STATE OF RHODE ISLAND

Is a license required? 19-14.8-4 states “(a) Except as otherwise provided in subsection (b) of this section, a provider may not provide debt-management services to an individual who it reasonably should know resides in this state at the time it agrees to provide the services, unless the provider is registered under this chapter.”
State specific loan modification law? Yes. Rhode Island Statutes Chapter 19-14(Attached as Schedule A) regulates debt management services, which includes loan modifications. 19-14.8-2-9 states that debt-management services means “services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions”
Advantages of becoming a licensed Mortgage Broker? None.

 

Penalties for operating in the state without a license:

 

19-14.8-33-5-B states that “Subject to adjustment of the dollar amount pursuant to subsection 19-14.8-32(f), if a person violates or knowingly authorizes, directs, or aids in the violation of a final order issued under subsection (a)(1) or (2), the director may impose a civil penalty not exceeding twenty thousand dollars ($20,000) for each violation.”
Is an advanced fee permitted? Yes. 19-14.8-23 regulates advance fees which seem to be very low. Too long to quote here, see text attached below.
Is a written agreement required? Yes. 19-14.8-19 requires a written agreement and states that it must “(1) Be in a record; (2) Be dated and signed by the provider and the individual;

(3) Include the name of the individual and the address where the individual resides;(4) Include the name, business address, and telephone number of the provider;(5) Be delivered to the individual immediately upon formation of the agreement; and”

Other noteworthy information? None.
Rhode Island Statutes

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Chapter 19-14:

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License application:

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License application additional form:

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SCHEDULE A

CHAPTER 19-14.8

Uniform Debt-Management Services Act

Index Of Sections

§ 19-14.8-1 Short title.

§ 19-14.8-2 Definitions.

§ 19-14.8-3 Exempt agreements and person.

§ 19-14.8-4 Registration required.

§ 19-14.8-5 Application for registration – Form, fee and accompanying documents.

§ 19-14.8-6 Application for registration – Required information.

§ 19-14.8-7 Application for registration – Obligation to update.

§ 19-14.8-8 Application for registration – Public information.

§ 19-14.8-9 Certificate of registration – Issuance or denial.

§ 19-14.8-10 Certificate of registration – Timing.

§ 19-14.8-11 Renewal of registration.

§ 19-14.8-12 Registration in another state.

§ 19-14.8-13 Bond required.

§ 19-14.8-14 Bond required – Substitute.

§ 19-14.8-15 Requirement of good faith.

§ 19-14.8-16 Customer service.

§ 19-14.8-17 Prerequisites for providing debt-management services.

§ 19-14.8-18 Communication by electronic or other means.

§ 19-14.8-19 Form and content of agreement.

§ 19-14.8-20 Cancellation of agreement – Waiver.

§ 19-14.8-21 Required language.

§ 19-14.8-22 Trust account.

§ 19-14.8-23 Fees and other charges.

§ 19-14.8-24 Voluntary contributions.

§ 19-14.8-25 Voidable agreements.

§ 19-14.8-26 Termination of agreements.

§ 19-14.8-27 Periodic reports and retention of records.

§ 19-14.8-28 Prohibited acts and practices.

§ 19-14.8-29 Notice of litigation.

§ 19-14.8-30 Advertising.

§ 19-14.8-31 Liability for the conduct of other persons.

§ 19-14.8-32 Powers of director or director’s designee.

§ 19-14.8-33 Administrative remedies.

§ 19-14.8-34 Suspension, revocation or nonrenewal of registration.

§ 19-14.8-35 Private enforcement.

§ 19-14.8-36 Violation of unfair or deceptive practices statute.

§ 19-14.8-37 Statute of limitations.

§ 19-14.8-38 Uniformity of application and construction.

§ 19-14.8-39 Relation to Electronic Signatures in Global and National Commerce Act.

§ 19-14.8-40 Transitional provisions – Application to existing transactions.

§ 19-14.8-41 Severability.

§ 19-14.8-42 [Reserved.].

§ 19-14.8-43 Official comments.

 

§ 19-14.8-1 Short title. – This chapter shall be known and may be cited as the “Uniform Debt-Management Services Act”.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-2

 

§ 19-14.8-2 Definitions. – In this chapter:

(1) “Director” means the director of the department of business regulation.

(2) “Affiliate”:

(a) With respect to an individual, means:

(i) The spouse of the individual;

(ii) A sibling of the individual or the spouse of a sibling;

(iii) An individual or the spouse of an individual who is a lineal ancestor or lineal descendant of the individual or the individual’s spouse;

(iv) An aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece, or grandnephew, whether related by the whole or the half blood or adoption, or the spouse of any of them; or

(v) Any other individual occupying the residence of the individual; and

(b) With respect to an entity, means:

(i) A person that directly or indirectly controls, is controlled by, or is under common control with the entity;

(ii) An officer of, or an individual performing similar functions with respect to, the entity;

(iii) A director of, or an individual performing similar functions with respect to, the entity;

(iv) Subject to adjustment of the dollar amount pursuant to this chapter, a person that receives or received more than twenty-five thousand dollars ($25,000) from the entity in either the current year or the preceding year or a person that owns more than ten percent (10%) of, or an individual who is employed by or is a director of, a person that receives or received more than twenty-five thousand dollars ($25,000) from the entity in either the current year or the preceding year;

(v) An officer or director of, or an individual performing similar functions with respect to, a person described in subsection (b)(i) above;

(vi) The spouse of, or an individual occupying the residence of, an individual described in subsection (b)(i) – (b)(v) of this section; or

(vii) An individual who has the relationship specified in subsection (a)(iv) to an individual or the spouse of an individual described in subsection (b)(i) – (b)(v) of this section.

(3) “Agreement” means an agreement between a provider and an individual for the performance of debt-management services.

(4) “Bank” means a financial institution, including a commercial bank, savings bank, savings and loan association, credit union, and trust company, engaged in the business of banking, chartered under federal or state law, and regulated by a federal or state banking regulatory authority.

(5) “Business address” means the physical location of a business, including the name and number of a street.

(6) “Certified counselor” means an individual certified by a training program or certifying organization, approved by the director, that authenticates the competence of individuals providing education and assistance to other individuals in connection with debt-management services.

(7) “Concessions” means assent to repayment of a debt on terms more favorable to an individual than the terms of the contract between the individual and a creditor.

(8) “Day” means calendar day.

(9) “Debt-management services” means services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions, but does not include:

(a) Legal services provided in an attorney-client relationship by an attorney licensed or otherwise authorized to practice law in this state;

(b) Accounting services provided in an accountant-client relationship by a certified public accountant licensed to provide accounting services in this state; or

(c) Financial-planning services provided in a financial planner-client relationship by a member of a financial-planning profession whose members the director, by rule, determines are

(i) Licensed by this state;

(ii) Subject to a disciplinary mechanism;

(iii) Subject to a code of professional responsibility; and

(iv) Subject to a continuing-education requirement.

(10) “Entity” means a person other than an individual.

(11) “Good faith” means honesty in fact and the observance of reasonable standards of fair dealing.

(12) “Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, or any other legal or commercial entity. The term does not include a public corporation, government, or governmental subdivision, agency, or instrumentality.

(13) “Plan” means a program or strategy in which a provider furnishes debt-management services to an individual and which includes a schedule of payments to be made by or on behalf of the individual and used to pay debts owed by the individual.

(14) “Principal amount of the debt” means the amount of a debt at the time of an agreement.

(15) “Provider” means a person that provides, offers to provide, or agrees to provide debt-management services directly or through others.

