CHAPTER 29. BUDGET SERVICE COMPANIES
IC 28-1-29
Chapter 29. Budget Service Companies
IC 28-1-29-0.5
Inapplicability to attorneys, depository financial institutions,third-party bill paying services
Sec. 0.5. (a) This chapter does not apply to an attorney at lawauthorized to practice in Indiana or to a depository financialinstitution (as defined in IC 28-1-1-6).
(b) This chapter does not apply to a third-party bill paying servicewith which the customer contracts solely for the customer'sconvenience of paying routine bills, in an arrangement in which thecustomer retains full control over all funds deposited. The types ofpayments made by a bill paying service are exempt from this chapteras long as the company's actions are not an attempt, as determined bythe director, to circumvent limitations under this chapter.
As added by P.L.35-2010, SEC.118.
IC 28-1-29-1
Definitions
Sec. 1. The following words, when used in this chapter, shall havethe meaning ascribed to them unless the context clearly requires adifferent meaning:
(1) "Person" includes individuals, sole proprietorships,partnerships, limited liability companies, trusts, joint ventures,corporations, unincorporated organizations, other entities, andtheir affiliates, however organized.
(2) "Debt management company" is any person doing businessas a budget counseling, credit counseling, debt management, ordebt pooling service or holding the person out, by words ofsimilar import, as providing services to debtors in themanagement of their finances and debts, and having a writtenagreement with the debtor to disburse money or anything ofvalue. The term includes the following:
(A) A person that simply holds any money, funds, check,personal check, money order, personal money order, draft,or any other instrument for the transmission of money.
(B) A person or an entity known as a "budget servicecompany".
(3) "License" means a license issued under the provisions ofthis chapter.
(4) "Licensee" means any person to whom a license has beenissued pursuant to the provisions of this chapter.
(5) "Contract debtor" means a debtor who has entered into awritten agreement with a licensee.
(6) "Debt" means an obligation arising out of personal, family,or household use.
(7) "Debtor" means an individual whose principal debts andobligations arise out of personal, family, or household use andshall not apply to persons whose principal indebtedness arises
out of business purpose transactions.
(8) "Department" means the members of the department offinancial institutions.
(9) "Finances" means a savings deposit that is:
(A) made on behalf of a contract debtor;
(B) owned and controlled exclusively by the contract debtorand not a licensee who has a power of attorney of thecontract debtor; and
(C) placed in a bank or savings institution chartered by thestate or federal government.
(10) "Affiliate" means a person that, directly or indirectly,through one (1) or more intermediaries:
(A) controls;
(B) is controlled by; or
(C) is under common control with;
a person subject to this chapter.
(11) "Fee" means the total amount of money charged to acontract debtor by a debt management company for theadministration of a debt management plan.
(12) "Plan" means a written debt repayment program in whicha debt management company furnishes debt managementservices to a contract debtor and that includes a schedule ofpayments to be made by or on behalf of the contract debtor andused to pay debts owed by the contract debtor.
(13) "Principal amount of the debt" means the total amount ofa debt at the time the contract debtor enters into an agreement.
(14) "Agreement" means an agreement between a debtmanagement company and a debtor for the performance of debtmanagement services.
(15) "Trust account" means an account held by a licensee thatis:
(A) established in a bank insured by the Federal DepositInsurance Corporation;
(B) separate from other accounts held by the licensee;
(C) designated as a trust account or other account designatedto indicate that the money in the account is not the money ofthe licensee; and
(D) used to hold money of one (1) or more contract debtorsfor disbursement to creditors of the contract debtors.
(16) "Month" means a calendar month.
(17) "Day" means a calendar day.
(18) "Concessions" means assent to repayment of a debt onterms more favorable to a contract debtor than the terms of thecontract between the debtor and a creditor.
(19) "Good faith" means honesty in fact and the observance ofreasonable standards of fair dealing.
(20) "Control of a related interest" refers to a situation in whicha person, directly or indirectly, or through or in concert withone (1) or more other persons, possesses any of the following:
(A) The ownership of, control of, or power to vote at least
twenty-five percent (25%) of the voting securities of arelated interest.
