Credit Counseling, Debt Management and Debt Settlement 2010 Legislation

Last Updated: September 8, 2010

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.

During the 2010 legislative session, 23 states have introduced legislation regarding credit counseling, debt management and/or debt settlement. Illinois, Indiana, Kansas, Kentucky, Maryland, Minnesota, Mississippi and Virginia have enacted legislation this year.

Click here to review the state statutes.

Click here to review the 2009 legislation.

CA | CO | CT | FL | IL | IN | KS | KY | ME | MD | MA | MI | MN | MS | MO | NJ | NM | NY | OH | OK | PA | UT | VA
STATES
BILL SUMMARY
Alabama
none
Alaska
none
Arizona
none
Arkansas
none
California

A.B. 350
Passed Assembly 6/2/09
Enacts the Debt Settlement Services Act and, commencing January 1, 2012, provides for the licensing and regulation by the commissioner of providers, defined as persons who provide, offer to provide, or agree to provide debt settlement services, as defined, directly or through others. The bill requires a provider to submit specified fees and an application, signed under penalty of perjury, for licensure with the commissioner. An applicant, and any person who signs an application on behalf of an applicant, who knowingly misrepresents or submits any material matter that is false, or a person who otherwise willfully violates a provision of the act, would be guilty of a misdemeanor. The bill specifies the conditions under which the commissioner may issue or deny licensure as a provider and requires a provider to satisfy certain requirements before entering into an agreement with an individual for the provision of debt settlement services, including providing specified disclosures. The bill requires an agreement for debt settlement services to contain specified terms and imposes limits on the fees charged by providers. The bill prohibits providers from engaging in specified practices. The bill requires a provider to submit annual reports to the commissioner containing specified information relating to its business in the previous calendar year. The bill authorizes the commissioner to take enforcement actions against a provider for violations of the bill's provisions and also authorizes an injured individual to recover specified damages from a provider that violates the bill's provisions. The bill enacts other related provisions.

Colorado

H.B. 1230
Postponed indefinitely 2/23/10
Amends various provisions of the "Uniform Debt-Management Services Act."

Connecticut

H.B. 5409
This bill exempts, from the licensing requirements for debt negotiators established in PA 09-208, fee-based individuals or entities who negotiate only with unsecured creditors on behalf of a debtor. The bill instead creates separate licensing requirements for such individuals or entities who negotiate or attempt to negotiate unsecured consumer debt resulting in payment of less than the amount owed being accepted as full payment or full satisfaction of the debt. The bill defines such services as debt settlement, and defines debt settlement providers as those who offer or agree to provide debt settlement services to an individual for or with the expectation of valuable consideration.

 

S.B. 54
Changes licensing requirements for debt adjusters.

Delaware
none
District of Columbia
none
Florida

H.B. 311
Passed House 4/23/10
S.B. 938
Died in committee 4/30/10
Creates "Debt Settlement Services Act"; requires person be licensed if he or she provides or offers to provide debt settlement services to client who resides in state; provides exemptions; specifies application procedures and authorizes fees; requires proof of insurance policy or surety bond; requires fingerprinting and background screening of licensees. Requires an applicant or licensee to notify the Office of Financial Regulation of any change of the application information within a specified time.

 

H.B. 471
Died in committee 4/30/10
Provides additional definitions relating to debt negotiation services; provides that attorney providing legal representation is exempt from debt negotiation organization requirements; prohibits certain acts by debt negotiation organization; provides penalties; provides insurance requirements for debt negotiation organization; provides requirements for debt negotiation service contracts.

 

S.B. 332
Withdrawn prior to introduction 1/5/10
Provides that an attorney providing legal representation is exempt from debt negotiation organization requirements. Requires a debt negotiation organization to annually register with the OFR. Requires an annual fee. Specifies acts prohibited by a debt negotiation organization. Provides insurance requirements for such an organization. Provides requirements for debt negotiation service contracts.

 

S.B. 706
Died in committee 4/30/10
Provides additional definitions relating to debt negotiation services. Provides that an attorney providing legal representation is exempt from debt negotiation organization requirements. Specifies acts prohibited by a debt negotiation organization. Provides insurance requirements for such an organization. Provides requirements for debt negotiation service contracts.

 

S.B. 1702
Died in committee 4/30/10
Expands the authority of the attorney general to take action against out-of-state consumer debt collectors. Provides that a violation of provisions relating to consumer debt collectors is a violation of the Florida Deceptive and Unfair Trade Practices Act. Prohibits a credit counseling organization from engaging in certain additional specified acts. Requires a credit counseling organization to obtain a surety bond.