(16) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(17) “Settlement fee” means a charge imposed on or paid by an individual in connection with a creditor’s assent to accept in full satisfaction of a debt an amount less than the principal amount of the debt.

(18) “Sign” means, with present intent to authenticate or adopt a record:

(a) To execute or adopt a tangible symbol; or

(b) To attach to or logically associate with the record an electronic sound, symbol, or process.

(19) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(20) “Trust account” means an account held by a provider that is:

(a) Established in an insured bank;

(b) Separate from other accounts of the provider or its designee;

(c) Designated as a trust account or other account designated to indicate that the money in the account is not the money of the provider or its designee; and

(d) Used to hold money of one or more individuals for disbursement to creditors of the individuals.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-3

 

§ 19-14.8-3 Exempt agreements and person. – (a) This chapter does not apply to an agreement with an individual who the provider has no reason to know resides in this state at the time of the agreement.

(b) This chapter does not apply to a provider to the extent that the provider:

(1) Provides or agrees to provide debt-management, educational, or counseling services to an individual who the provider has no reason to know resides in this state at the time the provider agrees to provide the services; or

(2) Receives no compensation for debt-management services from or on behalf of the individuals to whom it provides the services or from their creditors.

(c) This chapter does not apply to the following persons or their employees when the person or the employee is engaged in the regular course of the person’s business or profession:

(1) A judicial officer, a person acting under an order of a court or an administrative agency, or an assignee for the benefit of creditors;

(2) A bank chartered under the laws of the United States or of this state;

(3) An affiliate, as defined in subdivision 19-14.8-2(2)(b)(i), of a bank described in subsection (2) if the affiliate is regulated by a federal or state banking regulatory authority;

(4) A title insurer, escrow company, or other person that provides bill-paying services if the provision of debt-management services is incidental to the bill-paying services; or

(5) A bank chartered under the laws of another state, so long as the laws of such other state expressly authorize such bank to operate in such state, under conditions no more restrictive than those imposed by the laws of this state, as determined by the director or the director’s designee; or

(6) An affiliate, as defined in subdivision 19-14.8-2(2)(b)(i), of a bank described in subsection (5) above if the affiliate is regulated by a federal or state banking regulatory authority.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-4

 

§ 19-14.8-4 Registration required. – (a) Except as otherwise provided in subsection (b) of this section, a provider may not provide debt-management services to an individual who it reasonably should know resides in this state at the time it agrees to provide the services, unless the provider is registered under this chapter.

(b) If a provider is registered under this chapter, subsection (a) of this section does not apply to an employee or agent of the provider.

(c) The director shall maintain and publicize a list of the names of all registered providers.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-5

 

§ 19-14.8-5 Application for registration – Form, fee and accompanying documents. – (a) An application for registration as a provider must be in a form prescribed by the director.

(b) Subject to adjustment of dollar amounts pursuant to subsection 19-14.8-32(f), an application for registration as a provider must be accompanied by:

(1) The fee established by chapter 19-14;

(2) The bond required by § 19-14.8-13;

(3) Identification of all trust accounts required by § 19-14.8-22 and an irrevocable consent authorizing the director to review and examine the trust accounts;

(4) Evidence of insurance in the amount of two hundred fifty thousand dollars ($250,000):

(A) Against the risks of dishonesty, fraud, theft, and other misconduct on the part of the applicant or a director, employee, or agent of the applicant;

(B) Issued by an insurance company authorized to do business in this state and rated at least “A” by a nationally recognized rating organization;

(C) With no deductible;

(D) Payable to the applicant, the individuals who have agreements with the applicant, and this state, as their interests may appear; and

(E) Not subject to cancellation by the applicant without the approval of the director;

(5) If the applicant is a foreign corporation, proof that the applicant holds a certificate of authority to conduct affairs in this state, as required by chapter 7-6; and

(6) If the applicant is organized as a not-for-profit entity or is exempt from taxation, evidence of not-for-profit and tax-exempt status applicable to the applicant under the Internal Revenue Code, 26 U.S.C. § 501, as amended.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-6

 

§ 19-14.8-6 Application for registration – Required information. – An application for registration must be signed under oath or certified under the penalties of perjury and include:

(1) The applicant’s name, principal business address and telephone number, and all other business addresses in this state, electronic-mail addresses, and Internet website addresses;

(2) All names under which the applicant conducts business;

(3) The address of each location in this state at which the applicant will provide debt- management services or a statement that the applicant will have no such location;

(4) The name and home address of each officer and director of the applicant and each person that owns at least ten percent (10%) of the applicant;

(5) Identification of every jurisdiction in which, during the five (5) years immediately preceding the application:

(A) The applicant or any of its officers or directors has been licensed or registered to provide debt-management services; or

(B) Individuals have resided when they received debt-management services from the applicant;

(6) A statement describing, to the extent it is known or should be known by the applicant, any material civil or criminal judgment or litigation and any material administrative or enforcement action by a governmental agency in any jurisdiction against the applicant, any of its officers, directors, owners, or agents, or any person who is authorized to have access to the trust account required by § 19-14.8-22;

(7) The applicant’s financial statements, audited by an accountant licensed to conduct audits, for each of the two (2) years immediately preceding the application or, if it has not been in operation for the two (2) years preceding the application, for the period of its existence;

(8) Evidence of accreditation by an independent accrediting organization approved by the director;

(9) Evidence that, within twelve (12) months after initial employment, each of the applicant’s counselors becomes certified as a certified counselor;

(10) A description of the three (3) most commonly used educational programs that the applicant provides or intends to provide to individuals who reside in this state and a copy of any materials used or to be used in those programs;

(11) A description of the applicant’s financial analysis and initial budget plan, including any form or electronic model, used to evaluate the financial condition of individuals;

(12) A copy of each form of agreement that the applicant will use with individuals who reside in this state;

(13) The schedule of fees and charges that the applicant will use with individuals who reside in this state;

(14) At the applicant’s expense, the results of a criminal-records check, including fingerprints, conducted within the immediately preceding twelve (12) months, covering every officer of the applicant and every employee or agent of the applicant who is authorized to have access to the trust account required by § 19-14.8-22;

(15) The names and addresses of all employers of each director during the ten (10) years immediately preceding the application;

(16) A description of any ownership interest of at least ten percent (10%) by a director, owner, or employee of the applicant in:

(A) Any affiliate of the applicant; or

(B) Any entity that provides products or services to the applicant or any individual relating to the applicant’s debt-management services;

(17) A statement of the amount of compensation of the applicant’s five (5) most highly compensated employees for each of the three (3) years immediately preceding the application or, if it has not been in operation for the three (3) years preceding the application, for the period of its existence;

(18) The identity of each director who is an affiliate, as defined in subdivision 19-14.8-2(2)(A) or (B)(i), (ii), (iv), (v), (vi), or (vii), of the applicant; and

(19) Any other information that the director reasonably requires to perform the director’s duties hereunder.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-7

 

§ 19-14.8-7 Application for registration – Obligation to update. – An applicant or registered provider shall notify the director within ten (10) days after a change in the information specified in subdivision 19-14.8-5(b)(4) or (6) or subsection 19-14.8-6(1), (3), (6), (12), or (13).

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-8

 

§ 19-14.8-8 Application for registration – Public information. – Except for the information required by subsections 19-14.8-6(7)(14) and (17) and the addresses required by subsection 19-14.8-6(4), the director shall make the information in an application for registration as a provider available to the public.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-9

 

§ 19-14.8-9 Certificate of registration – Issuance or denial. – (a) Except as otherwise provided in subsections (b) and (c), the director shall issue a certificate of registration as a provider to a person that complies with § 19-14.8-5 and § 19-14.8-6.