(B) The control in any manner of the election of a majorityof the directors of a related interest.
(C) The power to exercise a controlling influence over themanagement or policies of a related interest. For purposes ofthis clause, a person is presumed to have control, includingthe power to exercise a controlling influence over themanagement or policies of the related interest, if the person:
(i) is an executive officer or a director of the relatedinterest and directly or indirectly owns, controls, or has thepower to vote more than ten percent (10%) of any class ofvoting securities of the related interest; or
(ii) directly or indirectly owns, controls, or has the powerto vote more than ten percent (10%) of any class of votingsecurities of the related interest and no other person owns,controls, or has the power to vote a greater percentage ofthat class of voting securities.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by P.L.14-1992, SEC.107; P.L.42-1993, SEC.46;P.L.196-1996, SEC.1; P.L.90-2008, SEC.27; P.L.35-2010, SEC.119.
IC 28-1-29-2
Administration of chapter
Sec. 2. The department shall adopt such rules and regulations asit deems advisable for the administration of this chapter, and toprovide such forms and procedures as it determines to be necessaryto carry out the provisions of such chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by P.L.42-1993, SEC.47.
IC 28-1-29-3
License required; persons operating in Indiana; evidence ofcompliance; fees; violations; renewal
Sec. 3. (a) No person shall operate a debt management companyin Indiana without having obtained a license from the department.For purposes of this section, a person is operating in Indiana if:
(1) the person or any of the person's employees or agents arelocated in Indiana; or
(2) the person:
(A) contracts with debtors who are residents of Indiana; or
(B) solicits business from residents of Indiana byadvertisements or other communications sent or deliveredthrough any of the following means:
(i) Mail.
(ii) Personal delivery.
(iii) Telephone.
(iv) Radio.
(v) Television.
(vi) The Internet or other electronic communications. (vii) Any other means of communication.
(b) The director may request evidence of compliance with thissection at:
(1) the time of application;
(2) the time of renewal of a license; or
(3) any other time considered necessary by the director.
(c) For purposes of subsection (b), evidence of compliance withthis section may include:
(1) criminal background checks, including a national criminalhistory background check (as defined in IC 10-13-3-12) by theFederal Bureau of Investigation for any individual described insection 5(b)(2) or 5(b)(3) of this chapter;
(2) credit histories; and
(3) other background checks considered necessary by thedirector.
If the director requests a national criminal history background checkunder subdivision (1) for an individual described in that subdivision,the director shall require the individual to submit fingerprints to thedepartment or to the state police department, as appropriate, at thetime evidence of compliance is requested under subsection (b). Theindividual to whom the request is made shall pay any fees or costsassociated with the fingerprints and the national criminal historybackground check. The national criminal history background checkmay be used by the director to determine the individual's compliancewith this section. The director or the department may not release theresults of the national criminal history background check to anyprivate entity.
(d) The fee for a license or renewal shall be fixed by thedepartment under IC 28-11-3-5 and shall be nonrefundable. Thedepartment may impose a fee under IC 28-11-3-5 for each day thata renewal fee and any related documents that are required to besubmitted with the renewal are delinquent.
(e) If a person knowingly acts as a debt management company inviolation of this chapter, any agreement the person has made underthis chapter is void and the debtor under the agreement is notobligated to pay any fees. If the debtor has paid any amounts to theperson, the debtor, or the department on behalf of the debtor, mayrecover the payment from the person that violated this section.
(f) A license issued under this section:
(1) is not assignable or transferable; and
(2) must be renewed every year in the manner prescribed by thedirector of the department.
The director of the department shall prescribe the form of therenewal application. In order to be accepted for processing, a renewalapplication must be accompanied by the license renewal fee imposedunder subsection (d) and all information and documents requested bythe director of the department.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by P.L.42-1993, SEC.48; P.L.172-1997, SEC.18;P.L.63-2001, SEC.12 and P.L.134-2001, SEC.13; P.L.10-2006,
SEC.33 and P.L.57-2006, SEC.33; P.L.213-2007, SEC.44;P.L.217-2007, SEC.42; P.L.90-2008, SEC.28; P.L.35-2010,SEC.120.