Georgia
none
Guam
none
Hawaii
none
Idaho
none
Illinois

H.B. 4682
Amends the Debt Management Service Act and renames the Act to the Debt Relief and Consumer Protection Act, including all cross-references in various other Acts. Changes the requirements for a license to include someone who operates a debt relief service (instead of debt management service). Changes the requirements concerning the (1) application for, (2) qualification for, (3) examination of, (4) renewal of, (5) fees for, and (6) revocation or suspension of a license from the Department of Financial and Professional Regulation. Changes provisions concerning the display and location of a license. Adds provisions concerning a written debt relief agreement between a debtor and licensee. Adds (1) disclosure requirements, (2) required terms, (3) accounting, and (4) the debtor's right to cancel with respect to debt relief services. Changes provisions concerning prohibited actions by a licensee. Adds provisions concerning the advertisement and solicitation of debt relief services. Requires the Department to post an annual report concerning debt relief agencies. Makes other changes.

 

H.B. 4781
Signed by governor 8/3/10, Public Act 96-1420
Creates the Debt Settlement Consumer Protection Act. Provides that it shall be unlawful for any person to operate as a debt settlement provider or engage in debt settlement service except as authorized by the Act and without first having obtained a license under the Act. Contains provisions concerning the (1) application for a license, (2) qualifications for licensure, (3) renewal of a license, (4) display requirements for a license, (5) temporary licensed locations, (6) denial of a license, (7) revocation or suspension of a license, (8) maintenance of records by a licensee, (9) examination of a licensee, (10) maintenance of trust funds by a licensee, and (11) other licensee businesses. Amends the Consumer Fraud and Deceptive Business Practices Act to provide that any person who violates the Debt Settlement Consumer Protection Act commits an unlawful practice within the meaning of the Consumer Fraud and Deceptive Business Practices Act.

 

S.B. 2244
Creates the Debt Settlement Act. Provides that no person shall engage in the business of debt settlement in the State without a license. Provides that an applicant for a license to engage in the business of debt settlement shall file an application with the director of the Division of Financial Institutions of the Department of Financial and Professional Regulation that contains specified provisions. Contains provisions concerning the renewal of licenses. Requires a licensee to create, maintain, and preserve accurate and complete books relating to the licensee's business. Contains provisions concerning contract fees. Provides for debt settlement contract requirements. Specifies the functions required to be performed and acts that are prohibited by a debt settlement provider. Provides that without limiting the generality of the Act and other applicable laws, the debt settlement provider, manager, or an employee of the debt settlement provider (except a licensed attorney who provides legal services in an attorney-client relationship or who is otherwise authorized to practice law in the state) shall not perform specified actions. Provides that the attorney general or the prosecuting attorney of any county within the state may bring an action in the name of the state against any person to restrain and prevent any violation of the Act and specifies penalties for violations of the Act.

 

S.B. 2480
Amends the Debt Management Service Act and renames the Act to the Debt Relief and Consumer Protection Act, including all cross-references in various other Acts. Changes the requirements for a license to include someone who operates a debt relief service (instead of debt management service). Changes the requirements concerning the (1) application for, (2) qualification for, (3) examination of, (4) renewal of, (5) fees for, and (6) revocation or suspension of a license from the Department of Financial and Professional Regulation. Changes provisions concerning the display and location of a license. Adds provisions concerning a written debt relief agreement between a debtor and licensee. Adds (1) disclosure requirements, (2) required terms, (3) accounting, and (4) the debtor's right to cancel with respect to debt relief services. Changes provisions concerning prohibited actions by a licensee. Adds provisions concerning the advertisement and solicitation of debt relief services. Requires the Department to post an annual report concerning debt relief agencies. Makes other changes.

 

S.B. 2582
Creates the Debt Settlement Consumer Protection Act. Contains only a short title provision.

