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CONSUMER CREDIT COUNSELING
2005 NCSL Annual Meeting, Seattle, Washington
Thursday, August 18, 2005
8:00 a.m. – 9:45 a.m.
2005 Legislation
Enactments noted in italics
Arizona
H.B. 2551
Passed House 3/24/05
Prohibits the licensee from directly or indirectly charging any fee for accepting a check for deferred presentment or deposit that is more than 15 percent of the face amount of the advanced check delivered to the maker by the licensee for an initial transaction or extension. Prohibits the garnishing of military earnings by a licensee. Prohibits collection activity against a member of the U.S. military or the member’s spouse during the member’s deployment to combat or combat support posting or during active duty service by National Guard or any military reserve unit members. Prohibits the licensee from contacting the commanding officer or anyone in the chain of command of a borrower in an effort to collect on a loan. Makes the licensee bound by the repayment agreement entered with respect to the borrower, including repayment agreements negotiated through military counselors or third-party credit counselors. Requires the licensee to devote some existing financial literacy effort toward addressing the educational needs of military borrowers. Requires the licensee to develop a brochure specifically for military borrowers including the following information: 1) the requirements of this legislation; 2) military policies relating to credit; 3) where military members may find financial assistance through established military programs, web sites and a military hotline; and 4) where military members may find information about local credit counseling alternatives.
S.B. 1189
To Senate for concurrence 4/28/05
Prohibits the licensee from directly or indirectly charging any fee for accepting a check for deferred presentment or deposit that is more than 15 percent of the face amount of the advanced check delivered to the maker by the licensee for an initial transaction or extension. Prohibits the garnishing of military earnings by a licensee. Prohibits collection activity against a member of the U.S. military or the member’s spouse during the member’s deployment to combat or combat support posting or during National Guard active duty service or any military reserve unit. Prohibits the licensee from contacting the commanding officer or anyone in the chain of command of a borrower in an effort to collect on a loan. Makes the licensee bound by the repayment agreement entered with respect to the borrower, including repayment agreements negotiated through military counselors or third-party credit counselors. Requires the licensee to devote some existing financial literacy effort toward addressing the educational needs of military borrowers. Requires the licensee to develop a brochure specifically for military borrowers including the following information: 1) the requirements of this legislation; 2) military policies relating to credit; 3) where military members may find financial assistance through established military programs, web sites and a military hotline; and 4) where military members may find information about local credit counseling alternatives.
California
A.B. 535
Passed Assembly 5/31/05
Requires the licensure and regulation by the commissioner of an agency defined as a nonprofit community service organization meeting specified requirements, including having consumer education and credit counseling among its principal functions. Requires an agency licensed under its provisions to annually submit a declaration under penalty of perjury affirming its compliance with certain regulatory requirements.
Illinois
H.B. 4050
Signed by governor 7/21/05, Public Act 94-0280
Amends the Residential Real Property Disclosure Act. Establishes a predatory lending database pilot program within Cook County. Requires the Department of Financial and Professional Regulation to maintain and administer a predatory lending database based on information submitted by any broker, originator, credit counselor, and title insurance company or closing agent involved in a mortgage transaction on residential real property within the pilot program area. Sets forth required information to be submitted by those entities to the database and authorizes the Department to require additional information by rule. Based on information submitted to the Department by the originator, requires the Department to make a determination as to whether credit counseling is recommended to the borrower. Requires the Department to notify each borrower for which it recommends counseling of all HUD-certified counseling agencies located within the state and direct the borrower to interview with a counselor associated with one of those agencies. Requires the borrower to select an agency from the notice and to interview with a counselor associated with that agency within 10 days after receipt of the notice. Prohibits the borrower from waiving the recommended credit counseling. Requires the title insurance company or closing agent to record simultaneously with the mortgage a certificate of its compliance with database reporting requirements and, if it fails to do so, provides that the mortgage is not recordable. Requires a certificate of service upon the Department to be recorded simultaneously with any lis pendens recorded on the property and, if no certificate is recorded, provides that this lis pendens is not recordable and is of no force and effect. Provides that information provided to the database is confidential and exempt from disclosure under the Freedom of Information Act, with certain exceptions. Amends the Freedom of Information Act to make corresponding changes. Amends the Consumer Fraud and Deceptive Business Practices Act. Provides that any person that violates the predatory lending database provisions of the Residential Real Property Disclosure Act commits an unlawful practice within the meaning of the Consumer Fraud and Deceptive Business Practices Act.
Kentucky
H.B. 294
Signed by governor 3/8/05, Act 38
Amends KRS 380.010 to delete the definition of "debt adjuster" and "debtor" and define "person," "debt adjusting," and "reside"; creates new sections of KRS Chapter 380 to establish the requirements for debt adjusting and requires the attorney general to promulgate administrative regulations to implement and enforces KRS Chapter 380; amends KRS 380.030 to conform; amends KRS 380.990 to provide penalties for violations of this Act; repeals KRS 380.020; requires that persons engaging in debt adjusting pay an initial registation fee of $250 and renew registration annually thereafter for a fee of $250.
Maryland
H.B. 753
Signed by governor 5/26/05, Chapter 574
Clarifies that a person who provides debt management services is subject to licensure whether or not the person maintains an office in the state; requires an applicant for licensure as a debt management services provider to provide specified information to the commissioner of Financial Regulation and to satisfy the commissioner as to specified matters.
