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S.B. 167 Enrolled
8 LONG TITLE
9 General Description:
10 This bill amends the Uniform Debt-Management Services Act.
11 Highlighted Provisions:
12 This bill:
13 . amends the insurance requirements for a debt-management services provider;
14 . amends the advertising requirements for a debt-management services provider; and
15 . makes technical corrections.
16 Monies Appropriated in this Bill:
18 Other Special Clauses:
20 Utah Code Sections Affected:
22 13-42-105, as last amended by Laws of Utah 2008, Chapter 382
23 13-42-111, as last amended by Laws of Utah 2008, Chapter 382
24 13-42-114, as enacted by Laws of Utah 2006, Chapter 154
25 13-42-117, as enacted by Laws of Utah 2006, Chapter 154
26 13-42-118, as enacted by Laws of Utah 2006, Chapter 154
27 13-42-119, as last amended by Laws of Utah 2008, Chapter 3
28 13-42-120, as enacted by Laws of Utah 2006, Chapter 154
29 13-42-122, as enacted by Laws of Utah 2006, Chapter 154
30 13-42-123, as enacted by Laws of Utah 2006, Chapter 154
31 13-42-128, as enacted by Laws of Utah 2006, Chapter 154
32 13-42-130, as enacted by Laws of Utah 2006, Chapter 154
34 Be it enacted by the Legislature of the state of Utah:
35 Section 1. Section 13-42-105 is amended to read:
36 13-42-105. Application for registration -- Form, fee, and accompanying
38 (1) An application for registration as a provider must be in a form prescribed by the
40 (2) Subject to adjustment of dollar amounts pursuant to Subsection 13-42-132 (6), an
41 application for registration as a provider must be accompanied by:
42 (a) the fee established by the administrator in accordance with Section 63J-1-303 ;
43 (b) the bond required by Section 13-42-113 ;
44 (c) identification of all trust accounts required by Section 13-42-122 and an
45 irrevocable consent authorizing the administrator to review and examine the trust accounts;
46 (d) evidence of insurance in the amount of $250,000:
47 (i) against the risks of dishonesty, fraud, theft, and other misconduct on the part of the
48 applicant or a director, employee, or agent of the applicant;
49 (ii) issued by an insurance company authorized to do business in this state and rated at
50 least A or equivalent by a nationally recognized rating organization approved by the
52 (iii) with [
53 (iv) payable [
55 appear; and
56 (v) not subject to cancellation by the applicant [
57 until 60 days after written notice has been given to the administrator;
58 (e) a record consenting to the jurisdiction of this state containing:
59 (i) the name, business address, and other contact information of its registered agent in
60 this state for purposes of service of process; or
61 (ii) the appointment of the administrator as agent of the provider for purposes of
62 service of process; and
63 (f) if the applicant is organized as a not-for-profit entity or is exempt from taxation,
64 evidence of not-for-profit and tax-exempt status applicable to the applicant under the Internal
65 Revenue Code, 26 U.S.C. Section 501.
66 (3) (a) The administrator may waive or reduce the insurance requirement in
67 Subsection 13-42-105 (2)(d) if the provider does not:
68 (i) maintain control of a trust account or receive money paid by an individual pursuant
69 to a plan for distribution to creditors;
70 (ii) make payments to creditors on behalf of individuals;
71 (iii) collect fees by means of automatic payment from individuals; and
72 (iv) execute any powers of attorney that may be utilized by the provider to collect fees
73 from or expend funds on behalf of an individual.
74 (b) A waiver or reduction in insurance requirements allowed by the administrator
75 under Subsection (3)(a) shall balance the reduction in risk posed by a provider meeting the
76 stated requirements against any continued need for insurance against employee and director
78 Section 2. Section 13-42-111 is amended to read:
79 13-42-111. Renewal of registration.
80 (1) A provider must obtain a renewal of its registration annually.
