HB 1433

1	A bill to be entitled
2	An act relating to credit counseling services; amending s.
3	817.801, F.S.; defining the terms "debt management plan"
4	and "debt settlement plan"; amending s. 817.802, F.S.;
5	conforming a cross-reference; creating s. 817.8035, F.S.;
6	requiring that debt management and credit counseling
7	services be provided pursuant to a debt management or debt
8	settlement plan; requiring the credit counseling agency to
9	make certain disclosures to the debtor before the debtor
10	consents to payment; prohibiting the agency from making
11	certain misrepresentations to the debtor; providing
12	certain conditions that the agency must meet before
13	receiving payment; providing that the debtor may withdraw
14	any account funds placed with the agency at any time
15	without penalty; amending s. 817.805, F.S.; authorizing
16	the agency to hold funds in order to allow the funds to
17	accumulate; providing an effective date.
18
19	Be It Enacted by the Legislature of the State of Florida:
20
21	Section 1.  Section 817.801, Florida Statutes, is amended
22	to read:
23	817.801  Definitions.-As used in this part:
24	(1)  "Credit counseling agency" means any organization
25	providing debt management services or credit counseling
26	services.
27	(2)  "Credit counseling services" means confidential money
28	management, debt reduction, and financial educational services.
29	(3)  "Creditor contribution" means any sum that a creditor
30	agrees to contribute to a credit counseling agency, whether
31	directly or by setoff against amounts otherwise payable to the
32	creditor on behalf of debtors.
33	(4)  "Debt management plan" or "DMP" means a written
34	agreement or contract between a credit counseling agency and a
35	debtor whereby the credit counseling agency, in return for a
36	direct or indirect payment by the debtor of fees not exceeding
37	those set forth in s. 817.802, will provide credit counseling
38	services or debt management services that contemplate that
39	creditors will reduce finance charges or fees for late payment,
40	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, or discharge of any
44	unsecured account, note, or other indebtedness of the debtor; or
45	(b)  Receive from the debtor and disburse to a creditor any
46	money or other thing of value.
47	(6)  "Debt settlement plan" or "DSP" means a written
48	agreement or contract between a credit counseling agency and a
49	debtor whereby the credit counseling agency, in return for
50	payment by the debtor, will provide debt management services
51	that contemplate that creditors will settle debts for less than
52	the principal amount of the debt.
53	(7)(5)  "Person" means any individual, corporation,
54	partnership, trust, association, or other legal entity.
55	Section 2.  Subsection (1) of section 817.802, Florida
56	Statutes, is amended to read:
57	817.802  Unlawful fees and costs.-
58	(1)  It is unlawful for any person, while engaging in debt
59	management services or credit counseling services, to charge or
60	accept from a debtor residing in this state, directly or
61	indirectly, a fee or contribution greater than $50 for the
62	initial setup or initial consultation. Subsequently, the person
63	may not charge or accept a fee or contribution from a debtor
64	residing in this state greater than $120 per year for additional
65	consultations or, alternatively, if debt management services as
66	defined in s. 817.801(5)(b) 817.801(4)(b) are provided, the
67	person may charge the greater of 7.5 percent of the amount paid
68	monthly by the debtor to the person or $35 per month.
69	Section 3.  Section 817.8035, Florida Statutes, is created
70	to read:
71	817.8035  Debt plans; disclosures to debtor; payments;
72	refunds.-
73	(1)  Debt management services or credit counseling services
74	provided to a debtor residing in this state may be provided only
75	pursuant to a debt management plan or debt settlement plan that
76	complies with this part.
77	(2)  Before a debtor consents to payment for debt
78	management services, the credit counseling agency must disclose
79	truthfully, in a clear and conspicuous manner, all of the
80	following material information:
81	(a)  The amount of time necessary to achieve the
82	represented results, and, to the extent that the debt management
83	service may include a settlement offer to any of the debtor's
84	creditors or debt collectors, the time by which the credit
85	counseling agency will make a bona fide settlement offer to each
86	of them.
87	(b)  To the extent that the debt management service may
88	include a settlement offer to any of the debtor's creditors or
89	debt collectors, the amount of money or the percentage of each
90	outstanding debt which the debtor must accumulate before the
91	credit counseling agency will make a bona fide settlement offer
92	to each of them.