(b) The director may deny registration if:

(1) The application contains information that is materially erroneous or incomplete;

(2) An officer, director, or owner of the applicant has been convicted of a crime, or suffered a civil judgment, involving dishonesty or the violation of state or federal securities laws;

(3) The applicant or any of its officers, directors, or owners has defaulted in the payment of money collected for others; or

(4) The director finds that the financial responsibility, experience, character, or general fitness of the applicant or its owners, directors, employees, or agents does not warrant belief that the business will be operated in compliance with this chapter.

(c) The director shall deny registration if:

(1) The application is not accompanied by the fee established by the director; or

(2) With respect to an applicant that is organized as a not-for-profit entity or has obtained tax-exempt status under the Internal Revenue Code, 26 U.S.C. § 501, the applicant’s board of directors is not independent of the applicant’s employees and agents.

(d) Subject to adjustment of the dollar amount pursuant to subsection 19-14.8-32(f), a board of directors is not independent for purposes of subsection (c) of this section if more than one-fourth (1/4) of its members:

(1) Are affiliates of the applicant, as defined in §§ 19-14.8-2(2)(a) or 19-14.8-2(2)(b)(i), (ii), (iv), (v), (vi), or (vii); or

(2) After the date ten (10) years before first becoming a director of the applicant, were employed by or directors of a person that received from the applicant more than twenty-five thousand dollars ($25,000) in either the current year or the preceding year.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-10

 

§ 19-14.8-10 Certificate of registration – Timing. – (a) The director shall approve or deny an initial registration as a provider within one hundred twenty (120) days after an application is filed. In connection with a request pursuant to this chapter for additional information, the director may extend the one hundred twenty (120) day period for not more than sixty (60) days. Within seven (7) days after denying an application, the director, in a record, shall inform the applicant of the reasons for the denial.

(b) If the director denies an application for registration as a provider or does not act on an application within the time prescribed in subsection (a), the applicant may appeal and request a hearing pursuant to chapter 42-35.

(c) Subject to this chapter subsection 19-14.8-11(d) and § 19-14.8-34, a registration as a provider is valid for one year.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-11

 

§ 19-14.8-11 Renewal of registration. – (a) A provider must obtain a renewal of its registration annually.

(b) An application for renewal of registration as a provider must be in a form prescribed by the director, signed under oath or certified under the penalties of perjury, and:

(1) Be filed in accordance with § 19-14-22;

(2) Be accompanied by the fee established by chapter 19-14 and the bond required by this chapter;

(3) Contain the matter required for initial registration as a provider by this chapter and a financial statement, audited by an accountant licensed to conduct audits, for the applicant’s fiscal year immediately preceding the application;

(4) Disclose any changes in the information contained in the applicant’s application for registration or its immediately previous application for renewal, as applicable;

(5) Supply evidence of insurance in an amount equal to the larger of two hundred fifty thousand dollars ($250,000) or the highest daily balance in the trust account required by this chapter during the six (6) month period immediately preceding the application:

(A) Against risks of dishonesty, fraud, theft, and other misconduct on the part of the applicant or a director, employee, or agent of the applicant;

(B) Issued by an insurance company authorized to do business in this state and rated at least “A” by a nationally recognized rating organization;

(C) With no deductible;

(D) Payable to the applicant, the individuals who have agreements with the applicant, and this state, as their interests may appear; and

(E) Not subject to cancellation by the applicant without the approval of the director;

(6) Disclose the total amount of money received by the applicant pursuant to plans during the preceding twelve (12) months from or on behalf of individuals who reside in this state and the total amount of money distributed to creditors of those individuals during that period;

(7) Disclose, to the best of the applicant’s knowledge, the gross amount of money accumulated during the preceding twelve (12) months pursuant to plans by or on behalf of individuals who reside in this state and with whom the applicant has agreements; and

(8) Provide any other information that the director reasonably requires to perform the director’s duties under this section.

(c) Except for the information required by subsections 19-14.8-6(7), (14), and (17) and the addresses required by subsection 19-14.8-6(4), the director shall make the information in an application for renewal of registration as a provider available to the public.

(d) If a registered provider files a timely and complete application for renewal of registration, the registration remains effective until the director, in a record, notifies the applicant of a denial and states the reasons for the denial.

(e) If the director denies an application for renewal of registration as a provider, the applicant, within ten (10) days after receiving notice of the denial, may appeal and request a hearing pursuant to chapter 42-35. Subject to § 19-14.8-34, while the appeal is pending the applicant shall continue to provide debt-management services to individuals with whom it has agreements. If the denial is affirmed, subject to the director’s order and § 19-14.8-34, the applicant shall continue to provide debt-management services to individuals with whom it has agreements until, with the approval of the director, it transfers the agreements to another registered provider or returns to the individuals all unexpended money that is under the applicant’s control.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-12

 

§ 19-14.8-12 Registration in another state. – If a provider holds a license or certificate of registration in another state authorizing it to provide debt-management services, the provider may submit a copy of that license or certificate and the application for it instead of an application in the form prescribed by subsection 19-14.8-5(a), 6, or 11(b). The director shall accept the application and the license or certificate from the other state as an application for registration as a provider or for renewal of registration as a provider, as appropriate, in this state if:

(1) The application in the other state contains information substantially similar to or more comprehensive than that required in an application submitted in this state;

(2) The applicant provides the information required by subsections 19-14.8-6(1), (3), (10), (12), and (13); and

(3) The applicant, under oath or certified under the penalties of perjury, certifies that the information contained in the application is current or, to the extent it is not current, supplements the application to make the information current.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-13

 

§ 19-14.8-13 Bond required. – (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, which must:

(1) Be in effect during the period of registration and for two (2) 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.

(b) Subject to adjustment of the dollar amount pursuant to subsection 19-14.8-32(f), a surety bond filed pursuant to subsection (a) must:

(1) Be in the amount of fifty thousand dollars ($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.

(c) If the principal amount of a surety bond is reduced by payment of a claim or a judgment, the provider shall immediately notify the director and, within thirty (30) days after notice by the director, file a new or additional surety bond in an amount set by the director. The amount of the new or additional bond must be at least the amount of the bond immediately before payment of the claim or judgment. If for any reason a surety terminates a bond, the provider shall immediately file a new surety bond in the amount of fifty thousand dollars ($50,000) or other amount determined pursuant to subsection (b).

(d) The director or an individual may obtain satisfaction out of the surety bond procured pursuant to this section if:

(1) The director assesses expenses under subdivision 19-14.8-32(b)(1), issues a final order under subdivision 19-14.8-33(a)(2), or recovers a final judgment under subdivision 19-14.8-33(a)(4) or (5) or (d); or

(2) An individual recovers a final judgment pursuant to subsection 19-14.8-5(a), (b), or (c)(1), (2), or (4).

(e) If claims against a surety bond exceed or are reasonably expected to exceed the amount of the bond, the director, on the initiative of the director or on petition of the surety, shall, unless the proceeds are adequate to pay all costs, judgments, and claims, distribute the proceeds in the following order:

(1) To satisfaction of a final order or judgment under subsection 19-14.8-33(a)(2), (4), or (5) or (d);

(2) To final judgments recovered by individuals pursuant to subsection 19-14.8-35(a), (b), or (c)(1), (2) or (4), pro rata;

(3) To claims of individuals established to the satisfaction of the director, pro rata; and

(4) If a final order or judgment is issued under subsection 19-14.8-33(a), to the expenses charged pursuant to subdivision 19-14.8-32(b)(1).