IC 28-1-29-4
Denial, suspension, or revocation of license; grounds; procedure
Sec. 4. (a) The department may revoke or suspend any licenseissued under this chapter for the following causes:
(1) Conviction of or a plea of guilty or nolo contendere to afelony under the laws of Indiana or any other jurisdiction.
(2) Violation of any of the provisions of this chapter.
(3) Fraud or deceit in procuring the issuance of a license orrenewal under this chapter.
(4) Indulging in a continuous course of unfair conduct.
(5) Insolvency, bankruptcy, receivership, or assignment for thebenefit of creditors by a licensee.
(6) Licensee lending money to any contract debtor that hassubscribed to the licensee's services.
(7) Except as provided in subsection (c), offering to pay or giveany cash, gift, bonus, premiums, reward, or other compensationto any person for referring any prospective customer to thelicensee.
(8) Except as provided in subsection (d), receiving any cash,gift, bonus, premium, reward, or other compensation from anyperson other than the contract debtor in connection with thelicensee's activities as a licensee.
(9) Licensee requiring a debtor to purchase or agree to purchasea policy of insurance from which licensee receives a fee orother remuneration.
(10) If the licensee violates any reasonable rule or regulationmade by the department under and within the authority of thischapter.
(11) Misleading advertising or representing that the licensee canprovide protection from legal recourse or suits of creditors.
(12) Engaging in an unfair, unconscionable, or deceptive act orpractice, including the knowing omission of any materialinformation.
(13) Providing a contract debtor less than the full benefit of acompromise of a debt arranged by the licensee.
(14) Furnishing legal advice or performing legal services,unless the person furnishing the advice or performing theservices:
(A) is licensed to practice law; and
(B) has been engaged by a debtor to provide legal servicesto the debtor.
(15) A fact or condition exists that, if the fact or condition hadexisted when the licensee applied for licensure as a debtmanagement company, would have been a reason for denyingthe license.
(b) Except as provided in section 4.1 of this chapter, the denial,
revocation, or suspension shall be made only after specific chargeshave been filed in writing, under oath, with the department or by thedepartment, whereupon a hearing shall be had as to the reasons forsuch denial, revocation, or suspension and a certified copy of thecharges shall be served on the licensee or the applicant for licensenot less than ten (10) days prior to the hearing.
(c) Notwithstanding subsection (a)(7), a licensee may reduce thefees of a contract debtor who is a client of the licensee if the contractdebtor refers a prospective customer to the licensee.
(d) Notwithstanding subsection (a)(8), a licensee may receive afair share creditor fee, based on disbursements made to the creditor,from a contract debtor's creditors. If any creditor refuses to pay thefair share creditor fee, the creditor must still be included in thecontract debtor's payment plan.
(e) If the director of the department:
(1) has just cause to believe an emergency exists from which itis necessary to protect the interests of the public; or
(2) determines that the license was obtained for the benefit of,or on behalf of, a person who does not qualify for a license;
the director may proceed with the revocation of the license underIC 4-21.5-3-6.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by P.L.42-1993, SEC.49; P.L.176-1996, SEC.15;P.L.196-1996, SEC.2; P.L.80-1998, SEC.10; P.L.213-2007, SEC.45;P.L.217-2007, SEC.43; P.L.35-2010, SEC.121.
IC 28-1-29-4.1
Failure to file renewal application or pay renewal fee; revocationof license
Sec. 4.1. (a) A license issued by the department under this chaptershall be revoked by the department if the person fails to:
(1) file any renewal application prescribed by the director; or
(2) pay any license renewal fee described under section 3 of thischapter;
within sixty (60) days after the date the renewal is due.
(b) A person whose license is revoked under this section may:
(1) pay all delinquent fees and apply for a new license; or
(2) appeal the revocation to the department for anadministrative review under IC 4-21.5-3. Pending the decisionresulting from the hearing under IC 4-21.5-3 concerning thelicense revocation, the license remains in force.