81 (2) An application for renewal of registration as a provider must be in a form
82 prescribed by the administrator, signed under penalty of perjury, and:
83 (a) be filed no fewer than 30 and no more than 60 days before the registration expires;
84 (b) be accompanied by the fee established by the administrator in accordance with
85 Section 63J-1-303 and the bond required by Section 13-42-113 ;
86 (c) contain the matter required for initial registration as a provider by Subsections
87 13-42-106 (8) and (9) and a financial statement, audited by an accountant licensed to conduct
88 audits, for the applicant's fiscal year immediately preceding the application;
89 (d) disclose any changes in the information contained in the applicant's application for
90 registration or its immediately previous application for renewal, as applicable;
91 (e) supply evidence of insurance in an amount equal to the larger of $250,000 or the
92 highest daily balance in the trust account required by Section 13-42-122 during the six-month
93 period immediately preceding the application:
94 (i) against risks of dishonesty, fraud, theft, and other misconduct on the part of the
95 applicant or a director, employee, or agent of the applicant;
96 (ii) issued by an insurance company authorized to do business in this state and rated at
97 least A or equivalent by a nationally recognized rating organization approved by the
99 (iii) with [
100 (iv) payable [
102 appear; and
103 (v) not subject to cancellation by the applicant [
104 until 60 days after written notice has been given to the administrator;
105 (f) disclose the total amount of money received by the applicant pursuant to plans
106 during the preceding 12 months from or on behalf of individuals who reside in this state and
107 the total amount of money distributed to creditors of those individuals during that period;
108 (g) disclose, to the best of the applicant's knowledge, the gross amount of money
109 accumulated during the preceding 12 months pursuant to plans by or on behalf of individuals
110 who reside in this state and with whom the applicant has agreements; and
111 (h) provide any other information that the administrator reasonably requires to perform
112 the administrator's duties under this section.
113 (3) Except for the information required by Subsections 13-42-106 (7), (14), and (17)
114 and the addresses required by Subsection 13-42-106 (4), the administrator shall make the
115 information in an application for renewal of registration as a provider available to the public.
116 (4) If a registered provider files a timely and complete application for renewal of
117 registration, the registration remains effective until the administrator, in a record, notifies the
118 applicant of a denial and states the reasons for the denial.
119 (5) If the administrator denies an application for renewal of registration as a provider,
120 the applicant, within 30 days after receiving notice of the denial, may appeal and request a
121 hearing pursuant to Title 63G, Chapter 4, Administrative Procedures Act. Subject to Section
122 13-42-134 , while the appeal is pending the applicant shall continue to provide
123 debt-management services to individuals with whom it has agreements. If the denial is
124 affirmed, subject to the administrator's order and Section 13-42-134 , the applicant shall
125 continue to provide debt-management services to individuals with whom it has agreements
126 until, with the approval of the administrator, it transfers the agreements to another registered
127 provider or returns to the individuals all unexpended money that is under the applicant's
129 (6) (a) The administrator may waive or reduce the insurance requirement in
130 Subsection 13-42-111 (1)(e) if the provider does not:
131 (i) maintain control of a trust account or receive money paid by an individual pursuant
132 to a plan for distribution to creditors;
133 (ii) make payments to creditors on behalf of individuals;
134 (iii) collect fees by means of automatic payment from individuals; and
135 (iv) execute any powers of attorney that may be utilized by the provider to collect fees
136 from or expend funds on behalf of an individual.
137 (b) A waiver or reduction in insurance requirements allowed by the administrator
138 under Subsection (6)(a) shall balance the reduction in risk posed by a provider meeting the
139 stated requirements against any continued need for insurance against employee and director
141 Section 3. Section 13-42-114 is amended to read:
142 13-42-114. Bond required -- Substitute.
143 (1) Instead of the surety bond required by Section 13-42-113 , a provider may deliver
144 to the administrator, in the amount required by Subsection 13-42-113 (2), and, except as
145 otherwise provided in Subsection (1)(c)(i), payable or available to this state and to individuals
146 who reside in this state when they agree to receive debt-management services from the
147 provider, as their interests may appear, if the provider or its agent does not comply with this
149 (a) a certificate of insurance:
150 (i) issued by an insurance company authorized to do business in this state and rated at
151 least A or equivalent by a nationally recognized rating organization[
152 administrator; and
153 (ii) with no deductible, or if the provider supplies a bond in the amount of $5,000, a
154 deductible not exceeding $5,000;
155 (b) a certificate of deposit issued or confirmed by a bank approved by the
156 administrator, payable upon presentation of a certificate by the administrator stating that the
157 provider or its agent has not complied with this chapter; or
158 (c) with the approval of the administrator:
159 (i) an irrevocable letter of credit, issued or confirmed by a bank approved by the
160 administrator, payable upon presentation of a certificate by the administrator stating that the
161 provider or its agent has not complied with this chapter; or
162 (ii) bonds or other obligations of the United States or guaranteed by the United States
163 or bonds or other obligations of this state or a political subdivision of this state, to be
164 deposited and maintained with a bank approved by the administrator for this purpose.
165 (2) If a provider furnishes a substitute pursuant to Subsection (1), the provisions of
166 Subsections 13-42-113 (1), (3), (4), and (5) apply to the substitute.
167 Section 4. Section 13-42-117 is amended to read:
168 13-42-117. Prerequisites for providing debt-management services.