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-14

 

§ 19-14.8-14 Bond required – Substitute. – (a) Instead of the surety bond required by § 19-14.8-13, a provider may deliver to the director, in the amount required by subsection 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 subsections 19-14.8-13(a), (c), (d), and (e) apply to the substitute.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-15

 

§ 19-14.8-15 Requirement of good faith. – A provider shall act in good faith in all matters under this chapter.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-16

 

§ 19-14.8-16 Customer service. – A provider that is required to be registered under this chapter shall maintain a toll-free communication system, staffed at a level that reasonably permits an individual to speak to a certified counselor or customer-service representative, as appropriate, during ordinary business hours.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-17

 

§ 19-14.8-17 Prerequisites for providing debt-management services. – (a) Before providing debt-management services, a registered provider shall give the individual an itemized list of goods and services and the charges for each. The list must be clear and conspicuous, be in a record the individual may keep whether or not the individual assents to an agreement, and describe the goods and services the provider offers:

(1) Free of additional charge if the individual enters into an agreement;

(2) For a charge if the individual does not enter into an agreement; and

(3) For a charge if the individual enters into an agreement, using the following terminology, as applicable, and format:

Set-up fee

dollar amount of fee

Monthly service fee

dollar amount of fee or method of determining amount

Settlement fee

dollar amount of fee or method of determining amount

Goods and services in addition to those provided in connection with a plan:

(item) dollar amount or method of determining amount

(item) dollar amount or method of determining amount.

(b) A provider may not furnish debt-management services unless the provider, through the services of a certified counselor:

(1) Provides the individual with reasonable education about the management of personal finance;

(2) Has prepared a financial analysis; and

(3) If the individual is to make regular, periodic payments:

(A) Has prepared a plan for the individual;

(B) Has made a determination, based on the provider’s analysis of the information provided by the individual and otherwise available to it, that the plan is suitable for the individual and the individual will be able to meet the payment obligations under the plan; and

(C) Believes that each creditor of the individual listed as a participating creditor in the plan will accept payment of the individual’s debts as provided in the plan.

(c) Before an individual assents to an agreement to engage in a plan, a provider shall:

(1) Provide the individual with a copy of the analysis and plan required by subsection (b) in a record that identifies the provider and that the individual may keep whether or not the individual assents to the agreement;

(2) Inform the individual of the availability, at the individual’s option, of assistance by a toll-free communication system or in person to discuss the financial analysis and plan required by subsection (b); and

(3) With respect to all creditors identified by the individual or otherwise known by the provider to be creditors of the individual, provide the individual with a list of:

(A) Creditors that the provider expects to participate in the plan and grant concessions;

(B) Creditors that the provider expects to participate in the plan but not grant concessions;

(C) Creditors that the provider expects not to participate in the plan; and

(D) All other creditors.

(d) Before an individual assents to an agreement to engage in a plan, the provider shall inform the individual, in a record that contains nothing else, that is given separately, and that the individual may keep whether or not the individual assents to the agreement:

(1) Of the name and business address of the provider;

(2) That plans are not suitable for all individuals and the individual may ask the provider about other ways, including bankruptcy, to deal with indebtedness;

(3) That establishment of a plan may adversely affect the individual’s credit rating or credit scores;

(4) That nonpayment of debt may lead creditors to increase finance and other charges or undertake collection activity, including litigation;

(5) Unless it is not true, that the provider may receive compensation from the creditors of the individual; and

(6) That, unless the individual is insolvent, if a creditor settles for less than the full amount of the debt, the plan may result in the creation of taxable income to the individual, even though the individual does not receive any money.

(e) If a provider may receive payments from an individual’s creditors and the plan contemplates that the individual’s creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may comply with subsection (d) by providing the following disclosure, surrounded by black lines:

IMPORTANT INFORMATION FOR YOU TO CONSIDER

(1) Debt-management plans are not right for all individuals, and you may ask us to provide information about other ways, including bankruptcy, to deal with your debts.

(2) Using a debt-management plan may hurt your credit rating or credit scores.

(3) We may receive compensation for our services from your creditors.

Name and business address of provider

(f) If a provider will not receive payments from an individual’s creditors and the plan contemplates that the individual’s creditors will reduce finance charges or fees for late payment, default, or delinquency, a provider may comply with subsection (d) by providing the following disclosure, surrounded by black lines:

IMPORTANT INFORMATION FOR YOU TO CONSIDER

(1) Debt-management plans are not right for all individuals, and you may ask us to provide information about other ways, including bankruptcy, to deal with your debts.

(2) Using a debt-management plan may hurt your credit rating or credit scores.

Name and business address of provider

(g) If a plan contemplates that creditors will settle debts for less than the full principal amount of debt owed, a provider may comply with subsection (d) by providing the following disclosure, surrounded by black lines:

IMPORTANT INFORMATION FOR YOU TO CONSIDER

(1) Our program is not right for all individuals, and you may ask us to provide information about bankruptcy and other ways to deal with your debts.

(2) Nonpayment of your debts under our program may:

hurt your credit rating or credit scores;

lead your creditors to increase finance and other charges; and

lead your creditors to undertake activity, including lawsuits, to collect the debts.

(3) Reduction of debt under our program may result in taxable income to you, even though you will not actually receive any money.

Name and business address of provider

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-18

 

§ 19-14.8-18 Communication by electronic or other means. – (a) In this section:

(1) “Federal act” means the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq., as amended.

(2) “Consumer” means an individual who seeks or obtains goods or services that are used primarily for personal, family, or household purposes.

(b) A provider may satisfy the requirements of § 19-14.8-17, 19-14.8-19, or 19-14.8-27 by means of the Internet or other electronic means if the provider obtains a consumer’s consent in the manner provided by § 101(c)(1) of the federal act.

(c) The disclosures and materials required by §§ 19-14.8-17, 19-14.8-19, and 19-14.8-27 shall be presented in a form that is capable of being accurately reproduced for later reference.

(d) With respect to disclosure by means of an Internet website, the disclosure of the information required by subsection 19-14.8-17(d) must appear on one or more screens that:

(1) Contain no other information; and

(2) The individual must see before proceeding to assent to formation of a plan.

(e) At the time of providing the materials and agreement required by subsections 19-14.8-17(c) and (d), § 19-14.8-19, and § 19-14.8-27, a provider shall inform the individual that upon electronic, telephonic, or written request, it will send the individual a written copy of the materials, and shall comply with a request as provided in subsection (f).

(f) If a provider is requested, before the expiration of ninety (90) days after a plan is completed or terminated, to send a written copy of the materials required by subsections 19-14.8-17(c) and (d), § 19-14.8-19, or § 19-14.8-27, the provider shall send them at no charge within three (3) business days after the request, but the provider need not comply with a request more than once per calendar month or if it reasonably believes the request is made for purposes of harassment. If a request is made more than ninety (90) days after a plan is completed or terminated, the provider shall send within a reasonable time a written copy of the materials requested.

(g) A provider that maintains an Internet website shall disclose on the home page of its website or on a page that is clearly and conspicuously connected to the home page by a link that clearly reveals its contents:

(1) Its name and all names under which it does business;

(2) Its principal business address, telephone number, and electronic-mail address, if any; and

(3) The names of its principal officers.

(h) Subject to subsection (i), if a consumer who has consented to electronic communication in the manner provided by section 101 of the federal act withdraws consent as provided in the federal act, a provider may terminate its agreement with the consumer.

