|
HCS/SCS/SB 216 - This act requires debt settlement providers only to provide debt settlement services under a debt settlement plan when performing the services for a fee. Debt settlement services are defined as the negotiation, settlement, or alteration of the terms of payment of a consumer's debt with the consumer's creditor with or without receiving or holding money from a consumer for the purpose of distributing that money to the creditor. Debt adjusters are exempted from the definition of "debt settlement provider" if the debt settlement service it provides to a debtor contemplates that creditors will settle debts for less than the principal amount of the debt enrolled in a debt settlement plan. Under the plan, the provider may only charge reasonable consideration not to exceed 4% of the principal amount of the debt in enrollment fees and 20% of the principal amount of the debt in aggregate fees. The balance shall be collected in equal payments over a period determined by the provider as long as the last payment is due no sooner than the median month in the plan. Upon completion of the plan, aggregate fees shall not exceed the amount the plan reduces the principal amount of the debt originally enrolled in the plan. The debtor may voluntarily prepay fees, and the provider may collect fees on a pro rata basis once the provider obtains reasonable offers. When debt settlement providers establish plans where the provider receives or holds the debtors money for distribution, the provider shall maintain a separate trust account for handling the funds with a depository institution insured by the Federal Deposit Insurance Corporation. Debt settlement providers are required to carry insurance in the amount of at least 1 million dollars. The Attorney General is charged with the enforcement of these provisions and injunctions and orders for restitution may be issued for violations. This act is similar to SB 1108 (2008). CHRIS HOGERTY
|
