Bill Text: FL S0336 | 2012 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Debt Settlement Services
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Failed) 2012-03-09 - Died in Commerce and Tourism [S0336 Detail]
Download: Florida-2012-S0336-Introduced.html
Bill Title: Debt Settlement Services
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Failed) 2012-03-09 - Died in Commerce and Tourism [S0336 Detail]
Download: Florida-2012-S0336-Introduced.html
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 contributionfrom a debtor72residing in this stategreater 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 debtorto the personor $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.