(i) If a provider wishes to terminate an agreement with a consumer pursuant to subsection (h), it shall notify the consumer that it will terminate the agreement unless the consumer, within thirty (30) days after receiving the notification, consents to electronic communication in the manner provided in § 101(c) of the federal act. If the consumer consents, the provider may terminate the agreement only as permitted by subdivision 19-14.8-19(a)(6)(G).

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-19

 

§ 19-14.8-19 Form and content of agreement. – (a) An agreement must:

(1) Be in a record;

(2) Be dated and signed by the provider and the individual;

(3) Include the name of the individual and the address where the individual resides;

(4) Include the name, business address, and telephone number of the provider;

(5) Be delivered to the individual immediately upon formation of the agreement; and

(6) Disclose:

(A) The services to be provided;

(B) The amount, or method of determining the amount, of all fees, individually itemized, to be paid by the individual;

(C) The schedule of payments to be made by or on behalf of the individual, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment or, if such information is not known to the provider at the time of the agreement is made, and affirmative statement to that effect;

(D) If a plan provides for regular periodic payments to creditors:

(i) Each creditor of the individual to which payment will be made, the amount owed to each creditor, and any concessions the provider reasonably believes each creditor will offer or, if the provider can not form a reasonable belief as to such amounts and concessions at the time of the agreement is made, an affirmative statement to that effect; and

(ii) The schedule of expected payments to each creditor, including the amount of each payment and the date on which it will be made;

(E) Each creditor that the provider believes will not participate in the plan and to which the provider will not direct payment;

(F) How the provider will comply with its obligations under subsection 19-14.8-27(a);

(G) That the provider may terminate the agreement for good cause, upon return of unexpended money of the individual;

(H) That the individual may cancel the agreement as provided in § 19-14.8-20;

(I) That the individual may contact the director with any questions or complaints regarding the provider; and

(J) The address, telephone number, and Internet address or website of the director.

(b) For purposes of subsection (a)(5), delivery of an electronic record occurs when it is made available in a format in which the individual may retrieve, save, and print it and the individual is notified that it is available.

(c) If the director supplies the provider with any information required under subsection (a)(6)(J), the provider may comply with that requirement only by disclosing the information supplied by the director.

(d) An agreement must provide that:

(1) The individual has a right to terminate the agreement at any time, without penalty or obligation, by giving the provider written or electronic notice, in which event:

(A) The provider will refund all unexpended money that the provider or its agent has received from or on behalf of the individual for the reduction or satisfaction of the individual’s debt;

(B) With respect to an agreement that contemplates that creditors will settle debts for less than the principal amount of debt, the provider will refund sixty-five percent (65%) of any portion of the set-up fee that has not been credited against the settlement fee; and

(C) All powers of attorney granted by the individual to the provider are revoked and ineffective;

(2) The individual authorizes any bank in which the provider or its agent has established a trust account to disclose to the director any financial records relating to the trust account; and

(3) The provider will notify the individual within five (5) days after learning of a creditor’s decision to reject or withdraw from a plan and that this notice will include:

(A) The identity of the creditor; and

(B) The right of the individual to modify or terminate the agreement.

(e) An agreement may confer on a provider a power of attorney to settle the individual’s debt for no more than fifty percent (50%) of the principal amount of the debt. An agreement may not confer a power of attorney to settle a debt for more than fifty percent (50%) of that amount, but may confer a power of attorney to negotiate with creditors of the individual on behalf of the individual. An agreement must provide that the provider will obtain the assent of the individual after a creditor has assented to a settlement for more than fifty percent (50%) of the principal amount of the debt.

(f) An agreement may not:

(1) Provide for application of the law of any jurisdiction other than the United States and this state;

(2) Except as permitted by Section 2 of the Federal Arbitration Act, 9 U.S.C. § 2, as amended, contain a provision that modifies or limits otherwise available forums or procedural rights, including the right to trial by jury, that are generally available to the individual under law other than this chapter;

(3) Contain a provision that restricts the individual’s remedies under this chapter or law other than this chapter; or

(4) Contain a provision that:

(A) Limits or releases the liability of any person for not performing the agreement or for violating this chapter; or

(B) Indemnifies any person for liability arising under the agreement or this chapter.

(g) All rights and obligations specified in subsection (d) and § 19-14.8-20 exist even if not provided in the agreement. A provision in an agreement which violates subsection (d), (e), or (f) is void.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-20

 

§ 19-14.8-20 Cancellation of agreement – Waiver. – (a) An individual may cancel an agreement before midnight of the third (3rd) business day after the individual assents to it, unless the agreement does not comply with subsection (b) or § 19-14.8-19 or 19-14.8-28, in which event the individual may cancel the agreement within thirty (30) days after the individual assents to it. To exercise the right to cancel, the individual must give notice in a record to the provider. Notice by mail is given when mailed.

(b) An agreement must be accompanied by a form that contains in bold-face type, surrounded by bold black lines:

Notice of Right to Cancel

You may cancel this agreement, without any penalty or obligation, at any time before midnight of the third business day that begins the day after you agree to it by electronic communication or by signing it.

To cancel this agreement during this period, send an e-mail to ]]]]]]]]]]]]]]]]]]]]]]]] or mail or deliver a signed, dated copy of this

E-mail address of provider ]]]]]]]]]]]]]]]]]]]]]]]] notice, or any other written notice to ]]]]]]]]]]]]]]]]]]]]]]]]

Name of provider at ]]]]]]]]]]]]]]]]]]]]]]]] before midnight on ]]]]]]]]]]]]]]]]]]]]]]]].

Address of provider ]]]]]]]]]]]]]]]]]]]]]]]]

Date ]]]]]]]]]]]]]]]]]]]]]]]]

If you cancel this agreement within the 3-day period, we will refund all money you already have paid us.

You also may terminate this agreement at any later time, but we are not required to refund fees you have paid us.

I cancel this agreement, ]]]]]]]]]]]]]]]]]]]]]]]]

Print your name ]]]]]]]]]]]]]]]]]]]]]]]]

Signature ]]]]]]]]]]]]]]]]]]]]]]]]

Date ]]]]]]]]]]]]]]]]]]]]]]]]

(c) If a personal financial emergency necessitates the disbursement of an individual’s money to one or more of the individual’s creditors before the expiration of three (3) days after an agreement is signed, an individual may waive the right to cancel. To waive the right, the individual must send or deliver a signed, dated statement in the individual’s own words describing the circumstances that necessitate a waiver. The waiver must explicitly waive the right to cancel. A waiver by means of a standard-form record is void.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-21

 

§ 19-14.8-21 Required language. – Unless the director, by rule, provides otherwise, the disclosures and documents required by this chapter must be in English. If a provider communicates with an individual primarily in a language other than English, the provider must furnish a translation into the other language of the disclosures and documents required by this chapter.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-22

 

§ 19-14.8-22 Trust account. – (a) All money paid to a provider by or on behalf of an individual pursuant to a plan for distribution to creditors is held in trust. Within two (2) business days after receipt, the provider shall deposit the money in a trust account established for the benefit of individuals to whom the provider is furnishing debt-management services.

(b) Money held in trust by a provider is not property of the provider or its designee. The money is not available to creditors of the provider or designee, except an individual from whom or on whose behalf the provider received money, to the extent that the money has not been disbursed to creditors of the individual.

(c) A provider shall:

(1) Maintain separate records of account for each individual to whom the provider is furnishing debt-management services;

(2) Disburse money paid by or on behalf of the individual to creditors of the individual as disclosed in the agreement, except that:

(A) The provider may delay payment to the extent that a payment by the individual is not final; and

(B) If a plan provides for regular periodic payments to creditors, the disbursement must comply with the due dates established by each creditor; and

(3) Promptly correct any payments that are not made or that are misdirected as a result of an error by the provider or other person in control of the trust account and reimburse the individual for any costs or fees imposed by a creditor as a result of the failure to pay or misdirection.

