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Debt MANAGEMENT |
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DEBT
MANAGEMENT LICENSING ADVISORY FOR BUSINESSES
Unless
exempted under the law, providers of debt
management services must be licensed to do
business with a person they know to be a Delaware
resident even if the service is performed over the
internet or on the telephone from another state
rather than in person. Both "for profit"
and "non-profit" providers who offer
debt management services must be licensed. |
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All
fees charged by providers must be fully disclosed to
consumers. A provider of debt management services which
receives no compensation from or on behalf of the consumer, or
from a creditor of the consumer, is not required to be
licensed.
Forms for applicants that are available at this site include
the application and surety bond. You can request fingerprint
cards so that we can obtain the required criminal records
checks. Instructions and authorization forms will be mailed
with the cards to the address you provide.
A criminal records check obtained for the purpose of doing
business in any state, that was issued within the last 12
months and based on the fingerprints of the officer or person
with access to the trust account, satisfies this requirement
if the criminal records check is provided by the licensing
state and received by that state from a central repository.
The following are highlights only of the Delaware Uniform Debt
Management Services Act found in 6 Del.C. Chapter 24A. It
important to read the entire act and the rules. http://delcode.delaware.gov/title6/c024a/index.shtml
2402A. The definition section describes terms used in
the law.
"Debt management services" are services provided by
an intermediary between an individual and 1 or more creditors
of the individual for the purpose of obtaining concessions,
but does not include:
(A) Legal services provided in an attorney-client relationship
by an attorney licensed or otherwise authorized to practice
law in this State;
(B) Accounting services provided in an accountant-client
relationship by a certified public accountant licensed to
provide accounting services in this State; …
2403A. This section provides for exemptions for some
providers.
2405A. An application must be on the form provided by the
Attorney General and include the non-refundable application
fee of $2000, evidence of the required bond, and evidence of
insurance that is in compliance with the law in the amount of
$250,000 against the risks of dishonest, fraud, theft, and
other misconduct on the part of the applicant or a director,
employee, or agent of the applicant
2406A. Some of the information required in the application is:
* an audited review by a certified public accountant of the
applicant's financial statements;
* evidence of accreditation by an independent accrediting
organization approved by the Attorney General;
* evidence that, within 12 months after initial employment,
each of the applicant's counselors becomes certified as a
certified counselor;
* a description of the applicant's financial analysis and
initial budget plan, including any form of electronic model,
used to evaluate the financial condition of individuals;
* a copy of each form of agreement that the applicant will use
with individuals who reside in Delaware;
* the schedule of fees and charges that the applicant will
used with individuals who reside in Delaware;
* at the applicant's expense, the results of a criminal
records check, including fingerprints, conducted within the
immediately preceding 12 months, covering every officer of the
applicant and every employee or agent of the applicant who is
authorized to have access to any trust account.
2413A. Every applicant must file a surety bond of at least
$50,000. The bond may be increased at the discretion of the
Attorney General based on the value of the provider's business
in Delaware and the value of the trust accounts. The bond
shall run to the State for the benefit of the Attorney General
and all consumers injured by any wrongful act, omission,
default, fraud or misrepresentation by a licensed provider in
the course of its activity as a licensed provider.
2416A. A licensed provider must maintain a toll-free
communication system staffed at a level that allows a consumer
to speak to a certified counselor or customer service
representative during ordinary business hours.
2417A. Before providing services, a licensed provider must
give the consumer a clear and conspicuous list of goods and
services and the itemized charges for each. The list must be
in a record that the consumer can keep.
Before a licensee can provide debt management services, a
certified counselor must provide reasonable education about
the management of personal finance and prepare a financial
analysis. If the service will require a consumer to make
regular, periodic payments, the counselor must:
* prepare a plan for the consumer;
* make a determination that the plan is suitable for the
consumer and that he or she will be able to meet the payment
obligations or that the creditor will likely engage in
negotiation with the provider;
* believe that each listed creditor will likely accept payment
of the debts as provided in the plan.
Before a consumer can agree to engage in the plan, the
provider must
* provide the consumer with a copy of the analysis and plan in
a record that identifies the provider that the consumer may
keep;
* inform the consumer of the availability, at the option of
the consumer, assistance by a toll free communication system
or in person to discuss the financial analysis and plan;
* inform the consumer that some of the creditors may be
unwilling to negotiate with the provider.
Before a consumer can agree to engage in the plan, the
provider shall inform the consumer, in a separate record that
the consumer may keep
* of the name and business address of the provider;
* that the plans are not suitable for all individuals and that
the individual may ask the provider about other ways,
including bankruptcy, to deal with indebtedness;
* that establishment of the plan may adversely affect the
individual's credit rating or credit scores;
* that nonpayment of debt may lead creditors to increase
finance and other charges or undertake collection activity,
including litigation;
* unless it is not true, that the provider may receive
compensation from the creditors or the individual; and
* that unless the individual is insolvent, if a creditor
settles for less that the full amount of the debt, the plan
may result in the creation of taxable income to the
individual, even though the individual does not receive any
money.
2419A. The agreement must include the information and terms
required in the statute and be signed, dated, and delivered to
the consumer.
