HB 1433

A bill to be entitled
2An act relating to credit counseling services; amending s.
3817.801, F.S.; defining the terms "debt management plan"
4and "debt settlement plan"; amending s. 817.802, F.S.;
5conforming a cross-reference; creating s. 817.8035, F.S.;
6requiring that debt management and credit counseling
7services be provided pursuant to a debt management or debt
8settlement plan; requiring the credit counseling agency to
9make certain disclosures to the debtor before the debtor
10consents to payment; prohibiting the agency from making
11certain misrepresentations to the debtor; providing
12certain conditions that the agency must meet before
13receiving payment; providing that the debtor may withdraw
14any account funds placed with the agency at any time
15without penalty; amending s. 817.805, F.S.; authorizing
16the agency to hold funds in order to allow the funds to
17accumulate; providing an effective date.
19Be It Enacted by the Legislature of the State of Florida:
21     Section 1.  Section 817.801, Florida Statutes, is amended
22to read:
23     817.801  Definitions.-As used in this part:
24     (1)  "Credit counseling agency" means any organization
25providing debt management services or credit counseling
27     (2)  "Credit counseling services" means confidential money
28management, debt reduction, and financial educational services.
29     (3)  "Creditor contribution" means any sum that a creditor
30agrees to contribute to a credit counseling agency, whether
31directly or by setoff against amounts otherwise payable to the
32creditor on behalf of debtors.
33     (4)  "Debt management plan" or "DMP" means a written
34agreement or contract between a credit counseling agency and a
35debtor whereby the credit counseling agency, in return for a
36direct or indirect payment by the debtor of fees not exceeding
37those set forth in s. 817.802, will provide credit counseling
38services or debt management services that contemplate that
39creditors will reduce finance charges or fees for late payment,
40default, or delinquency.
41     (5)(4)  "Debt management services" means services provided
42to a debtor by a credit counseling organization for a fee to:
43     (a)  Effect the adjustment, compromise, or discharge of any
44unsecured account, note, or other indebtedness of the debtor; or
45     (b)  Receive from the debtor and disburse to a creditor any
46money or other thing of value.
47     (6)  "Debt settlement plan" or "DSP" means a written
48agreement or contract between a credit counseling agency and a
49debtor whereby the credit counseling agency, in return for
50payment by the debtor, will provide debt management services
51that contemplate that creditors will settle debts for less than
52the principal amount of the debt.
53     (7)(5)  "Person" means any individual, corporation,
54partnership, trust, association, or other legal entity.
55     Section 2.  Subsection (1) of section 817.802, Florida
56Statutes, is amended to read:
57     817.802  Unlawful fees and costs.-
58     (1)  It is unlawful for any person, while engaging in debt
59management services or credit counseling services, to charge or
60accept from a debtor residing in this state, directly or
61indirectly, a fee or contribution greater than $50 for the
62initial setup or initial consultation. Subsequently, the person
63may not charge or accept a fee or contribution from a debtor
64residing in this state greater than $120 per year for additional
65consultations or, alternatively, if debt management services as
66defined in s. 817.801(5)(b) 817.801(4)(b) are provided, the
67person may charge the greater of 7.5 percent of the amount paid
68monthly by the debtor to the person or $35 per month.
69     Section 3.  Section 817.8035, Florida Statutes, is created
70to read:
71     817.8035  Debt plans; disclosures to debtor; payments;
73     (1)  Debt management services or credit counseling services
74provided to a debtor residing in this state may be provided only
75pursuant to a debt management plan or debt settlement plan that
76complies with this part.
77     (2)  Before a debtor consents to payment for debt
78management services, the credit counseling agency must disclose
79truthfully, in a clear and conspicuous manner, all of the
80following material information:
81     (a)  The amount of time necessary to achieve the
82represented results, and, to the extent that the debt management
83service may include a settlement offer to any of the debtor's
84creditors or debt collectors, the time by which the credit
85counseling agency will make a bona fide settlement offer to each
86of them.
87     (b)  To the extent that the debt management service may
88include a settlement offer to any of the debtor's creditors or
89debt collectors, the amount of money or the percentage of each
90outstanding debt which the debtor must accumulate before the
91credit counseling agency will make a bona fide settlement offer
92to each of them.
