of this subsection (a), payable or available to this state and to individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear, if the provider or its agent does not comply with this part 2: (1) Repealed. (2) With the approval of the administrator, an irrevocable letter of credit, issued or confirmed by a bank approved by the administrator, payable upon presentation of a certificate by the administrator stating that the provider or its agent has not complied with this part 2.

(b) If a provider furnishes a substitute pursuant to subsection (a) of this section, the provisions of §12-14.5-213 (a), (c), (d), and (e) apply to the substitute.

Debt Management

Connecticut

Conn. Gen. Stat. §36a-655 et seq.

(1) Except as provided in this subdivision, for every applicant, the principal amount of the bond shall be the greater of (A) $40,000, or (B) (i) twice the amount of the average daily balance of the payments received by the applicant from Connecticut debtors in connection with the applicant’s debt adjustment activity during the preceding 12 months ending July 31st of each year, or (ii) in the case of an applicant that has acquired the business of a predecessor debt adjuster, the lesser of the amount of the predecessor’s debt adjustment activity during such preceding period or $1 million. The commissioner may require a larger bond if the commissioner determines that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct and that such increased bond is necessary for the protection of consumers, or may increase or decrease the amount of the bond based upon the applicant’s or licensee’s financial condition, business plan and the actual or estimated aggregate amount of payments and fees paid by Connecticut debtors to such applicant. Each licensee shall submit to the commissioner, by September first of each year, a report containing information on the average daily balance of the payments received by the licensee from Connecticut debtors during the preceding 12 months ending July 31st of each such year. The report shall be subscribed and affirmed as true by the licensee and shall be in a form prescribed by the commissioner.

(2) If a licensee or applicant for renewal of a license establishes that such licensee or applicant is unable to comply with the bond required by subdivision (1) of this subsection, it shall file a bond for the highest principal amount it can obtain, provided such amount shall be a minimum of $40,000, and the licensee or applicant for renewal shall, in lieu of the balance of the required amount of the bond, deposit a sum equal to the amount of the bond required by subdivision (1) of this subsection, less the amount of the bond filed with the commissioner, in cash or cash equivalents, with such bank, out-of-state bank that has a branch in this state, Connecticut credit union or federal credit union as such applicant or licensee may designate and the commissioner may approve, and subject to such conditions as the commissioner deems necessary for the protection of consumers and in the public interest. No licensee or applicant shall make such deposit until the depository institution and the licensee or applicant executes a deposit agreement satisfactory to the commissioner. The deposit agreement shall pledge the amount deposited to the commissioner and provide that the depository institution shall not release any of the moneys pledged without the authorization of the commissioner. The amount deposited shall secure the same obligation as would a surety bond filed under this section and shall be held at such banks or credit unions to cover claims during the period the license remains in full force and effect and the succeeding two years after such license has been surrendered, revoked or suspended or has expired. The licensee or applicant may collect interest on such deposit in accordance with its deposit agreement. The deposits made pursuant to this section shall be deemed, by operation of law, to be held in trust for the benefit of any debtor, who may be damaged by failure of a licensee or applicant to perform any written agreements or by the wrongful conversion of funds paid to a licensee in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

Debt Adjusters

Conn. Gen. Stat. §36a-671 et seq.

(a)(3) Each debt negotiation licensee shall file a single surety bond that complies with the requirements of this section in connection with the main office license with the commissioner in an aggregate amount of $50,000 or such other amount required in subdivision (4) of this subsection, which bond shall identify any licensed branch office as a bonded location on such bond by addendum.

(4) In the case of a debt negotiation licensee engaging or offering to engage in the business of negotiating residential mortgage loans on behalf of mortgagors, such debt negotiation licensee shall file a bond in the penal sum amount set forth in subsection (f) of this section based on the aggregate dollar amount of the residential mortgage loans negotiated or offered to be negotiated by its sponsored mortgage loan originator licensees.