169 (1) Before providing debt-management services, a registered provider shall give the
170 individual an itemized list of goods and services and the charges for each. The list must be
171 clear and conspicuous, be in a record the individual may keep whether or not the individual
172 assents to an agreement, and describe the goods and services the provider offers:
173 (a) free of additional charge if the individual enters into an agreement;
174 (b) for a charge if the individual does not enter into an agreement; and
175 (c) for a charge if the individual enters into an agreement, using the following
176 terminology, as applicable, and format:
177 Set-up fee _________________________________________________
178 dollar amount of fee
179 Monthly service fee __________________________________________
180 dollar amount of fee or method of determining amount
181 Settlement fee ______________________________________________
182 dollar amount of fee or method of determining amount
183 Goods and services in addition to those provided in connection with a plan:
184 _____________ ____________________________________________
185 (item) dollar amount or method of determining amount
186 _____________ ____________________________________________
187 (item) dollar amount or method of determining amount.
188 (2) A provider may not furnish debt-management services unless the provider, through
189 the services of a certified counselor:
190 (a) provides the individual with reasonable education about the management of
191 personal finance;
192 (b) has prepared a financial analysis; and
193 (c) if the individual is to make regular, periodic payments to a creditor or a provider:
194 (i) has prepared a plan for the individual;
195 (ii) has made a determination, based on the provider's analysis of the information
196 provided by the individual and otherwise available to it, that the plan is suitable for the
197 individual and the individual will be able to meet the payment obligations under the plan; and
198 (iii) believes that each creditor of the individual listed as a participating creditor in the
199 plan will accept payment of the individual's debts as provided in the plan.
200 (3) Before an individual assents to an agreement to engage in a plan, a provider shall:
201 (a) provide the individual with a copy of the analysis and plan required by Subsection
202 (2) in a record that identifies the provider and that the individual may keep whether or not the
203 individual assents to the agreement;
204 (b) inform the individual of the availability, at the individual's option, of assistance by
205 a toll-free communication system or in person to discuss the financial analysis and plan
206 required by Subsection (2); and
207 (c) with respect to all creditors identified by the individual or otherwise known by the
208 provider to be creditors of the individual, provide the individual with a list of:
209 (i) creditors that the provider expects to participate in the plan and grant concessions;
210 (ii) creditors that the provider expects to participate in the plan but not grant
212 (iii) creditors that the provider expects not to participate in the plan; and
213 (iv) all other creditors.
214 (4) Before an individual assents to an agreement [
215 shall inform the individual, in a record that contains nothing else, that is given separately, and
216 that the individual may keep whether or not the individual assents to the agreement:
217 (a) of the name and business address of the provider;
218 (b) that plans are not suitable for all individuals and the individual may ask the
219 provider about other ways, including bankruptcy, to deal with indebtedness;
220 (c) that establishment of a plan may adversely affect the individual's credit rating or
221 credit scores;
222 (d) that nonpayment of debt may lead creditors to increase finance and other charges
223 or undertake collection activity, including litigation;
224 (e) unless it is not true, that the provider may receive compensation from the creditors
225 of the individual; and
226 (f) that, unless the individual is insolvent, if a creditor settles for less than the full
227 amount of the debt, the plan may result in the creation of taxable income to the individual,
228 even though the individual does not receive any money.
229 (5) If a provider may receive payments from an individual's creditors and the plan
230 contemplates that the individual's creditors will reduce finance charges or fees for late
231 payment, default, or delinquency, the provider may comply with Subsection (4) by providing
232 the following disclosure, surrounded by black lines:
234 (1) Debt-management plans are not right for all individuals, and you may ask us to
235 provide information about other ways, including bankruptcy, to deal with your debts.
236 (2) Using a debt-management plan may [
237 it harder for you to obtain credit.
238 (3) We may receive compensation for our services from your creditors.
241 (6) If a provider will not receive payments from an individual's creditors and the plan
242 contemplates that the individual's creditors will reduce finance charges or fees for late
243 payment, default, or delinquency, a provider may comply with Subsection (4) by providing the
244 following disclosure, surrounded by black lines:
246 (1) Debt-management plans are not right for all individuals, and you may ask us to
247 provide information about other ways, including bankruptcy, to deal with your debts.
248 (2) Using a debt-management plan may [
249 it harder for you to obtain credit.