93     (c)  To the extent that any aspect of the debt management
94service relies upon or results in the debtor's failure to make
95timely payments to creditors or debt collectors, that the use of
96the debt management service will likely adversely affect the
97debtor's creditworthiness, may result in the debtor being
98subject to collection actions or sued by creditors or debt
99collectors, and may increase the amount of money the debtor owes
100due to the accrual of fees and interest.
101     (d)  To the extent that the credit counseling agency
102requests or requires the debtor to place funds in an account at
103an insured financial institution, that the debtor owns the funds
104held in the account, the debtor may withdraw such funds from the
105debt management service at any time without penalty, and, if the
106debtor requests to withdraw such funds, the debtor must receive
107all funds in the account, other than funds earned by the credit
108counseling agency, within 7 business days after the debtor's
110     (3)  A credit counseling agency may not misrepresent,
111directly or by implication, any material aspect of any debt
112management service, including, but not limited to, the amount of
113money or the percentage of the debt amount which a debtor may
114save by using such service; the amount of time necessary to
115achieve the represented results; the amount of money or the
116percentage of each outstanding debt which the debtor must
117accumulate before the credit counseling agency will initiate
118attempts or make a bona fide offer to negotiate, settle, or
119modify the terms of the debtor's debt with the debtor's
120creditors or debt collectors; the effect of the service on a
121debtor's creditworthiness; the effect of the service on the
122collection efforts of the debtor's creditors or debt collectors;
123the percentage or number of debtors who attain the represented
124results; and whether a debt management service is offered or
125provided by a nonprofit entity.
126     (4)  A credit counseling agency may not receive payment of
127any fee or consideration for any debt management service until:
128     (a)  The credit counseling agency has renegotiated,
129settled, reduced, or otherwise altered the terms of at least one
130debt pursuant to a debt settlement plan or debt management plan;
131     (b)  The debtor has made at least one payment pursuant to
132that debt settlement plan or debt management plan; and
133     (c)  The fee or consideration for settling each individual
134debt enrolled in a debt settlement plan:
135     1.  Bears the same proportional relationship to the total
136fee for settling the entire debt balance as the individual debt
137amount bears to the entire debt amount. The individual debt
138amount and the entire debt amount are those owed at the time the
139debt was enrolled in the debt management service; or
140     2.  Is a percentage of the amount saved as a result of the
141settlement. The percentage charged may not change from one
142individual debt to another. The amount saved is the difference
143between the amount owed at the time the debt was enrolled in the
144debt management service and the amount actually paid to satisfy
145the debt.
146     (5)  This section does not prohibit a credit counseling
147agency from requesting or requiring the debtor to place funds in
148an account to be used for the credit counseling agency's fees
149and for payments to creditors or debt collectors in connection
150with a renegotiation, settlement, reduction, or other alteration
151of the terms of payment or other terms of a debt if:
152     (a)  The funds are held in an account at an insured
153financial institution;
154     (b)  The debtor owns the funds held in the account and is
155paid accrued interest on the account, if any;
156     (c)  If the credit counseling agency does not administer
157the account, the entity administering the account is not owned
158or controlled by, or in any way affiliated with, the credit
159counseling agency; and
160     (d)  The entity administering the account does not give or
161accept any money or other compensation in exchange for referrals
162of business by the credit counseling agency.
163     (6)  The debtor may withdraw from the debt management
164service at any time without penalty, and must receive all funds
165held in the account, other than funds earned by the credit
166counseling agency in compliance with this part, within 7
167business days after the debtor's request.
168     Section 4.  Section 817.805, Florida Statutes, is amended
169to read:
170     817.805  Disbursement of funds.-Any person engaged in debt
171management or credit counseling services shall disburse to the
172appropriate creditors all funds received from a debtor, less any
173fees permitted by s. 817.802 and any creditor contributions,
174within 30 days after receipt of such funds, unless the
175reasonable payment of one or more of the debtor's obligations
176requires that the funds be held for a longer period in order to
177accumulate. However, a creditor contribution may not reduce any
178sums to be credited to the account of a debtor making a payment
179to the credit counseling agency for further payment to the
180creditor. Further, any person engaged in such services shall
181maintain a separate trust account for the receipt of any funds
182from debtors and the disbursement of such funds on behalf of
183such debtors.
184     Section 5.  This act shall take effect July 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.