(d) A provider may not commingle money in a trust account established for the benefit of individuals to whom the provider is furnishing debt-management services with money of other persons.

(e) A trust account must at all times have a cash balance equal to the sum of the balances of each individual’s account.

(f) If a provider has established a trust account pursuant to subsection (a), the provider shall reconcile the trust account at least once a month. The reconciliation must compare the cash balance in the trust account with the sum of the balances in each individual’s account. If the provider or its designee has more than one trust account, each trust account must be individually reconciled.

(g) If a provider discovers, or has a reasonable suspicion of, embezzlement or other unlawful appropriation of money held in trust, the provider immediately shall notify the director by a method approved by the director. Unless the director by rule provides otherwise, within five (5) days thereafter, the provider shall give notice to the director describing the remedial action taken or to be taken.

(h) If an individual terminates an agreement or it becomes reasonably apparent to a provider that a plan has failed, the provider shall promptly refund to the individual all money paid by or on behalf of the individual which has not been paid to creditors, less fees that are payable to the provider under § 19-14.8-23.

(i) Before relocating a trust account from one bank to another, a provider shall inform the director of the name, business address, and telephone number of the new bank. As soon as practicable, the provider shall inform the director of the account number of the trust account at the new bank.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-23

 

§ 19-14.8-23 Fees and other charges. – (a) A provider may not impose directly or indirectly a fee or other charge on an individual or receive money from or on behalf of an individual for debt-management services except as permitted by this section.

(b) A provider may not impose charges or receive payment for debt-management services until the provider and the individual have signed an agreement that complies with §§ 19-14.8-19 and 19-14.8-28.

(c) If an individual assents to an agreement, a provider may not impose a fee or other charge for educational or counseling services, or the like, except as otherwise provided in this subsection and subsection 19-14.8-28(d). The director may authorize a provider to charge a fee based on the nature and extent of the educational or counseling services furnished by the provider.

(d) Subject to adjustment of dollar amounts pursuant to subsection 19-14.8-32(f), the following rules apply:

(1) If an individual assents to a plan that contemplates that creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may charge:

(A) A fee not exceeding fifty dollars ($50.00) for consultation, obtaining a credit report, setting up an account, and the like; and

(B) A monthly service fee, not to exceed ten dollars ($10.00) times the number of creditors remaining in a plan at the time the fee is assessed, but not more than fifty dollars ($50) in any month.

(2) If an individual assents to a plan that contemplates that creditors will settle debts for less than the principal amount of the debt, a provider may charge:

(A) Subject to subsection 19-14.8-19(d), a fee for consultation, obtaining a credit report, setting up an account, and the like, in an amount not exceeding the lesser of four hundred dollars ($400) and four percent (4%) of the debt in the plan at the inception of the plan; and

(B) A monthly service fee, not to exceed ten dollars ($10) times the number of creditors remaining in a plan at the time the fee is assessed, but not more than fifty dollars ($50) in any month.

(3) A provider may not impose or receive fees under both paragraphs (1) and (2) of this section.

(4) Except as otherwise provided in subsection 19-14.8-28(d), if an individual does not assent to an agreement, a provider may receive for educational and counseling services it provides to the individual a fee not exceeding one hundred dollars ($100) or, with the approval of the director, a larger fee. The director may approve a fee larger than one hundred ($100) if the nature and extent of the educational and counseling services warrant the larger fee.

(e) If, before the expiration of ninety (90) days after the completion or termination of educational or counseling services, an individual assents to an agreement, the provider shall refund to the individual any fee paid pursuant to subsection (d)(4) of this section.

(f) Except as otherwise provided in subsections (c) and (d) of this section, if a plan contemplates that creditors will settle an individual’s debts for less than the principal amount of the debt, compensation for services in connection with settling a debt may not exceed, with respect to each debt:

(1) Thirty percent (30%) of the excess of the principal amount of the debt over the amount paid the creditor pursuant to the plan less;

(2) To the extent it has not been credited against an earlier settlement fee:

(A) The fee charged pursuant to subdivision (d)(2)(A) of this section; and

(B) The aggregate of fees charged pursuant to subdivision (d)(2)(B) of this section.

(g) Subject to adjustment of the dollar amount pursuant to subsection 19-14.8-32(f), if a payment to a provider by an individual under this chapter is dishonored, a provider may impose a reasonable charge on the individual, not to exceed the lesser of twenty-five dollars ($25) and the amount permitted by law other than this chapter.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-24

 

§ 19-14.8-24 Voluntary contributions. – A provider may not solicit a voluntary contribution from an individual or an affiliate of the individual for any service provided to the individual. A provider may accept voluntary contributions from an individual but, until thirty (30) days after completion or termination of a plan, the aggregate amount of money received from or on behalf of the individual may not exceed the total amount the provider may charge the individual under § 19-14.8-23.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-25

 

§ 19-14.8-25 Voidable agreements. – (a) If a provider imposes a fee or other charge or receives money or other payments not authorized by § 19-14.8-23 or 19-14.8-24, the individual may void the agreement and recover as provided in § 19-14.8-35.

(b) If a provider is not registered as required by this chapter when an individual assents to an agreement, the agreement is voidable by the individual.

(c) If an individual voids an agreement under subsection (b), the provider does not have a claim against the individual for breach of contract or for restitution.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-26

 

§ 19-14.8-26 Termination of agreements. – (a) If an individual who has entered into an agreement fails for sixty (60) days to make payments required by the agreement, a provider may terminate the agreement.

(b) If a provider or an individual terminates an agreement, the provider shall immediately return to the individual:

(1) Any money of the individual held in trust for the benefit of the individual; and

(2) Sixty-five percent (65%) of any portion of the set-up fee received pursuant to subdivision 19-14.8-23(d)(2) which has not been credited against settlement fees.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-27

 

§ 19-14.8-27 Periodic reports and retention of records. – (a) A provider shall provide the accounting required by subsection (b) of this section:

(1) Upon cancellation or termination of an agreement; and

(2) Before cancellation or termination of any agreement:

(A) At least once each month; and

(B) Within five (5) business days after a request by an individual, but the provider need not comply with more than one request in any calendar month.

(b) A provider, in a record, shall provide each individual for whom it has established a plan an accounting of the following information:

(1) The amount of money received from the individual since the last report;

(2) The amounts and dates of disbursement made on the individual’s behalf, or by the individual upon the direction of the provider, since the last report to each creditor listed in the plan;

(3) The amounts deducted from the amount received from the individual;

(4) The amount held in reserve; and

(5) If, since the last report, a creditor has agreed to accept as payment in full an amount less than the principal amount of the debt owed by the individual:

(A) The total amount and terms of the settlement;

(B) The amount of the debt when the individual assented to the plan;

(C) The amount of the debt when the creditor agreed to the settlement; and

(D) The calculation of a settlement fee.