(e) The penal sum of the bond required by subdivision (4) of subsection (a) of this section shall be determined as follows: (1) An initial applicant for a debt negotiation license shall file a bond in a penal sum of $50,000. (2) A debt negotiation licensee sponsoring and bonding at least one mortgage loan originator as an exempt registrant under subdivision (2) of subsection (a) and subsection (c) of §36a-487, as amended by this act, shall file a bond with a penal sum in the following amount: (A) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding 12-month period ending July 31st of the current year is less than $30 million, the penal sum of the bond shall be $50,000; (B) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding 12-month period ending July 31st of the current year is $30 million or more but less than $50 million, the penal sum of the bond shall be $100,000; and (C) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding twelve-month period ending July 31st of the current year is $50 million or more, the penal sum of the bond shall be $150,000.

(f) For purposes of subsection (e) of this section, the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated shall mean the aggregate underlying dollar amount of all residential mortgage loans for which a sponsored mortgage loan originator provides debt negotiation services.

Debt Negotiation
Delaware

Del. Code Ann. tit. 6, §2401A et seq.

(a) Except as otherwise provided in §2414A of this title, every licensed provider shall file with the attorney general, in a form satisfactory to the attorney general, an original corporate surety bond, with surety provided by a corporation authorized to transact business in this state, in the principal sum to be determined by the attorney general, except that the bond amount shall not be less than $50,000. In determining the amount of the bond required for a licensed provider, the attorney general shall consider, among other things:
(1) The dollar value of the licensed provider's Delaware business;
(2) The dollar value of all trusts accounts; and
(3) Such other and further criteria as the attorney general may deem necessary and appropriate.

(a) In lieu of requiring the filing of a surety bond, the attorney general may, at the attorney general's discretion, accept from a licensed provider an irrevocable letter of credit. Such irrevocable letters of credit shall be provided by an insured depository institution (as defined in the Federal Deposit Insurance Act at 12 U.S.C. §1813(c)) acceptable to the attorney general, in a form satisfactory to the attorney general in the principal sum to be determined by the attorney general, except that the irrevocable letter of credit amount shall not be less than $50,000. In determining the amount of the irrevocable letter of credit required for a licensed provider, the attorney general shall consider, among other things:
(1) The dollar value of the licensed provider's Delaware business;
(2) The dollar value of all trust accounts; and
(3) Such other and further criteria as the attorney general may deem necessary and appropriate.

Debt Management

District of Columbia

none

Florida

Fla. Stat. §817.801 et seq.

(1)(b) Obtain and maintain at all times insurance coverage for employee dishonesty, depositor's forgery, and computer fraud. The insurance coverage must be in an amount not less than the greater of $100,000 or 10 percent of the monthly average of the aggregate amount of all deposits made for distribution to creditors with such person by all debtors for the six months immediately preceding the date of initial application for or renewal of the insurance. The deductible on such coverage shall not exceed 10 percent of the face amount of the policy coverage.

Credit Counseling

Georgia

Ga. Code §18-5-1 et seq.

(a)(2) Obtain and maintain at all times insurance coverage for employee dishonesty, depositor's forgery, and computer fraud in an amount not less than the greater of $100,000 or 10 percent of the monthly average for the immediately preceding six months of the aggregate amount of all deposits made with such person by all debtors. The deductible on such coverage shall not exceed 10 percent of the face amount of the policy coverage. Such policy shall be issued by a company rated at least "A-" or its equivalent by a nationally recognized rating organization and such policy shall provide for 30 days' advance written notice of termination of the policy to be provided to the governor's Office of Consumer Affairs.

Debt Adjustment

Guam

Guam Code Ann. tit. 14, §7101 et seq.

The agency shall file with the administrator a bond to be approved by it, in which the agency shall be the obligor, in the sum of $5,000, with one or more sureties, whose liability as sureties need not exceed that sum in the aggregate.

Credit Counseling

Hawaii

Hawaii Rev. Stat. §446-1 et seq.

Prohibited

Debt Adjusting

Idaho

Idaho Code §26-2221 et seq.

(2) The surety bond shall be executed to the state of Idaho in the sum of $15,000 or upon renewal in such larger sum as hereinafter provided.

Upon renewal of a license, the licensee shall supply the director with a statement of the moneys accepted, received or held for another in the licensee's conduct of business authorized by this act. The amount of the bond upon renewal shall be in the amount of $15,000, or two times the average monthly amount over the preceding year of moneys accepted, received or held for another in the licensee's conduct of business authorized by this act computed to the next highest $1,000, whichever sum is greater, up to a maximum of $100,000.

