SB 401 - Under current law, debt adjusters are authorized to enter debt management plans to alter terms of debt payments by receiving money or property from the debtor to pay creditors. This act modifies the definition of debt adjuster to allow such individuals to enter debt settlement plans to perform debt relief services. Such services include renegotiating, settling, or altering terms of payments. Debt adjusters are no longer required to collect funds from the debtor and deliver them to creditors. The act requires debt adjusters to disclose certain information to debtors before performing services including the time-frame required for results to be achieved, details relating to settlement offers, and any possible adverse affects to the debtors creditworthiness. Debt adjusters shall not receive payments until the following: • the adjuster has renegotiated, settled, reduced, or altered the terms of at least one debt. • the debtor has made at least one payment pursuant to a plan. • the payment must either bear the same proportional relationship to the total fee for settling the entire debt balance as the individual debt amount bears to the entire debt amount or be a percentage of the amount saved as a result of settlement. Debt adjusters may require debtors to place funds in an account to pay administrative fees and for payments to creditors or debt collectors. Debtors may withdraw all funds deposited in accounts for services at any time without penalty. CHRIS HOGERTY