93	(c)  To the extent that any aspect of the debt management
94	service relies upon or results in the debtor's failure to make
95	timely payments to creditors or debt collectors, that the use of
96	the debt management service will likely adversely affect the
97	debtor's creditworthiness, may result in the debtor being
98	subject to collection actions or sued by creditors or debt
99	collectors, and may increase the amount of money the debtor owes
100	due to the accrual of fees and interest.
101	(d)  To the extent that the credit counseling agency
102	requests or requires the debtor to place funds in an account at
103	an insured financial institution, that the debtor owns the funds
104	held in the account, the debtor may withdraw such funds from the
105	debt management service at any time without penalty, and, if the
106	debtor requests to withdraw such funds, the debtor must receive
107	all funds in the account, other than funds earned by the credit
108	counseling agency, within 7 business days after the debtor's
109	request.
110	(3)  A credit counseling agency may not misrepresent,
111	directly or by implication, any material aspect of any debt
112	management service, including, but not limited to, the amount of
113	money or the percentage of the debt amount which a debtor may
114	save by using such service; the amount of time necessary to
115	achieve the represented results; the amount of money or the
116	percentage of each outstanding debt which the debtor must
117	accumulate before the credit counseling agency will initiate
118	attempts or make a bona fide offer to negotiate, settle, or
119	modify the terms of the debtor's debt with the debtor's
120	creditors or debt collectors; the effect of the service on a
121	debtor's creditworthiness; the effect of the service on the
122	collection efforts of the debtor's creditors or debt collectors;
123	the percentage or number of debtors who attain the represented
124	results; and whether a debt management service is offered or
125	provided by a nonprofit entity.
126	(4)  A credit counseling agency may not receive payment of
127	any fee or consideration for any debt management service until:
128	(a)  The credit counseling agency has renegotiated,
129	settled, reduced, or otherwise altered the terms of at least one
130	debt pursuant to a debt settlement plan or debt management plan;
131	(b)  The debtor has made at least one payment pursuant to
132	that debt settlement plan or debt management plan; and
133	(c)  The fee or consideration for settling each individual
134	debt enrolled in a debt settlement plan:
135	1.  Bears the same proportional relationship to the total
136	fee for settling the entire debt balance as the individual debt
137	amount bears to the entire debt amount. The individual debt
138	amount and the entire debt amount are those owed at the time the
139	debt was enrolled in the debt management service; or
140	2.  Is a percentage of the amount saved as a result of the
141	settlement. The percentage charged may not change from one
142	individual debt to another. The amount saved is the difference
143	between the amount owed at the time the debt was enrolled in the
144	debt management service and the amount actually paid to satisfy
145	the debt.
146	(5)  This section does not prohibit a credit counseling
147	agency from requesting or requiring the debtor to place funds in
148	an account to be used for the credit counseling agency's fees
149	and for payments to creditors or debt collectors in connection
150	with a renegotiation, settlement, reduction, or other alteration
151	of the terms of payment or other terms of a debt if:
152	(a)  The funds are held in an account at an insured
153	financial institution;
154	(b)  The debtor owns the funds held in the account and is
155	paid accrued interest on the account, if any;
156	(c)  If the credit counseling agency does not administer
157	the account, the entity administering the account is not owned
158	or controlled by, or in any way affiliated with, the credit
159	counseling agency; and
160	(d)  The entity administering the account does not give or
161	accept any money or other compensation in exchange for referrals
162	of business by the credit counseling agency.
163	(6)  The debtor may withdraw from the debt management
164	service at any time without penalty, and must receive all funds
165	held in the account, other than funds earned by the credit
166	counseling agency in compliance with this part, within 7
167	business days after the debtor's request.
168	Section 4.  Section 817.805, Florida Statutes, is amended
169	to read:
170	817.805  Disbursement of funds.-Any person engaged in debt
171	management or credit counseling services shall disburse to the
172	appropriate creditors all funds received from a debtor, less any
173	fees permitted by s. 817.802 and any creditor contributions,
174	within 30 days after receipt of such funds, unless the
175	reasonable payment of one or more of the debtor's obligations
176	requires that the funds be held for a longer period in order to
177	accumulate. However, a creditor contribution may not reduce any
178	sums to be credited to the account of a debtor making a payment
179	to the credit counseling agency for further payment to the
180	creditor. Further, any person engaged in such services shall
181	maintain a separate trust account for the receipt of any funds
182	from debtors and the disbursement of such funds on behalf of
183	such debtors.
184	Section 5.  This act shall take effect July 1, 2011.

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