Credit/Debt Counselor

Illinois

Ill. Rev. Stat. ch. 205, §665/1 et seq.

Every applicant shall submit to the secretary, at the time of the application for a license, a bond to be approved by the secretary in which the applicant shall be the obligor, in the sum of $25,000 or such additional amount as required by the secretary based on the amount of disbursements made by the licensee in the previous year, and in which an insurance company, which is duly authorized by the state of Illinois, to transact the business of fidelity and surety insurance shall be a surety.

Debt Managment

Ill. Rev. Stat. ch. 225, §429/1 et seq.

Every applicant shall submit to the secretary, at the time of the application for a license, a bond to be approved by the secretary in which the applicant shall be the obligor, in the sum of $100,000 or an additional amount as required by the secretary, and in which an insurance company, which is duly authorized by the state of Illinois to transact the business of fidelity and surety insurance, shall be a surety.

Debt Settlement

Indiana

Ind. Code §24-5-15-1 et seq.

(a) Before doing business in Indiana, a credit services organization must:
(1) obtain a surety bond in the amount of $25,000, issued by a surety company authorized to do business in Indiana in favor of the state for the benefit of a person that is damaged by a violation of this chapter; and
(2) file a copy of the surety bond obtained under subdivision (1) with the attorney general.

(b) The attorney general may waive the bonding requirement under subsection (a) and, instead of the bond, accept an irrevocable letter of credit for an equivalent amount issued in favor of the state for the benefit of a person that is damaged by a violation of this chapter. A credit services organization that obtains an irrevocable letter of credit under this subsection must file a copy of the irrevocable letter of credit with the attorney general before doing business in Indiana.

Credit Services Organizations
(includes debt settlement services)

Ind. Code §28-1-29-1 et seq. Effective until July 1, 2014:
Each application for a license shall be accompanied by proof that the applicant has executed a bond, payable to the department, in an amount determined by the director and in accordance with the standards adopted by the director. Said bond shall also indemnify any person damaged by failure on the part of the licensee to conduct the business in accordance with the provisions of this chapter.
Budget Service Companies/Debt Management

Effective July 1, 2014:
(a) Each application for a license must be accompanied by proof that the applicant has executed a surety bond in accordance with this section.

(b) A surety bond issued under this section must:
(1) be in a form prescribed by the director;
(2) be in effect during the term of the license issued under this chapter;
(3) remain in effect during the two years after the licensee ceases offering debt management services to individuals in Indiana;
(4) be payable to the department for the benefit of: (A) the state; and (B) individuals who reside in Indiana when they agree to receive debt management services from the licensee;
(5) be in an amount equal to: (A) $50,000, in the case of an initial surety bond issued under this section; or (B) the amount prescribed under subsection (d), beginning with the first renewal of a license under this chapter;
(6) be issued by a bonding, surety, or insurance company authorized to do business in Indiana and rated at least "A-" by at least one nationally recognized investment rating service; and
(7) have payment conditioned upon the licensee's or any of the licensee's employees' or agents' noncompliance with or violation of this chapter or other applicable federal or state laws or regulations.

(c) The director may adopt rules or guidance documents with respect to the requirements for a surety bond as necessary to accomplish the purposes of this chapter.

(d) Beginning with the first renewal of a license under this chapter, each year that a licensee continues to offer debt management services to individuals in Indiana, the licensee shall file a new or an additional surety bond in an amount that ensures that the licensee's surety bond under this section is equal to the greater of the following: (1) $50,000; or (2) the average of the highest daily balance of funds held in trust for Indiana residents for each month during the licensee's most recently concluded fiscal year, not to exceed $100,000.
Iowa

Iowa Code §533A.1 et seq.

4. Each application shall be accompanied by a bond to be approved by the superintendent in favor of the people of the state of Iowa in the penal sum of $25,000 for each office, and conditioned that the obligor will not violate any law pertaining to such business and upon the faithful accounting of all moneys collected upon accounts entrusted to such person engaged in debt management, and their employees and agents for the purpose of indemnifying debtors for loss resulting from conduct prohibited by this chapter. The aggregate liability of the surety to all debtors doing business with the office for which the bond is filed shall, in no event, exceed the penal sum of such bond. The surety on the bond shall have the right to cancel such bond upon giving 30 days’ notice to the superintendent and thereafter shall be relieved of liability for any breach of condition occurring after the effective date of the cancellation. A person shall not engage in the business of debt management until a good and sufficient bond is filed in accordance with the provisions of this chapter.