As added by P.L.176-1996, SEC.16. Amended by P.L.35-2010,SEC.122.
IC 28-1-29-4.5
Collection agencies or process servers; licenses; restriction
Sec. 4.5. After August 31, 1981, the department may not issue alicense to any person who is an employee of, owner of, or affiliatedin any way with a collection agency or a process serving business.Any person who was granted a license before September 1, 1981, is
not affected by the restriction imposed in this section.
As added by Acts 1981, P.L.256, SEC.1. Amended by P.L.42-1993,SEC.50.
IC 28-1-29-4.6
Repealed
(Repealed by P.L.196-1996, SEC.5.)
IC 28-1-29-5
License application; findings by the department; felonies; denial;hearing
Sec. 5. (a) Every person doing business as a debt managementcompany shall make application to the department for a license toengage in such business. Such application shall be in the formprescribed by the department and shall contain such information asthe department may require.
(b) The department may not issue a license unless the departmentfinds that the financial responsibility, character, and fitness of:
(1) the applicant and any significant affiliate of the applicant;
(2) each executive officer, director, or manager of the applicant,or any other individual having a similar status or performing asimilar function for the applicant; and
(3) if known, each person directly or indirectly owning ofrecord or owning beneficially at least ten percent (10%) of theoutstanding shares of any class of equity security of theapplicant;
warrant belief that the business will be operated honestly and fairlyunder this chapter. The department is entitled to request evidence ofan applicant's financial responsibility, character, and fitness.
(c) An application submitted under this section must indicatewhether any individuals described in subsection (b)(2) or (b)(3):
(1) are, at the time of the application, under indictment for afelony under the laws of Indiana or any other jurisdiction; or
(2) have been convicted of or pleaded guilty or nolo contendereto a felony under the laws of Indiana or any other jurisdiction.
(d) The department may deny an application under this section ifthe director of the department determines that the application wassubmitted for the benefit of, or on behalf of, a person who does notqualify for a license.
(e) Upon written request, an applicant is entitled to a hearingunder IC 4-21.5 on the question of the qualifications of the applicantfor a license.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by P.L.42-1993, SEC.52; P.L.80-1998, SEC.11;P.L.10-2006, SEC.34 and P.L.57-2006, SEC.34; P.L.213-2007,SEC.46; P.L.217-2007, SEC.44; P.L.90-2008, SEC.29; P.L.35-2010,SEC.123.
IC 28-1-29-6
Bond Sec. 6. Each application for a license shall be accompanied byproof that the applicant has executed a bond, payable to thedepartment, in an amount determined by the director and inaccordance with the standards adopted by the director. Said bondshall also indemnify any person damaged by failure on the part of thelicensee to conduct the business in accordance with the provisions ofthis chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by Acts 1981, P.L.256, SEC.3; P.L.42-1993, SEC.53;P.L.35-2010, SEC.124.
IC 28-1-29-7
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 28-1-29-7.5
Felonies; civil actions; notice to department
Sec. 7.5. (a) This section applies if, after a person has been issueda license or renewal license under this chapter, any individualsdescribed in section 5(b)(2) or 5(b)(3) of this chapter have beenconvicted of or pleaded guilty or nolo contendere to a felony underthe laws of Indiana or any other jurisdiction.
(b) If this section applies, the licensee shall provide to thedepartment the information required under section 5(c) of thischapter:
(1) not later than thirty (30) days after any person described insubsection (a) has been convicted of or pleaded guilty or nolocontendere to the felony; or
(2) if the licensee's next license renewal fee under section 3(c)of this chapter is due before the date described in subdivision(1), along with the licensee's next license renewal fee undersection 3(d) of this chapter.
(c) Not later than thirty (30) days after a licensee has been servedwith notice of a civil action for violation of this chapter by or onbehalf of a debtor who resides or resided in Indiana on:
(1) the date an agreement that is the subject of the civil actionwas entered into; or
(2) the date the civil action is filed;
the licensee shall provide written notice of the civil action to thedepartment.