(c) A provider shall maintain records for each individual for whom it provides debt-management services for five (5) years after the final payment made by the individual and produce a copy of them to the individual within a reasonable time after a request for them. The provider may use electronic or other means of storage of the records.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-28

 

§ 19-14.8-28 Prohibited acts and practices. – (a) A provider may not, directly or indirectly:

(1) Misappropriate or misapply money held in trust;

(2) Settle a debt on behalf of an individual for more than fifty percent (50%) of the principal amount of the debt owed a creditor, unless the individual assents to the settlement after the creditor has assented;

(3) Take a power of attorney that authorizes it to settle a debt, unless the power of attorney expressly limits the providers authority to settle debts for not more than fifty percent (50%) of the principal amount of the debt owed a creditor;

(4) Exercise or attempt to exercise a power of attorney after an individual has terminated an agreement;

(5) Initiate a transfer from an individuals account at a bank or with another person unless the transfer is:

(A) A return of money to the individual; or

(B) Before termination of an agreement, properly authorized by the agreement and this chapter, and for:

(i) Payment to one or more creditors pursuant to a plan; or

(ii) Payment of a fee;

(6) Offer a gift or bonus, premium, reward, or other compensation to an individual for executing an agreement;

(7) Offer, pay, or give a gift or bonus, premium, reward, or other compensation to a person for referring a prospective customer, if the person making the referral has a financial interest in the outcome of debt-management services provided to the customer, unless neither the provider nor the person making the referral communicates to the prospective customer the identity of the source of the referral;

(8) Receive a bonus, commission, or other benefit for referring an individual to a person;

(9) Structure a plan in a manner that would result in a negative amortization of any of an individual’s debts, unless a creditor that is owed a negatively amortizing debt agrees to refund or waive the finance charge upon payment of the principal amount of the debt;

(10) Compensate its employees on the basis of a formula that incorporates the number of individuals the employee induces to enter into agreements;

(11) Settle a debt or lead an individual to believe that a payment to a creditor is in settlement of a debt to the creditor unless, at the time of settlement, the individual receives a certification by the creditor that the payment is in full settlement of the debt;

(12) Make a representation that:

(A) The provider will furnish money to pay bills or prevent attachments;

(B) Payment of a certain amount will permit satisfaction of a certain amount or range of indebtedness; or

(C) Participation in a plan will or may prevent litigation, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment;

(13) Misrepresent that it is authorized or competent to furnish legal advice or perform legal services;

(14) Represent that it is a not-for-profit entity unless it is organized and properly operating as a not-for-profit under the law of the state in which it was formed or that it is a tax-exempt entity unless it has received certification of tax-exempt status from the Internal Revenue Service;

(15) Take a confession of judgment or power of attorney to confess judgment against an individual; or

(16) Employ an unfair, unconscionable, or deceptive act or practice, including the knowing omission of any material information.

(b) If a provider furnishes debt-management services to an individual, the provider may not, directly or indirectly:

(1) Purchase a debt or obligation of the individual;

(2) Receive from or on behalf of the individual:

(A) A promissory note or other negotiable instrument other than a check or a demand draft; or

(B) A post-dated check or demand draft;

(3) Lend money or provide credit to the individual, except as a deferral of a settlement fee at no additional expense to the individual;

(4) Obtain a mortgage or other security interest from any person in connection with the services provided to the individual;

(5) Except as permitted by federal law, disclose the identity or identifying information of the individual or the identity of the individual’s creditors, except to:

(A) The director, upon proper demand;

(B) A creditor of the individual, to the extent necessary to secure the cooperation of the creditor in a plan; or

(C) The extent necessary to administer the plan;

(6) Except as otherwise provided in subsection 19-14.8-23(f), provide the individual less than the full benefit of a compromise of a debt arranged by the provider;

(7) Charge the individual for or provide credit or other insurance, coupons for goods or services, membership in a club, access to computers or the Internet, or any other matter not directly related to debt-management services or educational services concerning personal finance; or

(8) Furnish legal advice or perform legal services, unless the person furnishing that advice to or performing those services for the individual is licensed to practice law.

(c) This chapter does not authorize any person to engage in the practice of law.

(d) A provider may not receive a gift or bonus, premium, reward, or other compensation, directly or indirectly, for advising, arranging, or assisting an individual in connection with obtaining, an extension of credit or other service from a lender or service provider, except for educational or counseling services required in connection with a government-sponsored program.

(e) Unless a person supplies goods, services, or facilities generally and supplies them to the provider at a cost no greater than the cost the person generally charges to others, a provider may not purchase goods, services, or facilities from the person if an employee or a person that the provider should reasonably know is an affiliate of the provider:

(1) Owns more than ten percent (10%) of the person; or

(2) Is an employee or affiliate of the person.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-29

 

§ 19-14.8-29 Notice of litigation. – No later than thirty (30) days after a provider has been served with notice of a civil action for violation of this chapter by or on behalf of an individual who resides in this state at either the time of an agreement or the time the notice is served, the provider shall notify the director in a record that it has been sued.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-30

 

§ 19-14.8-30 Advertising. – A provider that advertises debt-management services shall disclose, in an easily comprehensible manner, the information specified in subdivisions 19-14.8-17(d)(3) and (4).

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-31

 

§ 19-14.8-31 Liability for the conduct of other persons. – If a provider delegates any of its duties or obligations under an agreement or this chapter to another person, including an independent contractor, the provider is liable for conduct of the person which, if done by the provider, would violate the agreement or this chapter.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-32

 

§ 19-14.8-32 Powers of director or director’s designee. – (a) The director may act on its own initiative or in response to complaints and may receive complaints, take action to obtain voluntary compliance with this chapter, refer cases to the attorney general, and seek or provide remedies as provided in this chapter.

(b) The director may investigate and examine, in this state or elsewhere, by subpoena or otherwise, the activities, books, accounts, and records of a person that provides or offers to provide debt-management services, or a person to which a provider has delegated its obligations under an agreement or this chapter, to determine compliance with this chapter. Information that identifies individuals who have agreements with the provider shall not be disclosed to the public. In connection with the investigation, the director may:

(1) Charge the person the reasonable expenses necessarily incurred to conduct the examination;

(2) Require or permit a person to file a statement under oath as to all the facts and circumstances of a matter to be investigated; and

(3) Seek a court order authorizing seizure from a bank at which the person maintains a trust account required by § 19-14.8-22, any or all money, books, records, accounts, and other property of the provider that is in the control of the bank and relates to individuals who reside in this state.

(c) The director may adopt rules to implement the provisions of this chapter in accordance with chapter 42-35.

(d) The director may enter into cooperative arrangements with any other federal or state agency having authority over providers and may exchange with any of those agencies information about a provider, including information obtained during an examination of the provider.

(e) [Reserved].

(f) The director, by rule, shall adopt dollar amounts instead of those specified in §§ 19-14.8-2, 19-14.8-5, 19-14.8-9, 19-14.8-13, 19-14.8-23, 19-14.8-33, and 19-14.8-35 to reflect inflation, as measured by the United States Bureau of Labor Statistics Consumer Price Index for All Urban Consumers or, if that index is not available, another index adopted by rule by the director. The director shall adopt a base year and adjust the dollar amounts, effective on July 1 of each year, if the change in the index from the base year, as of December 31 of the preceding year, is at least ten percent (10%). The dollar amount must be rounded to the nearest one hundred dollars ($100), except that the amounts in § 19-14.8-23 must be rounded to the nearest dollar.

(g) The director shall notify registered providers of any change in dollar amounts made pursuant to subsection (f) of this section and make that information available to the public.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-33

 

§ 19-14.8-33 Administrative remedies. – (a) The director may enforce this chapter and rules adopted under this chapter by taking one or more of the following actions:

(1) Ordering a provider or a director, employee, or other agent of a provider to cease and desist from any violations;

(2) Ordering a provider or a person that has caused a violation to correct the violation, including making restitution of money or property to a person aggrieved by a violation;

(3) Subject to adjustment of the dollar amount pursuant to subsection 19-14.8-32(f), imposing on a provider or a person that has caused a violation a civil penalty not exceeding ten thousand dollars ($10,000) for each violation;

(4) Prosecuting a civil action to:

(A) Enforce an order; or

(B) Obtain restitution or an injunction or other equitable relief, or both;

(5) Intervening in an action brought under § 19-14.8-35.