Debt Management (includes debt settlement services)

Kansas

Kan. Stat. Ann. §21-6502

Prohibited Debt Adjusting
Kentucky

Ky. Rev. Stat. §380.010 et seq.

(7)(a) A person engaged in debt adjusting shall obtain and at all times maintain insurance coverage for errors and omissions, employee dishonesty, depositor's forgery, and computer fraud in the amount of 10  percent of the monthly average for the immediately preceding six months of the aggregate amount of all deposits made with the person by all debtors. The insurance coverage shall comply with all of the following: (a) The minimum limit of the insurance coverage shall not be less than $100,000, and the maximum limit of the insurance coverage shall not be more than $250,000; (b) The insurance coverage shall not include a deductible in excess of 10 percent of the face amount of the policy coverage; (c) The insurance coverage shall be issued by an insurer and rated at least A-, or its equivalent, by a nationally recognized rating organization; and (d) The insurance coverage shall provide that the Consumer Protection Division of the Office of the Attorney General shall be named as an additional interested party.

A debt adjuster shall maintain a bond issued by a surety company admitted to do business in this Commonwealth. The bond shall be in the amount of $25,000 in favor of the attorney general for the benefit of the Commonwealth for any violation of this chapter or any person suffering injury or loss by reason of any violation of this chapter. A copy of the bond shall be filed with the attorney general.

The bond shall be in effect during the period of the debt adjuster's registration as well as for two years after the debt adjuster ceases to provide debt-adjusting services to debtors.

Debt Adjusting
Louisiana

La. Rev. Stat. Ann. §14-331

Prohibited when conducted for profit

Debt Adjusting

Maine

Me. Rev. Stat. Ann. tit. 32, §6171 et seq.

Each application must be accompanied by evidence of a surety bond in a form approved by the administrator in the aggregate amount of $50,000 to run to the administrator for use by the administrator and any person or persons who may have a cause of action against a debt management service provider. The terms of the bond must run concurrently with the period of time during which the registration is in effect.

Debt Management

Maryland

Md. Financial Institutions Code Ann. §12-901 et seq.

The surety bond shall be in an amount not less than $10,000 and not more than $1,000,000, as set by the commissioner.

Debt Management

Md. Financial Institutions Code Ann. §12-1001 et seq.
(Abrogated June 30, 2015)

A surety bond filed under this section shall: (1) Run to the commissioner for the benefit of any consumer who is injured by a violation of this subtitle committed by a registrant; (2) Be in the amount of $ 50,000; (3) Be issued by a bonding, surety, or insurance company that is authorized to do business in the state; and (4) Be conditioned so that the registrant shall comply with all state and federal laws and regulations governing the business of providing debt settlement services. Debt Settlement
Massachusetts

Mass. Gen. Laws. Ann. 180, §4A

Prohibited when conducted for profit

Credit Counseling

Michigan

Mich. Comp. Laws §451.411 et seq.

The amount of the surety bond must equal or exceed the total amount of Michigan clients' funds in the applicant's or licensee's trust account at the time of application for license or renewal, as determined by the department, but in no event shall a surety bond be less than $25,000 or be greater than $100,000.

Debt Management

Minnesota

Minn. Stat. §332A.02 et seq.

Subd. 4. The registration application must be accompanied by a surety bond in which the applicant shall be the obligor, in a sum to be determined by the commissioner but not less than $5,000, and in which an insurance company, which is duly authorized by the state of Minnesota to transact the business of fidelity and surety insurance, shall be a surety. The commissioner may also require a fidelity bond in an appropriate amount covering employees of any applicant. Each branch office or additional place of business in this state of an applicant must be bonded as provided in this subdivision.

Debt Management

Minn. Stat. §332B.01 et seq.

An applicant for registration as a debt settlement services provider must comply with the requirements of §332A.04, subdivisions 3, 4, and 5.

Debt Settlement

Mississippi

Miss. Code Ann. §81-22-1 et seq.