As added by P.L.213-2007, SEC.47; P.L.217-2007, SEC.45.Amended by P.L.90-2008, SEC.30; P.L.35-2010, SEC.125.
IC 28-1-29-7.7
Budget analysis and plan; written statement; disclosures
Sec. 7.7. (a) A licensee may not furnish debt management servicesto a debtor unless:
(1) the licensee has prepared a budget analysis; and
(2) if the debtor is to make regular, periodic payments, thelicensee: (A) has prepared a plan for the debtor;
(B) has made a determination, based on the licensee'sanalysis of the information provided by the debtor andotherwise available to the licensee, that the plan is suitablefor the debtor and the debtor will be able to meet thepayment obligations under the plan; and
(C) believes that each creditor of the debtor listed as aparticipating creditor in the plan will accept payment of thedebtor's debts as provided in the plan.
(b) Before a debtor enters into an agreement with a licensee toengage in a plan, the licensee shall:
(1) provide the debtor with a copy of the budget analysis andplan required by subsection (a) in a form that identifies thelicensee and that the debtor may keep whether or not the debtorenters into the agreement;
(2) inform the debtor of the availability, at the debtor's option,of assistance provided through a toll free communicationsystem or in person, where reasonably available to residents inIndiana, regarding the budget analysis and plan required bysubsection (a); and
(3) with respect to all creditors identified by the debtor orotherwise known by the licensee to be creditors of the debtor,provide the debtor with a list of:
(A) creditors that the licensee expects to participate in theplan and grant concessions;
(B) creditors that the licensee expects to participate in theplan but not grant concessions;
(C) creditors that the licensee expects not to participate inthe plan; and
(D) all other creditors.
(c) Except as provided in subsections (d), (e), and (f), before adebtor enters into an agreement with a licensee, the licensee shall, ina written form that is provided to the debtor separately, that containsno other information, and that the debtor may keep whether or notthe debtor enters into the agreement, provide the followinginformation to the debtor:
(1) The licensee's name and business address of the licensee.
(2) A statement that:
(A) the licensee's plans are not suitable for all debtors andthe debtor may ask the licensee about other ways, includingbankruptcy, to deal with indebtedness;
(B) nonpayment of debt may lead creditors to increasefinance and other charges or undertake collection activity,including litigation;
(C) unless the statement would be untrue, the licensee mayreceive compensation from the creditors of the debtor; and
(D) unless the debtor is insolvent, if a creditor settles for lessthan the full amount of the debt, the plan may result in thecreation of taxable income to the debtor, even though thedebtor does not receive any money. (d) If a licensee may receive payments from a debtor's creditorsand the plan contemplates that the debtor's creditors will reducefinance charges or fees for late payment, default, or delinquency, thelicensee may comply with subsection (c) by providing the followingdisclosure in clear and conspicuous type, surrounded by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Debt management plans are not right for all individuals, andyou may ask us to provide information about other ways,including bankruptcy, to deal with your debts.
(2) We may receive compensation for our services from yourcreditors.
_______________________________________
Name and business address of licensee".
(e) If a licensee will not receive payments from a debtor'screditors and the plan contemplates that the debtor's creditors willreduce finance charges or fees for late payment, default, ordelinquency, a licensee may comply with subsection (c) by providingthe following disclosure in clear and conspicuous type, surroundedby black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
Debt management plans are not right for all individuals, andyou may ask us to provide information about other ways,including bankruptcy, to deal with your debts.
______________________________________
Name and business address of licensee".
(f) If an agreement contemplates that creditors will settle debts forless than the full principal amount of debt owed, a licensee maycomply with subsection (c) by providing the following disclosure inclear and conspicuous type, surrounded by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Our program is not right for all individuals, and you may askus to provide information about bankruptcy and other ways todeal with your debts.
(2) Nonpayment of your debts under our program may:
(A) hurt your ability to obtain credit;
(B) lead your creditors to increase finance and other charges;and
(C) lead your creditors to undertake activity, includinglawsuits, to collect the debts.
(3) Reduction of debt under our program may result in taxableincome to you, even though you will not actually receive anymoney.
_________________________________________
Name and business address of licensee".