252 (7) If [
253 the full principal amount of debt owed, a provider may comply with Subsection (4) by
254 providing the following disclosure, surrounded by black lines:
256 (1) Our program is not right for all individuals, and you may ask us to provide
257 information about bankruptcy and other ways to deal with your debts.
258 (2) Nonpayment of your debts under our program may
259 hurt your credit rating or credit scores;
260 lead your creditors to increase finance and other charges; and
261 lead your creditors to undertake activity, including lawsuits, to collect the debts.
262 (3) Reduction of debt under our program may result in taxable income to you, even
263 though you will not actually receive any money.
266 Section 5. Section 13-42-118 is amended to read:
267 13-42-118. Communication by electronic or other means.
268 (1) In this section:
269 (a) "Consumer" means an individual who seeks or obtains goods or services that are
270 used primarily for personal, family, or household purposes.
271 (b) "Federal act" means the Electronic Signatures in Global and National Commerce
272 Act, 15 U.S.C. Section 7001 et seq.
273 (2) A provider may satisfy the requirements of Section 13-42-117 , 13-42-119 , or
274 13-42-127 by means of the Internet or other electronic means if the provider obtains a
275 consumer's consent in the manner provided by Section 101(c)(1) of the federal act.
276 (3) The disclosures and materials required by Sections 13-42-117 , 13-42-119 , and
277 13-42-127 shall be presented in a form that is capable of being accurately reproduced for later
279 (4) With respect to disclosure by means of an Internet website, the disclosure of the
280 information required by Subsection 13-42-117 (4) must appear on one or more screens that:
281 (a) contain no other information; and
282 (b) the individual must see before proceeding to assent to formation of [
284 (5) At the time of providing the materials and agreement required by Subsections
285 13-42-117 (3) and (4), Section 13-42-119 , and Section 13-42-127 , a provider shall inform the
286 individual that upon electronic, telephonic, or written request, it will send the individual a
287 written copy of the materials, and shall comply with a request as provided in Subsection (6).
288 (6) If a provider is requested, before the expiration of 90 days after [
289 agreement is completed or terminated, to send a written copy of the materials required by
290 Subsections 13-42-117 (3) and (4), Section 13-42-119 , or Section 13-42-127 , the provider
291 shall send them at no charge within three business days after the request, but the provider need
292 not comply with a request more than once per calendar month or if it reasonably believes the
293 request is made for purposes of harassment. If a request is made more than 90 days after [
295 time a written copy of the materials requested.
296 (7) A provider that maintains an Internet website shall disclose on the home page of its
297 website or on a page that is clearly and conspicuously connected to the home page by a link
298 that clearly reveals its contents:
299 (a) its name and all names under which it does business;
300 (b) its principal business address, telephone number, and electronic-mail address, if
301 any; and
302 (c) the names of its principal officers.
303 (8) Subject to Subsection (9), if a consumer who has consented to electronic
304 communication in the manner provided by Section 101 of the federal act withdraws consent as
305 provided in the federal act, a provider may terminate its agreement with the consumer.
306 (9) If a provider wishes to terminate an agreement with a consumer pursuant to
307 Subsection (8), it shall notify the consumer that it will terminate the agreement unless the
308 consumer, within 30 days after receiving the notification, consents to electronic
309 communication in the manner provided in Section 101(c) of the federal act. If the consumer
310 consents, the provider may terminate the agreement only as permitted by Subsection
311 13-42-119 (1)(f)(vii).
312 Section 6. Section 13-42-119 is amended to read:
313 13-42-119. Form and contents of agreement.
314 (1) An agreement must:
315 (a) be in a record;
316 (b) be dated and signed by the provider and the individual;
317 (c) include the name of the individual and the address where the individual resides;
318 (d) include the name, business address, and telephone number of the provider;
319 (e) be delivered to the individual immediately upon formation of the agreement; and
320 (f) disclose:
321 (i) the services to be provided;
322 (ii) the amount, or method of determining the amount, of all fees, individually
323 itemized, to be paid by the individual;
324 (iii) the schedule of payments to be made by or on behalf of the individual, including
325 the amount of each payment, the date on which each payment is due, and an estimate of the
326 date of the final payment;
327 (iv) if a plan provides for regular periodic payments to creditors:
328 (A) each creditor of the individual to which payment will be made, the amount owed
329 to each creditor, and any concessions the provider reasonably believes each creditor will offer;
331 (B) the schedule of expected payments to each creditor, including the amount of each
332 payment and the date on which it will be made;
333 (v) each creditor that the provider believes will not participate in the plan and to which
334 the provider will not direct payment;
335 (vi) how the provider will comply with its obligations under Subsection 13-42-127 (1);
336 (vii) that the provider may terminate the agreement for good cause, upon return of
337 unexpended money of the individual;
338 (viii) that the individual may cancel the agreement as provided in Section 13-42-120 ;
339 (ix) that the individual may contact the administrator with any questions or complaints
340 regarding the provider; and
341 (x) the address, telephone number, and Internet address or website of the
343 (2) For purposes of Subsection (1)(e), delivery of an electronic record occurs when it
344 is made available in a format in which the individual may retrieve, save, and print it and the
345 individual is notified that it is available.