S.B. 902
To Senate for concurrence 4/9/05
Clarifies that a person who provides debt management services is subject to licensure whether or not the person maintains an office in the state; requires an applicant for licensure as a debt management services provider to provide specified information to the commissioner of Financial Regulation; prohibits specified contracts or agreements, advertising, and incentives, subject to specified penalties.
Massachusetts
H.B. 2934
Establishes standards for consumer credit counseling.
S.B. 211
Establishes a board of registration of credit counselors.
S.B. 227
Establishes standards for consumer credit counseling.
Montana
H.B. 140
Signed by governor 4/19/05, Chapter 272
Creates a Montana Consumer Debt Management Services Act; requires licensure of credit counseling services; establishes requirements for debt management plans entered into between consumers and credit counseling services; designates prohibited practices for credit counseling services; provides the Department of Administration with rulemaking authority; provides remedies and penalties; repeals certain debt adjustment laws.
New Jersey
A.B. 2904
A.B. 4133
S.B. 1722
Passed Senate 5/12/05
Amends and supplements P.L.1979, c.16 (C.17:16G-1 et seq.), which is commonly known as the Debt Adjuster Act. This act permits nonprofit social services agencies and nonprofit consumer credit counseling agencies to be licensed by the Department of Banking and Insurance to provide debt adjustment and credit counseling services. Provides that a copy of the annual audit currently required to be filed with the commissioner of Banking and Insurance must be available for public inspection at each of the licensee's locations. Requires every licensee acting as a debt adjuster to disburse to the appropriate creditors all funds received from a debtor, less any permissible fees, within 30 days of receipt of the funds. Requires the licensee to maintain a separate trust account for the receipt and disbursement of funds on behalf of each debtor. Increases the current penalty of $500 for any violation of the debt adjuster act, to $1,000 for the first offense and not more than $5,000 for the second and each subsequent offense. Clarifies that a debtor injured by a violation of the act may bring a civil action for recovery of damages, in addition to any other available remedy.
North Carolina
S.B. 590
Passed Senate 6/1/05
Protects consumers seeking assistance with managing their debts.
Oregon
S.B. 327
Signed by governor 6/28/05, Chapter 309
Prohibits a debt consolidating agency from receiving a fee from a client until the first installment is paid to a creditor. Authorizes a nonprofit debt consolidating agency to charge a credit counseling fee under specified conditions. Requires an agency to disclose in writing the maximum charge for services and client responsibilities.
Pennsylvania
H.B. 1644
Provides for the licensure of credit counseling agencies and for the powers and duties of the Department of Banking; requires surety bonds; prohibits certain fees and costs; provides for debt management plans; and prohibits certain acts by credit counseling agencies.
South Carolina
S.B. 607
Became law without governor’s signature 6/2/05, Act 111
Provides for the licensing and regulation of consumer credit counseling in this state by the Department of Consumer Affairs including definitions, licensing requirements, a written contract, a thorough budget analysis, a trust account with at least quarterly accountings to the consumer, a surety bond, a limitation on fees, reports to the Department, a list of prohibited activities, civil and criminal penalties for a violation, and makes a violation an unfair trade practice subject to the Unfair Trade Practices Act.
Tennessee
H.B. 744
S.B. 692
Requires both for-profit and non-profit consumer credit services businesses to obtain a signed statement from consumers that they understand that participation in a debt management plan may negatively impact the consumer's credit rating.
H.B. 1351
Signed by governor 5/19/05, Public Law Chapter 199
S.B. 1234
Requires both non-profit and for-profit consumer credit services businesses to obtain a signed statement from consumers that they understand that participation in a debt management plan may negatively impact the consumer's credit rating.
Texas
S.B. 1112
Signed by governor 6/1/05
Requires the Office of Consumer Credit Commissioner to regulate Consumer Debt Management Service providers, including registration and investigation responsibilities.
Vermont
H.B. 479
Signed by governor 5/9/05
Requires Vermont’s financial institutions, licensed lenders, mortgage brokers, sales finance companies, money transmitters, and debt adjusters to comply with the provisions of the federal Truth in Lending Act, the federal Real Estate Settlement Procedures Act and the federal Bank Secrecy Act.
S.B. 62
Signed by governor 6/1/05, Act 36
Eliminates duplicate licensing requirements for debt adjusters and licensed lenders; clarifies the treatment of licensed lender application and license fees; increases the bond amount requirements for licensed lenders and mortgage brokers; clarifies the definition of "debt adjuster" to require licensing in connection with debts involving one or more creditors; corrects an improper cross-reference to the subchapter defining bank trust powers; authorizes reciprocal out-of-state activities by Vermont financial institutions; and clarifies the list of exempt securities.
Virginia
H.B. 2460
Signed by governor 3/20/05, Chapter 315
Eliminates the requirement that licensed credit counseling agencies be nonprofit, tax-exempt organizations. Requires that an applicant for licensure as a credit counseling agency not be the subject of a current material administrative or regulatory proceeding and not have received a material adverse determination in any past administrative or regulatory proceedings. An applicant is also required to file a consumer disclosure form with the State Corporation Commission.
West Virginia
S.C.R. 5
Requests the Joint Committee on Government and Finance study the feasibility of requiring certain insurance carriers to provide credit counseling and other services.
 Financial Services Committee 2005 Annual Meeting Agenda
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