Florida Senate - 2012 SB 336
By Senator Richter
37-00303A-12 2012336__
1 A bill to be entitled
2 An act relating to credit counseling services;
3 amending s. 817.801, F.S.; defining terms; revising
4 definitions; amending s. 817.802, F.S.; conforming a
5 cross-reference; creating s. 817.8035, F.S.; requiring
6 that debt management and credit counseling services be
7 provided pursuant to a debt settlement plan; requiring
8 a credit counseling agency to make certain disclosures
9 to the debtor before a debtor consents to payment;
10 prohibiting a credit counseling agency from making
11 certain misrepresentations to a debtor; providing
12 certain conditions that a credit counseling agency
13 must meet before receiving payment; providing that a
14 debtor may withdraw any account funds placed with a
15 credit counseling agency at any time without penalty;
16 amending s. 817.805, F.S.; authorizing a credit
17 counseling agency to hold funds in order to allow the
18 funds to accumulate; providing an effective date.
19
20 Be It Enacted by the Legislature of the State of Florida:
21
22 Section 1. Section 817.801, Florida Statutes, is amended to
23 read:
24 817.801 Definitions.—As used in this part:
25 (1) “Credit counseling agency” means any organization
26 providing debt management services, debt settlement services, or
27 credit counseling services for compensation.
28 (2) “Credit counseling services” means confidential money
29 management, debt reduction, and financial educational services.
30 (3) “Creditor contribution” means any sum that a creditor
31 agrees to contribute to a credit counseling agency, whether
32 directly or by setoff against amounts otherwise payable to the
33 creditor on behalf of debtors.
34 (4) “Debt management plan” means a written agreement or
35 contract between a credit counseling agency and a debtor whereby
36 the credit counseling agency, in return for a direct or indirect
37 payment by the debtor of fees not exceeding those in s. 817.802,
38 will provide credit counseling services or debt management
39 services that contemplate that creditors will reduce finance
40 charges or fees for late payment, default, or delinquency.
41 (5)(4) “Debt management services” means services provided
42 to a debtor by a credit counseling organization for a fee to:
43 (a) Effect the adjustment, compromise, reduction of
44 interest rate or fees, modification of terms, or negotiation or
45 discharge of any unsecured account, note, or other indebtedness
46 of the debtor; or
47 (b) Receive from the debtor and disburse to a creditor any
48 money or other thing of value with the expectation that the
49 debtor will repay the entire principal amount owed to the
50 creditor.
51 (6) “Debt settlement plan” means a written agreement or
52 contract between a credit counseling agency and a debtor whereby
53 the credit counseling agency, in return for payment by the
54 debtor, will provide debt settlement services that contemplate
55 that creditors will settle debts for less than the principal
56 amount of the debt.
57 (7) “Debt settlement services” means services provided to a
58 debtor with the expectation of obtaining the creditor’s
59 agreement to accept less than the principal amount of debt in
60 full satisfaction of the debt.
61 (8)(5) “Person” means any individual, corporation,
62 partnership, trust, association, or other legal entity.
63 Section 2. Subsection (1) of section 817.802, Florida
64 Statutes, is amended to read:
65 817.802 Unlawful fees and costs.—
66 (1) It is unlawful for any person, while engaging in debt
67 management services or credit counseling services, to charge or
68 accept from a debtor residing in this state, directly or
69 indirectly, a fee or contribution greater than $50 for the
70 initial setup or initial consultation. Subsequently, the person
71 may not charge or accept a fee or contribution from a debtor
72 residing in this state greater than $120 per year for additional
73 consultations or, alternatively, if debt management services as
74 defined in s. 817.801(5)(b) 817.801(4)(b) are provided, the
75 person may charge the greater of 7.5 percent of the amount paid
76 monthly by the debtor to the person or $35 per month.
77 Section 3. Section 817.8035, Florida Statutes, is created
78 to read:
79 817.8035 Debt settlement plans; disclosures to debtor;
80 payments; refunds.—
81 (1) Debt settlement services or credit counseling services
82 provided to a debtor residing in this state may be provided only
83 pursuant to a debt settlement plan that complies with this part.
84 (2) Before a debtor consents to payment for debt settlement
85 services, the credit counseling agency must disclose, in a clear
86 and conspicuous manner, all of the following material
87 information:
88 (a) The amount of time necessary to achieve the represented
89 results and, to the extent that the debt settlement service may
90 include a settlement offer to any of the debtor’s creditors or
91 debt collectors, the anticipated time by which the credit
92 counseling agency will make a bona fide settlement offer to each
93 of them.
94 (b) To the extent that the debt settlement service may
95 include a settlement offer to any of the debtor’s creditors or
96 debt collectors, the amount of money or the percentage of each
97 outstanding debt that the debtor must accumulate before the
98 credit counseling agency will make a bona fide settlement offer
99 to each of them.