346 (3) If the administrator supplies the provider with any information required under
347 Subsection (1)(f)(x), the provider may comply with that requirement only by disclosing the
348 information supplied by the administrator.
349 (4) An agreement must provide that:
350 (a) the individual has a right to terminate the agreement at any time, without penalty
351 or obligation, by giving the provider written or electronic notice, in which event:
352 (i) the provider will refund all unexpended money that the provider or its agent has
353 received from or on behalf of the individual for the reduction or satisfaction of the individual's
355 (ii) with respect to an agreement that contemplates that creditors will settle debts for
356 less than the principal amount of debt, the provider will refund 65% of any portion of the
357 set-up fee that has not been credited against the settlement fee; and
358 (iii) all powers of attorney granted by the individual to the provider are revoked and
360 (b) the individual authorizes any bank in which the provider or its agent has
361 established a trust account to disclose to the administrator any financial records relating to the
362 trust account; and
363 (c) the provider will notify the individual within five days after learning of a creditor's
364 final decision to reject or withdraw from a plan and that this notice will include:
365 (i) the identity of the creditor; and
366 (ii) the right of the individual to modify or terminate the agreement.
367 (5) An agreement may confer on a provider a power of attorney to settle the
368 individual's debt for no more than 50% of the principal amount of the debt. An agreement
369 may not confer a power of attorney to settle a debt for more than 50% of that amount, but may
370 confer a power of attorney to negotiate with creditors of the individual on behalf of the
371 individual. An agreement must provide that the provider will obtain the assent of the
372 individual after a creditor has assented to a settlement for more than 50% of the principal
373 amount of the debt.
374 (6) An agreement may not:
375 (a) provide for application of the law of any jurisdiction other than the United States
376 and this state;
377 (b) except as permitted by Section 2 of the Federal Arbitration Act, 9 U.S.C. Section
378 2, or Title 78B, Chapter 11, Utah Uniform Arbitration Act, contain a provision that modifies
379 or limits otherwise available forums or procedural rights, including the right to trial by jury,
380 that are generally available to the individual under law other than this chapter;
381 (c) contain a provision that restricts the individual's remedies under this chapter or law
382 other than this chapter; or
383 (d) contain a provision that:
384 (i) limits or releases the liability of any person for not performing the agreement or for
385 violating this chapter; or
386 (ii) indemnifies any person for liability arising under the agreement or this chapter.
387 (7) All rights and obligations specified in Subsection (4) and Section 13-42-120 exist
388 even if not provided in the agreement. A provision in an agreement which violates Subsection
389 (4), (5), or (6) is void.
390 Section 7. Section 13-42-120 is amended to read:
391 13-42-120. Cancellation of agreement -- Waiver.
392 (1) An individual may cancel an agreement before midnight of the third business day
393 after the individual assents to it, unless the agreement does not comply with Subsection (2) or
394 Section 13-42-119 or Section 13-42-128 , in which event the individual may cancel the
395 agreement within 30 days after the individual assents to it. To exercise the right to cancel, the
396 individual must give notice in a record to the provider. Notice by mail is given when mailed.
397 (2) An agreement must be accompanied by a form that contains in bold-face type,
398 surrounded by bold black lines:
400 You may cancel this agreement, without any penalty or obligation, at any time before
401 midnight of the third business day that begins the day after you agree to it by electronic
402 communication or by signing it.
403 To cancel this agreement during this period, send an e-mail to
404 ____________________________ or mail or deliver a signed, dated copy of this
405 E-mail address of provider
406 notice, or any other written notice to ___________________________________
407 Name of provider
408 at _______________________________ before midnight on ___________________.
409 Address of provider Date
410 If you cancel this agreement within the 3-day period, we will refund all money you
411 already have paid us.
412 You also may terminate this agreement at any later time, but we [
413 required to refund fees you have paid us.