To be eligible for a license, an applicant shall file with the commissioner a bond with good security in the penal sum of $50,000, payable to the state of Mississippi for the faithful performance by the licensee of the duties and obligations pertaining to the business so licensed and the prompt payment of any judgment that may be recovered against the licensee on account of charges or other claims arising directly or collectively from any violation of the provisions of this chapter.

Debt Management

Missouri

Mo. Rev. Stat. §425.010 et seq.

A debt adjuster shall provide a blanket bond in the amount of $100,000 in favor of the state of Missouri and a copy of the bond shall be filed with the director of the Division of Finance.

Debt Adjusters
(includes debt settlement services)

Montana

Mont. Code Ann. §30-14-2001 et seq.

A surety bond for the benefit of consumers harmed by a violation of the provisions of this part in an amount, form, and duration as required by the department by rule, except that an applicant that does not maintain an office in this state with a credit counselor on the premises shall post a surety bond in the amount of $50,000.

Debt Management

Mont. Code Ann. §30-14-2101 et seq.

A debt settlement provider shall maintain insurance coverage for dishonesty, fraud, theft, and other misconduct on the part of directors, officers, employees, or agents that is issued by an insurer rated at least A- or its equivalent by a nationally recognized rating organization. The debt settlement provider shall, at the request of the attorney general, make available to the attorney general proof of the insurance coverage required by this subsection (1)(a). The insurance coverage must be in a minimum amount of $100,000 with a deductible of not more than $10,000.

Debt settlement

Nebraska

Neb. Rev. Stat. §69-1201 et seq.

At the time of filing the application the applicant shall furnish a bond to the people of the state in the sum of $10,000, conditioned upon the faithful accounting of all money collected upon accounts entrusted to such person engaged in debt management, and their employees and agents. The aggregate liability of the surety to all claimants doing business with the office for which the bond is filed shall in no event exceed the amount of such bond. The bond or bonds shall be approved by the secretary and filed in the office of the secretary of state. No person, firm, limited liability company, or corporation shall engage in the business of debt management until a good and sufficient bond is filed in accordance with the provisions of §§69-1201 to 69-1217.

Debt Management

Nevada

Nev. Rev. Stat. §676A.010 et seq.

1. Except as otherwise provided in NRS 676A.400, a provider that is required to be registered under this chapter shall file a surety bond with the commissioner, which must:
(a) Be continuously in effect during the period of registration and for two years after the provider ceases providing debt-management services to individuals in this state; and
(b) Run to this state for the benefit of this state and of individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear.

2. Subject to adjustment of the dollar amount pursuant to subsection 6 of NRS 676A.730, a surety bond filed pursuant to subsection 1 must:
(a) Be in the amount of $50,000 or other larger amount that the commissioner determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals and any other factor the commissioner considers appropriate;
(b) Be issued by a bonding, surety or insurance company authorized to do business in this state and rated at least A by a nationally recognized rating organization; and
(c) Have payment conditioned upon noncompliance of the provider or its agent with this chapter.

1. Instead of the surety bond required by NRS 676A.390, a provider may deliver to the commissioner, in the amount required by subsection 2 of NRS 676A.390, and, except as otherwise provided in subparagraph (1) of paragraph (b), payable or available to this state and to individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear, if the provider or its agent does not comply with this chapter:
(a) A certificate of insurance issued by an insurance company authorized to do business in this state and rated at least A or equivalent by a nationally recognized rating organization, approved by the commissioner and with no deductible, or, if the provider supplies a bond in the amount of $5,000, a deductible not exceeding $5,000; or
(b) With the approval of the commissioner:
(1) An irrevocable letter of credit, issued or confirmed by a bank approved by the commissioner, payable upon presentation of a certificate by the commissioner stating that the provider or its agent has not complied with this chapter; or
(2) Bonds or other obligations of the United States or guaranteed by the United States or bonds or other obligations of this state or a political subdivision of this state, to be deposited and maintained with a bank approved by the commissioner for this purpose.

2. If a provider furnishes a substitute pursuant to subsection 1, the provisions of subsections 1, 3, 4 and 5 of NRS 676A.390 apply to the substitute.

Debt Management
(includes debt settlement services)

New Hampshire

N.H. Rev. Stat. Ann. §399-D:1 et seq.