 

S.B. 3936
Amends the Debt Settlement Consumer Protection Act, if and only if House Bill 4781 of the 96th General Assembly becomes law. Deletes the provision that requires every applicant for a license to operate as a debt settlement provider to submit a bond in the sum of $100,000 or an additional amount as required by the secretary of Financial and Professional Regulation. Provides instead that the surety bond must be in the amount of $50,000 or other larger or smaller amount that the secretary determines. Sets forth other requirements concerning the surety bond. Provides that instead of the surety bond required under the Act, a provider may deliver to the secretary, under certain conditions, a certificate of insurance or other instrument with the approval of the secretary. Deletes the provision prohibiting a debt settlement provider from charging a settlement fee in an amount greater than 15 percent of the savings. Provides instead that a debt settlement provider may calculate fees on a percentage of debt basis or on a percentage of savings basis. Sets forth provisions concerning the calculation and collection of fees. Provides that the Act is repealed two years after its effective date. Makes other changes. Effective immediately or on the effective date of House Bill 4781, whichever is later.

Indiana

H.B. 1332
Signed by governor 3/24/10, Public Law 114
Amends the definition of "credit services organization" for purposes of the law governing such entities to include a person that does or offers to do any of the following on behalf of a buyer: (1) Obtain a lower interest rate with respect to a consumer loan or a residential mortgage loan. (2) Provide debt settlement services. Provides that a "credit service organization" does not include: (A) a loan servicer acting on behalf of the holder of a consumer loan or a residential mortgage loan; or (B) a debt management company. Amends the law concerning the disclosures that a credit services organization must provide to a buyer to reflect changes in the federal Fair Credit Reporting Act concerning the circumstances under which a consumer is entitled to a consumer report without charge from a consumer reporting agency. Provides that before a credit services organization may do business in Indiana, it must file a copy of the required surety bond or irrevocable letter of credit with the attorney general.

 

S.B. 328
Signed by governor 3/12/10, Public Law 35
Makes various changes to the laws concerning: (1) financial institutions; (2) debt management companies; (3) pawnbrokers; (4) money transmitters; (5) check cashers; (6) persons licensed under the Uniform Consumer Credit Code; (7) first lien mortgage lenders; and (8) rental purchase agreements. Makes various changes to the laws concerning licensing residential mortgage loan creditors and originators to comply with requirements of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Repeals provisions being superseded by this bill. Repeals provisions under the Uniform Consumer Credit Code concerning the following: (1) A definition index. (2) Revocations of certain licenses. Repeals a provision requiring the display of a license by a debt management company. Repeals a provision concerning reverse mortgage loans made by savings associations and replaces the provision with requirements for reverse mortgage loans made by creditors in first lien mortgage transactions.

 

S.B. 341
Amends the definition of "credit services organization" for purposes of the law governing such entities to include a person that does or offers to do any of the following on behalf of a buyer: (1) Obtain a lower interest rate with respect to a consumer loan or a residential mortgage loan. (2) Provide debt settlement services. Amends the law concerning the disclosures that a credit services organization must provide to a buyer to reflect changes in the federal Fair Credit Reporting Act concerning the circumstances under which a consumer is entitled to a consumer report without charge from a consumer reporting agency. Provides that before a credit services organization may do business in Indiana, it must file a copy of the required surety bond or irrevocable letter of credit with the attorney general. Prohibits a person from maintaining or offering to maintain an account for the receipt of funds in an escrow transaction unless the person is a specified financial institution. Prohibits a person from managing residential real estate in Indiana unless the person possesses: (1) legal title to the property; (2) a real estate salesperson license; or (3) a real estate broker license. Provides that in a real estate transaction involving a land contract between the seller and the buyer, the seller must give to the buyer, at certain specified times, written notice of any encumbrance that affects the title to the real estate. Provides that upon the suspension of a principal broker's license, the real estate commission (commission) shall take custody of each trust account maintained by the principal broker on behalf of others. (Current law requires the commission to take custody of a principal broker's trust accounts upon only the expiration or revocation of the broker's license.) Removes an incorrect cross-reference in the statute concerning real estate brokers and salespersons. Allows a county recorder to refuse to record a deed if the recorder has reason to believe the deed is fraudulent or has been altered in a way that makes it unreliable or inaccurate.

Iowa
none
Kansas

H.B. 2668
Signed by governor 5/13/10, Chapter 136
This bill recodifies various provisions concerning crimes, punishment and criminal procedure, including debt adjustment.