414 I cancel this agreement,
416 Print your name
421 (3) If a personal financial emergency necessitates the disbursement of an individual's
422 money to one or more of the individual's creditors before the expiration of three days after an
423 agreement is signed, an individual may waive the right to cancel. To waive the right, the
424 individual must send or deliver a signed, dated statement in the individual's own words
425 describing the circumstances that necessitate a waiver. The waiver must explicitly waive the
426 right to cancel. A waiver by means of a standard form record is void.
427 Section 8. Section 13-42-122 is amended to read:
428 13-42-122. Trust account.
429 (1) All money paid to a provider by or on behalf of an individual [
430 for distribution to creditors pursuant to a plan is held in trust. Within two business days after
431 receipt, the provider shall deposit the money in a trust account established for the benefit of
432 individuals to whom the provider is furnishing debt-management services.
433 (2) Money held in trust by a provider is not property of the provider or its designee.
434 The money is not available to creditors of the provider or designee, except an individual from
435 whom or on whose behalf the provider received money, to the extent that the money has not
436 been disbursed to creditors of the individual.
437 (3) A provider shall:
438 (a) maintain separate records of account for each individual to whom the provider is
439 furnishing debt-management services;
440 (b) disburse money paid by or on behalf of the individual to creditors of the individual
441 as disclosed in the agreement, except that:
442 (i) the provider may delay payment to the extent that a payment by the individual is
443 not final; and
444 (ii) if a plan provides for regular periodic payments to creditors, the disbursement
445 must comply with the due dates established by each creditor; and
446 (c) promptly correct any payments that are not made or that are misdirected as a result
447 of an error by the provider or other person in control of the trust account and reimburse the
448 individual for any costs or fees imposed by a creditor as a result of the failure to pay or
450 (4) A provider may not commingle money in a trust account established for the benefit
451 of individuals to whom the provider is furnishing debt-management services with money of
452 other persons.
453 (5) A trust account must at all times have a cash balance equal to the sum of the
454 balances of each individual's account.
455 (6) If a provider has established a trust account pursuant to Subsection (1), the
456 provider shall reconcile the trust account at least once a month. The reconciliation must
457 compare the cash balance in the trust account with the sum of the balances in each individual's
458 account. If the provider or its designee has more than one trust account, each trust account
459 must be individually reconciled.
460 (7) If a provider discovers, or has a reasonable suspicion of, embezzlement or other
461 unlawful appropriation of money held in trust, the provider immediately shall notify the
462 administrator by a method approved by the administrator. Unless the administrator by rule
463 provides otherwise, within five days thereafter, the provider shall give notice to the
464 administrator describing the remedial action taken or to be taken.
465 (8) If an individual terminates an agreement or it becomes reasonably apparent to a
466 provider that a plan has failed, the provider shall promptly refund to the individual all money
467 paid by or on behalf of the individual which has not been paid to creditors, less fees that are
468 payable to the provider under Section 13-42-123 .
469 (9) Before relocating a trust account from one bank to another, a provider shall inform
470 the administrator of the name, business address, and telephone number of the new bank. As
471 soon as practicable, the provider shall inform the administrator of the account number of the
472 trust account at the new bank.
473 Section 9. Section 13-42-123 is amended to read:
474 13-42-123. Fees and other charges.
475 (1) A provider may not impose directly or indirectly a fee or other charge on an
476 individual or receive money from or on behalf of an individual for debt-management services
477 except as permitted by this section.
478 (2) A provider may not impose charges or receive payment for debt-management
479 services until the provider and the individual have signed an agreement that complies with
480 Sections 13-42-119 and 13-42-128 .
481 (3) If an individual assents to an agreement, a provider may not impose a fee or other
482 charge for educational or counseling services, or the like, except as otherwise provided in this
483 Subsection (3) and Subsection 13-42-128 (4). The administrator may authorize a provider to
484 charge a fee based on the nature and extent of the educational or counseling services furnished
485 by the provider.
486 (4) Subject to adjustment of dollar amounts pursuant to Subsection 13-42-132 (6), the
487 following rules apply:
488 (a) If an individual assents to a plan that contemplates that creditors will reduce
489 finance charges or fees for late payment, default, or delinquency, the provider may charge:
490 (i) a fee not exceeding $50 for consultation, obtaining a credit report, setting up an
491 account, and the like; and
492 (ii) a monthly service fee, not to exceed $10 times the number of [
493 remaining in a plan at the time the fee is assessed, but not more than $50 in any month.