Each applicant shall submit to the commissioner, with his or her application for a license, a bond, in such form as the commissioner shall prescribe, in the amount of $25,000. The applicant shall be the obligor in such bond and an insurance company authorized to transact the business of fidelity and surety insurance in this state shall be the surety.

Debt Adjustment

New Jersey

N.J. Rev. Stat. §2C:21-19

Prohibited without a license

Debt Adjustment

N.J. Rev. Stat. §17:16G-1 et seq.

Any nonprofit social service agency or nonprofit consumer credit counseling agency licensed under this act shall be bonded to the satisfaction of the commissioner for each location pursuant to regulation. In setting the bonding requirements for each location, the commissioner shall consider the number of debtors provided credit counseling and debt adjustment services at that location, and the balance of funds in the trust account required to be maintained pursuant to §3 of P.L.2005, c.287 (C.17:16G-9).

Debt Adjustment, Credit Counseling

New Mexico

N.M. Stat. Ann. §56-2-1 et seq.

Prohibited

Debt Adjuster

New York

N.Y. Banking Law §579 et seq.

Except as provided hereunder, the principal amount of such bond shall be $250,000. The superintendent may require a larger bond if he or she determines, in his or her sole discretion, that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct and that such increased bond is necessary for the protection of consumers; or the superintendent may increase or decrease the amount of such bond or deposit based upon the applicant's or licensee's financial condition, business plan, and the actual or estimated aggregate amount of payments and fees paid by debtors to such licensee.

Budget Planners

N.Y. Business Law §455 et seq.

 

Budget Planning

North Carolina

N.C. Gen. Stat. §14-423 et seq.

Prohibited

Debt Adjusting
(includes debt settlement services)

North Dakota

N.D. Cent. Code §13-07-01 et seq.

A consumer credit counseling service entering an agreement with a debtor who resides in this state shall file with the attorney general a surety bond or other security in an amount equal to the largest sum accrued in the service's trust account during the prior year, or $5,000, whichever is greater.

Consumer Credit Counseling

N.D. Cent. Code §13-11-01 et seq.

The applicant must provide a surety bond in the sum of $50,000 or an additional amount as required by the commissioner by rule.

Debt Settlement

Ohio

Ohio Rev. Code Ann. §4710.01 et seq.

A person engaged in debt adjusting shall obtain and maintain at all times insurance coverage for employee dishonesty, depositor's forgery, and computer fraud in the amount of 10 percent of the monthly average for the immediate preceding six months of the aggregate amount of all deposits made with the person by all debtors. The insurance coverage shall comply with all of the following: (1) The insurance coverage is not less than $100,000. (2) The insurance coverage includes a deductible that does not exceed 10 percent of the face amount of the policy coverage. (3) The insurance coverage is issued by an insurer rated at least A- or its equivalent by a nationally recognized rating organization. (4) The insurance coverage provides that 30 days advance written notice be given to the consumer protection division of the attorney general before coverage is terminated.

Debt Pooling/Debt Adjusting

Oklahoma

none

Oregon

Or. Rev. Stat. §697.602 et seq.

An applicant for registration as a debt management service provider at the time of application shall file with the director of the Department of Consumer and Business Services a bond issued by one or more corporate sureties authorized to do business in this state. The bond must: (a) Be in an amount that is: (A) A minimum of $10,000; or (B) An amount the director specifies by rule. (b) Require the surety company to provide written notice to the director by registered or certified mail: (A) At least 30 days before the surety company cancels or revokes the bond; or (B) Whenever the surety company pays for a loss under the bond. (c) Satisfy the provisions of subsection (2) of this section.

Debt Management

Pennsylvania

Pa. Stat. tit. 63, §2401 et seq.

The department shall issue a license under this act if the applicant obtains and maintains a bond in an amount greater than the total amount of Pennsylvania consumer funds that the licensee will hold directly or in trust at any time, in a form acceptable to the department, prior to the issuance of the license, from a surety company authorized to do business in this Commonwealth. The bond shall be a penal bond conditioned on compliance with this act and subject to forfeiture by the department and shall run to the Commonwealth for its use. The bond shall also be for the use of any person against the licensee for the benefit of any consumer who is injured by a violation of this act or regulation promulgated under this act.