Kentucky

H.B. 166
Signed by governor 4/8/10, Chapter 86
Amends KRS 380.010 to define "debt adjuster," "debtor," "personal information," and "additional interested party," and amends definition of "debt adjusting"; creates new sections of KRS Chapter 380 to set forth requirements regarding debt-adjusting contracts, including the requirement that contracts be in writing and signed and dated by the debtor; provides a debtor's right to cancel and sets forth provisions relating to cancellation; prohibits the waiver of a debtor's rights; provides for a private right of action for persons entering into debt-adjusting transactions who have suffered loss of money or property, including the right to punitive damages and attorney's fees and costs; requires debt adjusters to adhere to stated information security standards; prohibits the sale of debtor's personal information except under permitted circumstances; amends KRS 380.040 to prohibit a debt adjuster from accepting a fee, contribution, or other consideration in advance of complete performance of promised services, to require debt adjuster's to maintain insurance for violations KRS Chapter 380, and to require debt adjusters to maintain a bond or irrevocable letter of credit in the amount of $25,000 in favor of the attorney general for the benefit of the Commonwealth or any person suffering injury or loss by reason of a violation of KRS Chapter 380; amends KRS 380.990 to allow for imposition of a $5,000 civil penalty for violation of KRS 380.040 and stipulates that violations of KRS Chapter 380 are unfair, false, misleading, or deceptive trade practices, including the ramifications thereof; amends KRS 380.030 to clarify that attorneys admitted to the practice of law in this state by the Kentucky Supreme Court are not to be considered debt adjusters; clarifies that a person must receive money or something of value to be engaged in "debt adjusting"; specifies that "secured debt" means debt primarily for personal, family, or household use that is secured by a mortgage, deed of trust, other equivalent security interest on residential real property, or collateral that has a mortgage lien interest in real property; enumerates activities in which a debt adjuster may not engage, including misappropriation of funds, settlement requirements, restrictions on powers of attorney, and misrepresentations; specifies requirements for agreements for debt adjusting. Amends KRS 380.010 to require insurance companies to give notice to the attorney general at the time of cancellation, nonrenewal, modification or change in insurance coverage; amends KRS 380.040 to increase the insurance amount to $250,000 and to increase the bond amount to $50,000 if a debt adjuster deals with debts secured by a mortgage on a residence; amends KRS 380.030 to exempt creditors when adjusting debts owed to them by the debtor from being debt adjusters; creates a new section of KRS Chapter 380 to specify that this Act does not limit financial institutions' abilities to collect debt owed to them by debtors.

Louisiana
none
Maine

L.D. 1289
Repeals the existing law governing debt management services and enacts in its stead the Uniform Debt Management Services Act.

Maryland

H.B. 392
Signed by governor 5/4/10, Chapter 339
S.B. 701
Signed by governor 5/4/10, Chapter 338
Requires the Office of the Commissioner of Financial Regulation in the Department of Labor, Licensing, and Regulation, in consultation with the Consumer Protection Division of the Office of the Attorney General, to conduct a study of the debt settlement services industry; requires the study to determine how best to regulate the debt settlement services industry in the state; requires the Office, in consultation with the Division, to establish a workgroup comprising specified representatives.

Massachusetts

H.B. 4913
Provides for the Division of Banks’ licensing and supervision of debt management services.

Michigan

S.B. 1288
Enacts the Uniform Debt-Management Services Act.

 

S.B. 1289
Makes conforming change to Credit Services Protection Act as part of the Uniform Debt-Management Services Act; requires registration insurance, surety bond, fee reporting, and contract provisions.

 

S.B. 1290
Makes conforming change to Consumer Financial Services Act as part of the Uniform Debt-Management Services Act.

 

S.B. 1291
Makes conforming change to Credit Union Act with the enactment of the Uniform Debt-Management Services Act.

Minnesota

H.F. 2970
Indefinitely postponed 5/3/10
S.F. 2642
Signed by governor 5/27/10, Chapter 382
Amends provisions regarding debt settlement service provider’s right to payment and right to cancel contract.

Mississippi

H.B. 172
Died in Senate committee 3/4/10
Extends the repealer on the Mississippi Debt Management Services Act.

 

S.B. 2427
Signed by governor 3/17/10, Chapter 396
Extends the repealer on the Mississippi Debt Management Services Act.