494 (b) If an individual assents to [
495 will settle debts for less than the principal amount of the debt, a provider may charge:
496 (i) subject to Subsection 13-42-119 (4), a fee for consultation, obtaining a credit report,
497 setting up an account, and the like, in an amount not exceeding the lesser of $400 and 4% of
498 the debt in the plan at the inception of the plan; and
499 (ii) a monthly service fee, not to exceed $10 times the number of [
500 remaining in a plan at the time the fee is assessed, but not more than $50 in any month.
501 (c) A provider may not impose or receive fees under both Subsections (4)(a) and (b).
502 (d) Except as otherwise provided in Subsection 13-42-128 (4), if an individual does
503 not assent to an agreement, a provider may receive for educational and counseling services it
504 provides to the individual a fee not exceeding $100 or, with the approval of the administrator,
505 a larger fee. The administrator may approve a fee larger than $100 if the nature and extent of
506 the educational and counseling services warrant the larger fee.
507 (5) If, before the expiration of 90 days after the completion or termination of
508 educational or counseling services, an individual assents to an agreement, the provider shall
509 refund to the individual any fee paid pursuant to Subsection (4)(d).
510 (6) (a) Except as otherwise provided in Subsections (3) and (4), if [
511 agreement contemplates that creditors will settle an individual's debts for less than the
512 principal amount of the debt, compensation for services in connection with settling a debt may
513 not exceed[
516 in Subsection (6)(b) or (c), the terms of which shall be clearly disclosed in the agreement.
519 (b) (i) With respect to agreements where a flat settlement fee is charged based on the
520 overall amount of included debt, total aggregate fees charged may not exceed 17% of the
521 principal amount of debt included in the agreement, including any fees charged under
522 Subsections (4)(b)(i) and (ii).
523 (ii) The flat settlement fee authorized under this Subsection (6)(b) shall be assessed in
524 equal monthly payments over no less than half of the length of the plan, as estimated at the
525 plan's inception, unless:
526 (A) payment is voluntarily accelerated by the individual in a separate record; and
527 (B) at least half of the principal amount of overall debt included in the agreement at its
528 inception has been settled.
529 (c) (i) With respect to agreements where fees are calculated as a percentage of the
530 amount saved by an individual, a settlement fee may not exceed 30% of the excess of the
531 outstanding amount of each debt over the amount actually paid to the creditor, as calculated at
532 the time of settlement.
533 (ii) Settlement fees authorized under this Subsection (6)(c):
534 (A) may be collected only as debts are settled; and
535 (B) the total aggregate amount of fees charged to any individual under this chapter,
536 including fees charged under Subsections (4)(b)(i) and (ii), may not exceed 20% of the
537 principal amount of debt included in the agreement at the agreement's inception.
538 (d) A provider may not impose or receive fees under both Subsections (6)(b) and (c).
539 (7) Subject to adjustment of the dollar amount pursuant to Subsection 13-42-132 (6), if
540 a payment to a provider by an individual under this chapter is dishonored, a provider may
541 impose a reasonable charge on the individual, not to exceed the lesser of $25 and the amount
542 permitted by law other than this chapter.
543 Section 10. Section 13-42-128 is amended to read:
544 13-42-128. Prohibited acts and practices.
545 (1) A provider may not, directly or indirectly:
546 (a) misappropriate or misapply money held in trust;
547 (b) settle a debt on behalf of an individual for more than 50% of the principal amount
548 of the debt owed a creditor, unless the individual assents to the settlement after the creditor has
550 (c) take a power of attorney that authorizes it to settle a debt, unless the power of
551 attorney expressly limits the provider's authority to settle debts for not more than 50% of the
552 principal amount of the debt owed a creditor;
553 (d) exercise or attempt to exercise a power of attorney after an individual has
554 terminated an agreement;
555 (e) initiate a transfer from an individual's account at a bank or with another person
556 unless the transfer is:
557 (i) a return of money to the individual; or
558 (ii) before termination of an agreement, properly authorized by the agreement and this
559 chapter, and for:
560 (A) payment to one or more creditors pursuant to [
561 (B) payment of a fee;
562 (f) offer a gift or bonus, premium, reward, or other compensation to an individual for
563 executing an agreement;
564 (g) offer, pay, or give a gift or bonus, premium, reward, or other compensation to a
565 person for referring a prospective customer, if the person making the referral has a financial
566 interest in the outcome of debt-management services provided to the customer, unless neither
567 the provider nor the person making the referral communicates to the prospective customer the
568 identity of the source of the referral;
569 (h) receive a bonus, commission, or other benefit for referring an individual to a
571 (i) structure a plan in a manner that would result in a negative amortization of any of
572 an individual's debts, unless a creditor that is owed a negatively amortizing debt agrees to
573 refund or waive the finance charge upon payment of the principal amount of the debt;