(b) Subject to adjustment of the dollar amount pursuant to subsection 19-14.8-32(f), if a person violates or knowingly authorizes, directs, or aids in the violation of a final order issued under subsection (a)(1) or (2), the director may impose a civil penalty not exceeding twenty thousand dollars ($20,000) for each violation.

(c) The director may maintain an action to enforce this chapter in any county.

(d) The director may recover the reasonable costs of enforcing the chapter under subsections (a) – (c), including attorney’s fees based on the hours reasonably expended and the hourly rates for attorneys of comparable experience in the community.

(e) In determining the amount of a civil penalty to impose under subsection (a) or (b), the director shall consider the seriousness of the violation, the good faith of the violator, any previous violations by the violator, the deleterious effect of the violation on the public, the net worth of the violator, and any other factor the director considers relevant to the determination of the civil penalty.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-34

 

§ 19-14.8-34 Suspension, revocation or nonrenewal of registration. – (a) In this section, “insolvent” means:

(1) Having generally ceased to pay debts in the ordinary course of business other than as a result of good-faith dispute;

(2) Being unable to pay debts as they become due; or

(3) Being insolvent within the meaning of the federal bankruptcy law, 11 U.S.C. § 101 et seq., as amended.

(b) The director may suspend, revoke, or deny renewal of a provider’s registration if:

(1) A fact or condition exists that, if it had existed when the registrant applied for registration as a provider, would have been a reason for denying registration;

(2) The provider has committed a material violation of this chapter or a rule or order of the director under this chapter;

(3) The provider is insolvent;

(4) The provider or an employee or affiliate of the provider has refused to permit the director to make an examination authorized by this chapter, failed to comply with subdivision 19-14.8-32(b)(2) within fifteen (15) days after request, or made a material misrepresentation or omission in complying with subdivision 19-14.8-32(b)(2); or

(5) The provider has not responded within a reasonable time and in an appropriate manner to communications from the director.

(c) If a provider does not comply with subsection 19-14.8-22(f) or if the director otherwise finds that the public health or safety or general welfare requires emergency action, the director may order a summary suspension of the provider’s registration, effective on the date specified in the order.

(d) If the director suspends, revokes, or denies renewal of the registration of a provider, the director may seek a court order authorizing seizure of any or all of the money in a trust account required by § 19-14.8-22, books, records, accounts, and other property of the provider which are located in this state.

(e) If the director suspends or revokes a provider’s registration, the provider may appeal and request a hearing pursuant to chapter 42-35.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-35

 

§ 19-14.8-35 Private enforcement. – (a) If an individual voids an agreement pursuant to subsection 19-14.8-25(b), the individual may recover in a civil action all money paid or deposited by or on behalf of the individual pursuant to the agreement, except amounts paid to creditors, in addition to the recovery under subsection (c)(3) and (c)(4) of this section.

(b) If an individual voids an agreement pursuant to subsection 19-14.8-25(a), the individual may recover in a civil action three (3) times the total amount of the fees, charges, money, and payments made by the individual to the provider, in addition to the recovery under subsection (c)(4) of this section.

(c) Subject to subsection (d) of this section, an individual with respect to whom a provider violates this chapter may recover in a civil action from the provider and any person that caused the violation:

(1) Compensatory damages for injury, including noneconomic injury, caused by the violation;

(2) Except as otherwise provided in subsection (d) of this section and subject to adjustment of the dollar amount pursuant to subsection 19-14.8-32(f), with respect to a violation of § 19-14.8-17, 19-14.8-19, 19-14.8-20, 19-14.8-21, 19-14.8-22, 19-14.8-23, 19-14.8-24, 19-14.8-27, or subsection 19-14.8-28(a), (b), or (d), the greater of the amount recoverable under paragraph (1) or five thousand dollars ($5,000);

(3) Punitive damages; and

(4) Reasonable attorney’s fees and costs.

(d) In a class action, except for a violation of subdivision 19-14.8-28(a)(5), the minimum damages provided in subsection (c)(2) of this section do not apply.

(e) In addition to the remedy available under subsection (c) of this section, if a provider violates an individual’s rights under § 19-14.8-20, the individual may recover in a civil action all money paid or deposited by or on behalf of the individual pursuant to the agreement, except for amounts paid to creditors.

(f) A provider is not liable under this section for a violation of this chapter if the provider proves that the violation was not intentional and resulted from a good-faith error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. An error of legal judgment with respect to a provider’s obligations under this chapter is not a good-faith error. If, in connection with a violation, the provider has received more money than authorized by an agreement or this chapter, the defense provided by this subsection is not available unless the provider refunds the excess within two (2) business days of learning of the violation.

(g) The director shall assist an individual in enforcing a judgment against the surety bond or other security provided under § 19-14.8-13 or 19-14.8-14.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-36

 

§ 19-14.8-36 Violation of unfair or deceptive practices statute. – If an act or practice of a provider violates both this chapter and either chapter 13.1 of title 6, an individual may not recover under both for the same act or practice.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-37

 

§ 19-14.8-37 Statute of limitations. – (a) An action or proceeding brought pursuant to subsection 19-14.8-33(a), (b), or (c) must be commenced within four (4) years after the conduct that is the basis of the director’s complaint.

(b) An action brought pursuant to § 19-14.8-35 must be commenced within two (2) years after the latest of:

(1) The individual’s last transmission of money to a provider;

(2) The individual’s last transmission of money to a creditor at the direction of the provider;

(3) The provider’s last disbursement to a creditor of the individual;

(4) The provider’s last accounting to the individual pursuant to subsection 19-14.8-27(a);

(5) The date on which the individual discovered or reasonably should have discovered the facts giving rise to the individual’s claim; or

(6) Termination of actions or proceedings by the director with respect to a violation of the chapter.

(c) The period prescribed in subsection (b)(5) of this section is tolled during any period during which the provider or, if different, the defendant has materially and willfully misrepresented information required by this chapter to be disclosed to the individual, if the information so misrepresented is material to the establishment of the liability of the defendant under this chapter.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-38

 

§ 19-14.8-38 Uniformity of application and construction. – In applying and construing this chapter, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-39

 

§ 19-14.8-39 Relation to Electronic Signatures in Global and National Commerce Act. – This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.) but does not modify, limit, or supersede § 101(c) of that act (15 U.S.C. § 7001(c)) or authorize electronic delivery of any of the notices described in § 103(b) of that act (15 U.S.C. § 7003(b)).

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-40

 

§ 19-14.8-40 Transitional provisions – Application to existing transactions. – Transactions entered into before this chapter takes effect and the rights, duties, and interests resulting from them may be completed, terminated, or enforced as required or permitted by a law amended, repealed, or modified by this chapter as though the amendment, repeal, or modification had not occurred.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-41

 

§ 19-14.8-41 Severability. – If any provision of this chapter or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-42

 

§ 19-14.8-42 [Reserved.]. –

TITLE 19
Financial institutions

CHAPTER 19-14.8
Uniform Debt-Management Services Act

SECTION 19-14.8-43

 

§ 19-14.8-43 Official comments. – It is the intention of the general assembly that the official comments to this chapter represent the express legislative intent of the general assembly and shall be used as a guide for interpretation of this chapter.

 


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