Missouri

H.B. 1763
This bill establishes the Uniform Debt-Management Services Act to regulate debt-management services. In its main provisions, the bill: (1) Requires a debt-service company to register with the attorney general by submitting detailed information including its financial condition, the identity of its principals, locations at which the service will be offered, a copy of the form used for agreements with debtors, and its business history in other jurisdictions and to pay a fee as established by the attorney general; (2) Requires a debt-service company to carry an insurance policy against fraud, dishonesty, theft, or other misconduct in an amount of at least $250,000 and to provide a security bond of at least $50,000 which has the attorney general as the beneficiary; (3) Requires a debt-service company to renew its registration annually; (4) Requires a debt-service company to provide an itemized list of goods and the charges for each as well as any risks or benefits of entering into the debt-management service agreement; (5) Allows for a penalty-free, three-day cancellation of the agreement by the debtor or cancellation within 30 days, subject to specified fees; (6) Allows a debt-service company to terminate the agreement if an individual fails to make the required payments for 60 days; (7) Requires a debt-service company to keep a debtor's payments in a separate trust account that may not be used to hold any other company funds; (8) Prohibits a debt-service company from misappropriating trust funds, settling for more than 50 percent of the principal amount of a debt without the debtor's and creditor's consent, or settling a debt or leading an individual to believe that a settlement has occurred without a certification from the creditor; (9) Authorizes the attorney general to investigate debt-service companies, order an individual to cease and desist debt counseling services, bring civil actions, and assess civil penalties of up to $10,000; (10) Allows an individual to bring a civil action for compensatory damages, including triple damages, if a debt-service company obtains payments not authorized in the bill; and (11) Specifies that a proceeding brought by the attorney general must commence within four years of the action and within two years for a proceeding brought by an individual. The bill becomes effective August 28, 2011.

Montana
No Regular 2010 Session
Nebraska
none
Nevada
No Regular 2010 Session
New Hampshire
none
New Jersey