574 (j) compensate its employees on the basis of a formula that incorporates the number of
575 individuals the employee induces to enter into agreements;
576 (k) settle a debt or lead an individual to believe that a payment to a creditor is in
577 settlement of a debt to the creditor unless, at the time of settlement, the individual:
578 (i) receives a certification by the creditor that the payment is in full settlement of the
579 debt; or
580 (ii) is part of a payment plan, the terms of which are included in the certification,
581 which upon completion will result in full settlement of the debt;
582 (l) make a representation that:
583 (i) the provider will furnish money to pay bills or prevent attachments;
584 (ii) payment of a certain amount will permit satisfaction of a certain amount or range
585 of indebtedness; or
586 (iii) participation in a plan will or may prevent litigation, garnishment, attachment,
587 repossession, foreclosure, eviction, or loss of employment;
588 (m) misrepresent that it is authorized or competent to furnish legal advice or perform
589 legal services;
590 (n) represent in its agreements, disclosures required by this chapter, advertisements, or
591 Internet website that it is:
592 (i) a not-for-profit entity unless it is organized and properly operating as a
593 not-for-profit entity under the law of the state in which it was formed [
594 (ii) a tax-exempt entity unless it has received certification of tax-exempt status from
595 the Internal Revenue Service and is properly operating as a not-for-profit entity under the law
596 of the state in which it was formed;
597 (o) take a confession of judgment or power of attorney to confess judgment against an
599 (p) employ an unfair, unconscionable, or deceptive act or practice, including the
600 knowing omission of any material information; or
601 (q) make or use any untrue or misleading statement:
602 (i) to the administrator; or
603 (ii) in the provision of services subject to this chapter.
604 (2) If a provider furnishes debt-management services to an individual, the provider
605 may not, directly or indirectly:
606 (a) purchase a debt or obligation of the individual;
607 (b) receive from or on behalf of the individual:
608 (i) a promissory note or other negotiable instrument other than a check or a demand
609 draft; or
610 (ii) a post-dated check or demand draft;
611 (c) lend money or provide credit to the individual, except as a deferral of a settlement
612 fee at no additional expense to the individual;
613 (d) obtain a mortgage or other security interest from any person in connection with the
614 services provided to the individual;
615 (e) except as permitted by federal law, disclose the identity or identifying information
616 of the individual or the identity of the individual's creditors, except to:
617 (i) the administrator, upon proper demand;
618 (ii) a creditor of the individual, to the extent necessary to secure the cooperation of the
619 creditor in a plan; or
620 (iii) the extent necessary to administer the plan;
621 (f) except as otherwise provided in Subsection 13-42-123 (6), provide the individual
622 less than the full benefit of a compromise of a debt arranged by the provider;
623 (g) charge the individual for or provide credit or other insurance, coupons for goods or
624 services, membership in a club, access to computers or the Internet, or any other matter not
625 directly related to debt-management services or educational services concerning personal
626 finance, except to the extent such services are expressly authorized by the administrator; or
627 (h) furnish legal advice or perform legal services, unless the person furnishing that
628 advice to or performing those services for the individual is licensed to practice law.
629 (3) This chapter does not authorize any person to engage in the practice of law.
630 (4) A provider may not receive a gift or bonus, premium, reward, or other
631 compensation, directly or indirectly, for advising, arranging, or assisting an individual in
632 connection with obtaining, an extension of credit or other service from a lender or service
633 provider, except for educational or counseling services required in connection with a
634 government-sponsored program.
635 (5) Unless a person supplies goods, services, or facilities generally and supplies them
636 to the provider at a cost no greater than the cost the person generally charges to others, a
637 provider may not purchase goods, services, or facilities from the person if an employee or a
638 person that the provider should reasonably know is an affiliate of the provider:
639 (a) owns more than 10% of the person; or
640 (b) is an employee or affiliate of the person.
641 Section 11. Section 13-42-130 is amended to read:
642 13-42-130. Advertising.
644 finance charges or fees for late payment, default, or delinquency advertises debt-management
645 services, it shall disclose, in an easily comprehensible manner, that using a debt-management
646 plan may make it harder for the individual to obtain credit.
647 (2) If a provider whose agreements contemplate that creditors will settle for less than
648 the full principal amount of debt that advertises debt-management services, it shall disclose, in
649 an easily comprehensible manner[
650 (a) the information specified in Subsections 13-42-117 (4)(c) and (d)[
651 (b) the provider's settlement fee structure, consistent with the limitations of Section
652 13-42-123 .
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