The agreement must disclose the services, itemized fees, a
schedule of payments from the consumer and to the creditor if
provided under a plan, identity of creditors not included in a
plan, provisions for cancellation or termination.
The agreement must advise the consumer that he or she can
contact the Attorney General with questions or complaints
about the provider. The address, telephone number, and
Internet address or website of the Attorney General must be
included in the agreement.
The complete list of requirements and disclosures for the
agreement are found in the law.
2422A. Funds paid to providers by or on behalf of consumers
pursuant to a plan for distribution to creditors are held in
trust and must be deposited within 2 business days of receipt
into a trust account that shall at all times maintain a
balance equal to the sum of the balances of the individual
consumer's accounts.
2424A. A provider may not solicit a voluntary contribution
from an individual or an affiliate of the individual for any
service provided to the individual. A provider may accept a
contribution only if the amount is within the limitation of
fees the provider may charge or the contribution is made more
than 30 days after completion or termination of the plan.
2428A. A provider may not:
* misappropriate or misapply money held in trust;
* settle a debt for more that 50% of the amount owned to a
creditor unless the consumer agrees after the creditor has
agreed;
* take a power of attorney authorizing it to settle a debt
unless the power expressly limits the provider's authority to
settle debts for not more that 50% of the amount owed to the
creditor;
* exercise a power of attorney after an agreement is
terminated;
* initiate a transfer from a consumer's account at a bank
unless it is a return of money to the consumer or a properly
authorized payment to creditor under a plan or a fee;
* offer a gift, bonus, premium, reward or other compensation
to a consumer for executing an agreement;
* offer a gift, bonus, premium, reward or other compensation
to a person for referring a prospective customer if the person
making the referral has a financial interest in the outcome of
the debt managements services unless neither the provider nor
the person making the referral communicates to the prospective
customer, the source of the referral;
* receive a bonus, commission, or other benefit for referring
an individual to a person;
* structure a plan in a manner that would result in a negative
amortization of any of an individual's debts unless a creditor
that is owned a negatively amortizing debt agrees to refund or
waive the finance charge upon payment of the principal amount
of the debt;
* compensate its employees on the basis of a formula that
incorporates the number of individual the employee induces to
enter into agreements;
* settle a debt or lead an individual to believe that a
payment to a creditor is in settlement of a debt unless at the
time of settlement the individual receives a certification by
the creditor that the payment is in full settlement of the
debt;
* make a representation that the provider will furnish money
to pay bills or prevent attachments, that payment of a certain
amount will permit satisfaction or a certain amount or range
of indebtedness, or that participation in a plan will or may
prevent litigation, garnishment, attachment, repossession,
foreclosure, eviction, or loss of employment;
* misrepresent that it is authorized or competent to furnish
legal advice or legal services;
* represent that it is a non-for-profit entity unless it is
organized and properly operating as a not-for-profit under the
law of the state in which it was formed or that it is a
tax-exempt entity unless it has received certification of
tax-exempt status from the IRS;
* take a confession of judgment or power of attorney to
confess a judgment against an individual; or
* employ an unfair, unconscionable, or deceptive act or
practice including the knowing omission of any material
information.
A provider who provides debt management services to a consumer
may not directly, or indirectly:
* purchase a debt or obligation of the individual;
* receive from or on behalf of the individual a promissory
note or other instrument other that a check or a demand draft
which may not be post-dated;
* lend money or provide credit to the individual except as a
deferral of a settlement fee at no additional expense to the
individual;
* except where permitted by federal law, disclose the identity
or identifying information of individual or his or her
creditors except to the Attorney General, a creditor of the
individual to secure the cooperation of the creditor in a
plan, or as necessary to administer the plan;
* except as otherwise provided in 2423A(f), provide the
individual less that the full benefit of a compromise of a
debt arranged by the provider;
* charge the individual for or provide credit or other
insurance, coupons for goods or services, membership in a
club, access to computers or the Internet, or any other matter
not directly related to debt-management services or education
services concerning personal finance;
* furnish legal advice or perform legal services;
* advise, encourage, or suggest to the individual not to make
payment to creditors while under the plan.
2431. A provider is liable for the conduct of its employees or
independent contractors who violate an agreement or the
Delaware Uniform Debt Management Services Act.
2432A - 2334A. These sections specify the powers of the
Attorney General and the remedies for violations.
NOTE: that these are highlights of the Delaware Uniform
Debt Management Services Act. You must read the act for all of
the law's provisions. |
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Last Updated: Thursday, 05-Nov-2009 10:08:48 EST
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Press RELEASES |
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Related LINKS |
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| Important
CONTACTS |
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Consumer
Protection Hotline:
800-220-5424
(Toll-Free)
302-577-8600
Consumer
Protection Fax:
302-577-6499
Consumer Protection Email:
consumer.protection@state.de.us
Consumer Protection Wilmington:
820 N. French Street
5th floor
Wilmington, DE 19801
Consumer Protection Dover:
102 W. Water St.
Dover, DE 19904
Consumer
Protection Georgetown:
114 E. Market St.
Georgetown, DE 19947
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