Debt Management
(includes debt settlement services)

Puerto Rico

none

Rhode Island

R.I. Gen. Laws §19-14.8-1 et seq.

(a) Except as otherwise provided in §19-14.8-14, a provider that is required to be registered under this chapter shall file a surety bond with the director. Subject to adjustment of the dollar amount pursuant to §19-14.8-32(f), a surety bond filed pursuant to subsection (a) must: (1) Be in the amount of $50,000 or other larger or smaller amount that the director determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals, and any other factor the director considers appropriate; (2) Be issued by a bonding, surety, or insurance company authorized to do business in this state and rated at least "A" by a nationally recognized rating organization; and (3) Have payment conditioned upon noncompliance of the provider or its agent with this chapter.

(a) Instead of the surety bond required by §19-14.8-13, a provider may deliver to the director, in the amount required by § 19-14.8-13(b), and, except as otherwise provided in subparagraph (2)(A) below, payable or available to this state and to individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear, if the provider or its agent does not comply with this chapter:
(1) A certificate of insurance issued by an insurance company authorized to do business in this state and rated at least "A" by a nationally recognized rating organization, with no deductible; or
(2) With the approval of the director:
(A) An irrevocable letter of credit, issued or confirmed by a bank approved by the director, payable upon presentation of a certificate by the director stating that the provider or its agent has not complied with this chapter; or
(B) Bonds or other obligations of the United States or guaranteed by the United States or bonds or other obligations of this state or a political subdivision of this state, to be deposited and maintained with a bank approved by the director for this purpose.

(b) If a provider furnishes a substitute pursuant to subsection (a), the provisions of §19-14.8-13(a), (c), (d), and (e) apply to the substitute.

Debt Management

South Carolina

S.C. Code Ann. 1976 §37-7-101 et seq.

A credit counseling organization may not offer or agree to offer credit counseling services in this state without first filing a surety bond with the department. The amount of the surety bond must equal or exceed the total amount of South Carolina clients' funds in the applicant's or licensee's trust account at the time of application for license or renewal, as determined by the department, but the surety bond must be at least $25,000. The surety bond is conditioned upon the faithful accounting of all money collected upon accounts entrusted to a credit counseling organization engaged in the business of credit counseling or its employees and agents.

Consumer Credit Counseling
(includes debt settlement services)

South Dakota

S.D. Codified Laws Ann. §37-34-1 et seq.

Any person who files and maintains with the attorney general a bond to be approved by the attorney general in the penal sum of $50,000 conditioned for the faithful performance and payment of obligations of such debt adjuster arising in connection with his business as such, and for the payment of all claims for damages for which he may become liable in the course of his business as a debt adjuster.

Debt Adjusting

Tennessee

Tenn. Code Ann. §47-18-5501 et seq.

(a) Except as otherwise provided in §47-18-5514, a provider that is required to be registered under this part shall file a surety bond with the administrator, which must: (1) Be in effect during the period of registration and for two years after the provider ceases providing debt-management services to individuals in this state; and (2) Run to this state for the benefit of this state and of individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear.

Subject to adjustment of the dollar amount pursuant to §47-18-5532(f), a surety bond filed pursuant to subsection (a) must: (1) Be in the amount of $50,000 or other larger or smaller amount that the administrator determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals and any other factor the administrator considers appropriate; (2) Be issued by a bonding, surety or insurance company authorized to do business in this state and rated at least “A” by a nationally recognized rating organization; and (3) Have payment conditioned upon noncompliance of the provider or its agent with this part.

(a) Instead of the surety bond required by §47-18-5513, a provider may deliver to the administrator, in the amount required by §47-18-5513(b), and, except as otherwise provided in subdivision (a)(2)(A), payable or available to this state and to individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear, if the provider or its agent does not comply with this part:
(1) A certificate of insurance:
(A) Issued by an insurance company authorized to do business in this state and rated at least "A" or equivalent by a nationally recognized rating organization approved by the administrator; and
(B) With no deductible, or if the provider supplies a bond in the amount of $5,000, a deductible not exceeding $5,000; or
(2) With the approval of the administrator:
(A) An irrevocable letter of credit, issued or confirmed by a bank approved by the administrator, payable upon presentation of a certificate by the administrator stating that the provider or its agent has not complied with this part; or
(B) Bonds or other obligations of the United States or guaranteed by the United States or bonds or other obligations of this state or a political subdivision of this state, to be deposited and maintained with a bank approved by the administrator for this purpose.