A.B. 1949
This bill, titled the “Debt-Management Services Act of New Jersey,” is based upon a national model act drafted by the National Conference of Commissioners on Uniform State Laws. The bill intends to provide a comprehensive reworking of the State’s debt settlement law, P.L.1979, c.16 (C.17:16G-1 et seq.), by repealing this existing law and establishing a new registration requirement for debt-management providers (covering credit counseling and debt settlement activities), mandatory notices and other provisions for consumer agreements, and enforcement through the Department of Banking and Insurance, as well as private causes of action. Under the bill, a debt-management provider, which may be organized for-profit or nonprofit, shall not provide, offer to provide, or agree to provide any debt-management services in this state unless the provider is registered with the department. An application for registration shall be in a form prescribed by the commissioner of Banking and Insurance, properly certified, and which documents the applicant’s contact information, business organization, proof of coverage by a surety bond or other form of financial assurance and insurance coverage, past and proposed business practices, and includes a submission for criminal history record background checks on officers, directors, owners, and employees and agents authorized to access the applicant’s trust accounts containing consumer money. The application shall also include evidence of accreditation for debt-management services by an independent accrediting organization recognized by the commissioner pursuant to regulation, and an affirmation, with supporting evidence as appropriate, that each consumer counselor employed is, or will become within 12 months of being employed, properly certified for counseling based upon accreditation from a similarly recognized independent accrediting organization. Within 120 days of receipt of an application for registration, the commissioner shall issue a one-year certificate of registration to an applicant in order for the applicant to act as a debt-management provider in this state, if: the application and all supporting materials are provided; and the commissioner finds the applicant is duly qualified, based upon an examination of the financial responsibility, experience, character, and general fitness of the applicant and its owners, directors, employees, and agents. Under the bill, the commissioner may extend this review period for up to an additional 60 days, or issue a temporary certificate of registration, to last no more than 180 days after issuance, for an applicant that has submitted an incomplete application but is making a timely effort to obtain any necessary information or supporting material. A registered debt-management provider shall obtain a renewal of its registration annually in order to continue conducting business in this state. This application for registration renewal, containing updated information for review by the commissioner as well as financial disclosures concerning the previous year’s business operations, shall be filed not more than 60 days, but not less than 30 days, prior to the expiration of the debt-management provider’s current registration. If the commissioner denies the registration renewal, the debt-management provider, pending outcome of an appeal of the denial, shall be permitted to continue to provide services to individuals with whom it already has debt-management agreements. If the denial is affirmed, the commissioner shall oversee the transfer of any on-going debt-management agreements to another registered debt-management provider or the return of all unexpended money received from or on behalf of individuals with agreements under the control of the provider. A debt-management provider holding a current license or certificate of registration issued in another state to provide debt-management services may submit to the commissioner a copy of this other state’s license or registration, along with a copy of the other state’s application for this license or registration, and this shall be accepted by the commissioner as an application for this state, if: (1) the submission from the other state contains information and supporting materials substantially similar or more comprehensive than that required by an application prepared pursuant to this bill; and (2) the submission contains additional information specific to conducting business in this state, including a listing of in-state service locations and a submission for criminal history record background checks on officers, directors, owners, employees, and agents. This submission in lieu of a standard application shall be reviewed, and a certificate of registration (or registration renewal) issued or denied, in the same manner as set forth for a standard, in-state application. Any nonprofit social service agency or nonprofit consumer credit counseling agency that was licensed as a debt adjuster pursuant to P.L.1979, c.16 (C.17:16G-1 et seq.) prior to the effective date of this bill may continue on or after that effective date to provide debt-management services, so long as the nonprofit social service agency or nonprofit consumer credit counseling agency applies and is registered accordingly as a debt-management provider pursuant to this bill. Prior to providing any debt-management services for any individual, a debt-management provider shall give the individual an itemized list of goods and services, and the corresponding fee or other charge for each. This list shall indicate all goods and services the provider offers for a charge, by dollar amount or other method of determination, which may include with respect to a debt-management agreement a set-up fee, monthly service fee, and debt-management settlement fee. The debt-management provider shall not provide any debt-management service to an individual, unless a properly certified consumer counselor provides the individual with reasonable education about the management of personal finance, has prepared a financial analysis of the individual, and made a determination about the suitability of any payment plan to reduce debt prepared for the individual. Further, in a separate notice, the debt-management provider shall inform the individual, prior to entering an agreement, of the potential financial and legal consequences of entering the agreement, which shall include: (1) an indication that a debt-management plan may adversely impact the individual’s credit rating or credit score, making it more difficult to obtain credit; (2) an indication that nonpayment of debt may lead creditors to increase finance and other charges or undertake collection actions against the individual, including litigation; and (3) if applicable, an indication that if a creditor settles for less than the full amount of a debt owed as a result of a debt-management plan, it may result in the creation of taxable income to the individual, even though the individual did not actually receive any money. The debt-management agreement shall be in writing, in accordance with the provisions of the bill. Any such agreement may confer on the debt-management provider a power of attorney to settle an individual’s debt for no more than 50 percent of the principal amount of that debt. An agreement shall provide that the debt-management provider obtain approval from the individual of a negotiated settlement of more than 50 percent of the principal amount owed on any debt. An agreement shall not: provide for the application of the law of any jurisdiction other than the United States and this state; contain any provision modifying or limiting otherwise available legal forums or procedural rights, except as set forth in any pre-dispute arbitration clause; and contain any provision that modifies or limits the individual’s available remedies under this bill and any other applicable law. An individual may cancel a debt-management agreement for any reason, and receive a full refund of any moneys paid to a debt-management provider, within three business days after assenting to the agreement. However, this period shall extend to 30 days if the agreement does not comply with the requirements set forth under the bill as stated above as well as the requirement to notify the individual in writing regarding this right to cancel. This right to cancel may also be waived, in writing, by the individual, if a personal financial emergency necessitates the disbursement of an individual’s money to a creditor before the expiration of the initial cancellation period. A debt-management provider shall hold in trust all money paid to it by or on behalf of an individual with whom it has a debt-management agreement for distribution to creditors. Within two business days after receipt, the provider shall deposit the money in a trust account indicated in the information submitted to the commissioner as part of its application to be registered to conduct business in this state. The debt-management provider shall reconcile each trust account at least once per month, by comparing the cash balance in the trust account with the sum of balances in each individual’s account within the trust account. If the debt-management provider knows, or has a reasonable suspicion, of embezzlement or other unlawful appropriation of money held in trust, the provider shall immediately notify the department. Unless otherwise set forth in regulation, within five business days of first notifying the department of any occurrence, the debt-management provider shall provide the department with further information describing the remedial action taken or to be taken in response to the occurrence. With respect to enforcement, the commissioner may take appropriate actions to enforce the provisions of this bill, including investigations, requests for voluntary compliance, making references on activities to the attorney general, and seeking various remedies, including: the suspension or revocation of a certificate of registration; issuance of cease and desist orders; ordering a civil penalty in an amount not to exceed $10,000 for each violation; and ordering restitution for any person harmed by a violation. The commissioner may also enter into cooperative arrangements with any other state or federal agency having authority over debt-management providers or debt-management services, and exchange information with any agency about any person under investigation by the commissioner. Additionally, a person may file a private cause of action in a court of competent jurisdiction against any person who violates the bill. The person may recover: (1) compensatory damages, including for noneconomic injury, or $5,000, whichever is greater, for each violation, except for monies already paid to creditors; or (2) treble these damages, if the private cause of action involves an individual who voided a debt-management agreement due to a debt-management provider imposing a fee or other charge not permitted under the bill. The person may also recover punitive damages, reasonable attorney’s fees and costs. A debt-management provider shall not be liable in a private cause of action if the provider’s action or omission was not intentional and resulted from a good faith error; except that, this good faith defense shall not apply if, in connection with any violation concerning fees or other charges imposed, the provider received more money than authorized by the bill or the agreement with an individual, and the provider did not refund the excess money within two business days of discovering the violation. This bill shall take effect on the first day of the 30th month next following enactment, but the commissioner of Banking and Insurance may take any anticipatory administrative action in advance thereof as shall be necessary for the implementation of the bill.