100 (c) To the extent that any aspect of the debt settlement
101 service relies upon or results in the debtor’s failure to make
102 timely payments to creditors or debt collectors, that the use of
103 the debt settlement service will likely adversely affect the
104 debtor’s creditworthiness, may result in the debtor being
105 subject to collection actions or sued by creditors or debt
106 collectors, and may increase the amount of money the debtor owes
107 due to the accrual of fees and interest.
108 (d) To the extent that the credit counseling agency
109 requests or requires the debtor to place funds in an account at
110 a state or federal financial institution insured by the Federal
111 Deposit Insurance Corporation or the National Credit Union Share
112 Insurance Fund, that the debtor owns the funds held in the
113 account, the debtor may withdraw such funds from the debt
114 settlement service at any time without penalty, and, if the
115 debtor requests to withdraw such funds, the debtor must receive
116 all funds in the account, other than funds earned by the credit
117 counseling agency, within 7 business days after the debtor’s
118 request.
119 (3) The credit counseling agency shall provide the debtor
120 with a copy of the disclosures required under subsection (2)
121 within 7 days after the debtor consents to pay the credit
122 counseling agency for debt settlement services.
123 (4) A credit counseling agency may not misrepresent,
124 directly or by implication, any material aspect of any debt
125 management service, including, but not limited to, the amount of
126 money or the percentage of the debt amount which a debtor may
127 save by using such service; the amount of time necessary to
128 achieve the represented results; the amount of money or the
129 percentage of each outstanding debt the debtor must accumulate
130 before the credit counseling agency will initiate attempts or
131 make a bona fide offer to negotiate, settle, or modify the terms
132 of the debtor’s debt with the debtor’s creditors or debt
133 collectors; the effect of the service on a debtor’s
134 creditworthiness; the effect of the service on the collection
135 efforts of the debtor’s creditors or debt collectors; the
136 percentage or number of debtors who attain the represented
137 results; and whether a debt settlement service is offered or
138 provided by a nonprofit entity.
139 (5) A credit counseling agency may not receive payment of
140 any fee or consideration for any debt settlement service until:
141 (a) The credit counseling agency has renegotiated, settled,
142 reduced, or otherwise altered the terms of at least one debt
143 pursuant to a debt settlement plan;
144 (b) The debtor has made at least one payment pursuant to
145 that debt settlement plan; and
146 (c) The fee or consideration for settling each individual
147 debt enrolled in a debt settlement plan:
148 1. Bears the same proportional relationship to the total
149 fee for settling the entire debt balance as the individual debt
150 amount bears to the entire debt amount. The individual debt
151 amount and the entire debt amount are those owed at the time the
152 debtor enrolled in the debt management service; or
153 2. Is a percentage of the amount saved as a result of the
154 settlement. The percentage charged may not change from one
155 individual debt to another and may not exceed 30 percent of the
156 amount saved. The amount saved is the difference between the
157 amount owed at the time the debtor enrolled in the debt
158 settlement service and the amount actually paid to satisfy the
159 debt.
160 (6) This section does not prohibit a credit counseling
161 agency from requesting or requiring the debtor to place funds in
162 an account to be used for the credit counseling agency’s fees
163 and for payments to creditors or debt collectors in connection
164 with a renegotiation, settlement, reduction, or other alteration
165 of the terms of payment or other terms of a debt if:
166 (a) The funds are held in an account at a state or federal
167 financial institution insured by the Federal Deposit Insurance
168 Corporation or the National Credit Union Share Insurance Fund;
169 (b) The debtor owns the funds held in the account and is
170 paid accrued interest on the account, if any;
171 (c) The entity administering the account, if the credit
172 counseling agency does not administer the account, is not owned
173 or controlled by, or in any way affiliated with, the credit
174 counseling agency; and
175 (d) The entity administering the account does not give or
176 accept any money or other compensation in exchange for referrals
177 of business by the credit counseling agency.
178 (7) The debtor may withdraw from the debt settlement
179 service at any time without penalty, and must receive all funds
180 held in the account, other than funds earned by the credit
181 counseling agency in compliance with this part, within 7
182 business days after the debtor’s request.
183 Section 4. Section 817.805, Florida Statutes, is amended to
184 read:
185 817.805 Disbursement of funds.—Any person engaged in debt
186 management, debt settlement, or credit counseling services shall
187 disburse to the appropriate creditors all funds received from a
188 debtor, less any fees permitted by s. 817.802 and any creditor
189 contributions, within 30 days after receipt of such funds,
190 unless the reasonable payment of one or more of the debtor’s
191 obligations requires that the funds be held for a longer period
192 in order to accumulate. However, a creditor contribution may not
193 reduce any sums to be credited to the account of a debtor making
194 a payment to the credit counseling agency for further payment to
195 the creditor. Further, any person engaged in such services shall
196 maintain a separate trust account for the receipt of any funds
197 from debtors and the disbursement of such funds on behalf of
198 such debtors.
199 Section 5. This act shall take effect October 1, 2012.