(b) If a provider furnishes a substitute pursuant to subsection (a), then §47-18-5513(a), (c), (d) and (e) apply to the substitute..

Debt Management

Texas

Tex. Finance Code Ann. §394.201 et seq.

(a) A provider shall, at the time the provider files an initial or renewal registration application with the commissioner, file: (1) a surety bond; or (2) evidence that the provider maintains an insurance policy in a form approved by the commissioner. (b) The bond or insurance must: (4) be in an amount equal to the average daily balance of the provider's trust account serving Texas consumers over the six-month period preceding the issuance of the bond, or in the case of an initial application, in an amount determined by the commissioner, but not less than $25,000 or more than $100,000; (5)if an insurance policy: (A) provide coverage for professional liability, employee dishonesty, depositor's forgery, and computer fraud in an amount not less than $100,000; (B) be issued by a company rated at least "A-" or its equivalent by a nationally recognized rating organization; and (C) provide for 30 days advance written notice of termination of the policy to be provided to the commissioner.

Debt Management

Utah

Utah Code Ann. §13-42-101 et seq.

(1) Except as otherwise provided in §13-42-114, a provider that is required to be registered under this chapter shall file a surety bond with the administrator. (2) Subject to adjustment of the dollar amount pursuant to §13-42-132(6), a surety bond filed pursuant to Subsection (1) must: (a) be in the amount of $100,000; (b) be issued by a bonding, surety, or insurance company authorized to do business in this state and rated at least A by a nationally recognized rating organization; and (c) have payment conditioned upon noncompliance of the provider or its agent with this chapter.

Instead of the surety bond required by §13-42-113, a provider may deliver to the administrator, in the amount required by §13-42-113(2), and, except as otherwise provided in Subsection (1)(c)(i), payable or available to this state and to individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear, if the provider or its agent does not comply with this chapter:
(a) a certificate of insurance: (i) issued by an insurance company authorized to do business in this state and rated at least A or equivalent by a nationally recognized rating organization approved by the administrator; and (ii) with no deductible, or if the provider supplies a bond in the amount of $5,000, a deductible not exceeding $5,000;
(b) a certificate of deposit issued or confirmed by a bank approved by the administrator, payable upon presentation of a certificate by the administrator stating that the provider or its agent has not complied with this chapter; or
(c) with the approval of the administrator: (i) an irrevocable letter of credit, issued or confirmed by a bank approved by the administrator, payable upon presentation of a certificate by the administrator stating that the provider or its agent has not complied with this chapter; or (ii) bonds or other obligations of the United States or guaranteed by the United States or bonds or other obligations of this state or a political subdivision of this state, to be deposited and maintained with a bank approved by the administrator for this purpose.

Debt Management

Vermont

Vt. Stat. Ann. tit. 8, §2751 et seq.

Each applicant shall submit to the commissioner, with the application for a license, a bond, in such form as the commissioner shall direct, in the amount of $50,000, or such greater amount as the commissioner may determine is required by the business circumstances of the applicant.

Debt Adjusters

Virginia

Va. Code §6.2-2200 et seq.

The application for a license shall also be accompanied by a bond filed with the commissioner with corporate surety authorized to execute such bond in the commonwealth, in the principal amount as determined by the commission but not less than $25,000 nor more than $350,000.

Credit Counseling
Debt Management
(includes debt settlement services)

Virgin Islands

none

Washington

Wash. Rev. Code §18.28.010 et seq.

 

Debt Adjusting

West Virginia

W. Va. Code §61-10-23

 

Debt Pooling

Wisconsin

Wis. Stat. §218.02

The division may require any licensee either before or after the issuance of the license to file and maintain in force a bond in a form to be prescribed by and acceptable to the division, in such sum as the division may deem necessary to safeguard the interest of the borrowers and the public, not exceeding, however, the sum of $5,000.

Debt Adjustment

Wyoming

Wyo. Stat. §33-14-101 et seq.

Prohibited

Debt Adjusters

 

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