New Mexico

H.B. 175
Passed House 2/16/10
Enacts the Uniform Debt Management Services Act.

New York

A.B. 7268
S.B. 6167
S.B. 7317
Enacting clause stricken 6/7/10
Establishes the Uniform Debt-Management Services Act.

 

A.B. 7739
Enacting clause stricken 4/29/10
Relates to licensed lenders, licensed cashers of checks, sales finance companies, premium finance companies, budget planners, and transmitters of money.

 

A.B. 11325
S.B. 3727
Passed Senate 6/22/10
Relates to licensed lenders, licensed cashers of checks, sales finance companies, premium finance companies, budget planners, and transmitters of money.

 

S.B. 7067
Establishes the uniform debt-management services act.

North Carolina
none
North Dakota
No Regular 2010 Session
Ohio

H.B. 549
Amends §4710.01 and to enact §§4710.20 to 4710.43 of the Revised Code to establish licensing and regulation of debt settlement services.

Oklahoma

H.B. 3106
Creates the Uniform Debt Management Services Act.

 

H.B. 3164
Creates the Credit Counseling Act of 2010.

Oregon
No Regular 2010 Session
Pennsylvania

H.B. 1655
Establishes a moratorium on applicability to debt settlement services pending regulatory action.

 

H.B. 2671
Amends the Debt Management Services Act. Provides for definitions, for license required and for application for licensure. Provides for application for debt settlement services licensure. Further provides for penal bond and for reports to department. Provides for disclosure form, for debt settlement services agreements, for requirements for providing debt settlement services and for prohibitions regarding debt settlement services. Further provides for fees. Provides for debt settlement services fees.

 

S.B. 1284
Provides for the licensure of persons providing debt settlement services, for powers and duties of the Department of Banking and for enforcement.

Puerto Rico
none
Rhode Island
none
South Carolina
none
South Dakota
none
Tennessee
none
Texas
No Regular 2010 Session
Utah

H.B. 457
Relates to credit counseling amendments, short title only.

Vermont
none
Virginia

S.B. 295
Signed by governor 4/21/10, Chapter 794
Creates proposed Title 6.2 (Financial Institutions and Services) as a revision of existing Title 6.1 (Banking and Finance). Proposed Title 6.2 consists of 22 chapters divided into four subtitles: Subtitle I (General Provisions); Subtitle II (Depository Institutions and Trust Organizations); Subtitle III (Other Regulated Providers of Financial Services); and Subtitle IV (Other Financial Activities). Subtitle I includes title-wide definitions and chapters addressing money and currency, interest and usury, lending practices generally, including credit card laws currently in Title 11, and equal credit opportunity laws that are currently in Title 59.1. Subtitle II addresses deposits and accounts at financial institutions, as well as provisions applicable to specific types of depository institutions, including financial institution holding companies, banks, savings institutions, credit unions, and entities conducting trust business. Subtitle III sets out provisions relating to providers of financial services that are subject to licensure or registration with the State Corporation Commission, including industrial loan associations, consumer finance companies, mortgage lenders and brokers, mortgage loan originators, payday lenders, money order sellers and money transmitters, agencies providing debt management plans, and check cashers. Subtitle IV includes provisions regulating the conduct of other financial activities, including refund anticipation loans, safe deposit boxes, and securitization transactions. The Wet Settlement Act and provisions regarding real estate settlement agents are relocated to Title 55.

Washington
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West Virginia
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Wisconsin
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Wyoming
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