As added by P.L.35-2010, SEC.126.
IC 28-1-29-8
Agreement between licensee and debtor; contents; delivery; noticeto creditors; payments; cancellation by contract debtor; budgetanalysis; periodic reviews; operation of other businesses or sale of
other products and services; out-of-state licensees; toll freecommunication system; good faith required
Sec. 8. (a) An agreement between a licensee and a debtor must:
(1) be in a written form;
(2) be dated and signed by the licensee and the debtor;
(3) include the name of the debtor and the address where thedebtor resides;
(4) include the name, business address, and telephone numberof the licensee;
(5) be delivered to the debtor immediately upon formation ofthe agreement; and
(6) disclose the following:
(A) The services to be provided.
(B) The amount or method of determining the amount of allfees, individually itemized, to be paid by the debtor.
(C) The schedule of payments to be made by or on behalf ofthe debtor, including the amount of each payment, the dateon which each payment is due, and an estimate of the date ofthe final payment.
(D) If a plan provides for regular periodic payments tocreditors:
(i) each creditor of the debtor to which payment will bemade, the amount owed to each creditor, and anyconcessions the licensee reasonably believes each creditorwill offer; and
(ii) the schedule of expected payments to each creditor,including the amount of each payment and the date onwhich the payment will be made.
(E) Each creditor that the licensee believes will notparticipate in the plan and to which the licensee will notdirect payment.
(F) The manner in which the licensee will comply with thelicensee's obligations under section 9(j) of this chapter.
(G) A statement that:
(i) the licensee may terminate the agreement for goodcause, upon return of unexpended money of the debtor;
(ii) the debtor may cancel the agreement as provided insection 8.6 of this chapter; and
(iii) the debtor may contact the department with anyquestions or complaints regarding the licensee.
(H) The address, telephone number, and Internet address orweb site of the department.
(b) For purposes of subsection (a)(5), delivery of an electronicrecord occurs when:
(1) the record is made available in a format in which the debtormay retrieve, save, and print the record; and
(2) the debtor is notified that the record is available.
(c) An agreement must provide that:
(1) the debtor has a right to terminate the agreement at any timewithout penalty, notwithstanding the close-out fee as permitted
by section 8.3(d) of this chapter, or obligation, by giving thelicensee written or electronic notice, in which event:
(A) the licensee shall refund all unexpended money that thelicensee or the licensee's agent has received from or onbehalf of the debtor for the reduction or satisfaction of thedebtor's debt; and
(B) all powers of attorney granted by the debtor to thelicensee are revoked and ineffective;
(2) the debtor authorizes any bank insured by the federaldeposit insurance corporation in which the licensee or thelicensee's agent has established a trust account to disclose to thedepartment any financial records relating to the trust account;
(3) the licensee shall notify the debtor within five (5) days afterlearning of a creditor's final decision to reject or withdraw froma plan under the agreement; and
(4) the notice under subdivision (3) must include:
(A) the identity of the creditor; and
(B) a statement that the debtor has the right to modify orterminate the agreement.
(d) All creditors must be notified of the debtor's and licensee'srelationship.
(e) A licensee shall give to the contract debtor a dated receipt foreach payment, at the time of the payment, unless the payment ismade by check, money order, or automated clearinghouse withdrawalas authorized by the contract debtor.
(f) A licensee shall, upon cancellation by a contract debtor of theagreement, notify immediately in writing all creditors in the debtmanagement plan of the cancellation by the contract debtor.
(g) A licensee may not enter into an agreement with a debtorunless a thorough, written budget analysis of the debtor indicates thatthe debtor can reasonably meet the payments required under aproposed plan. The following must be included in the budgetanalysis:
(1) Documentation and verification of all income considered.All income verification shall be dated not more than sixty (60)days before the completion of the budget analysis.
(2) Monthly living expense figures must be reasonable for theparticular family size and part of the state.
(3) Documentation and verification, either by a current creditbureau report, current debtor account statements, or directdocumentation from the creditor, of monthly debt payments andbalances to be paid outside the plan.
(4) Documentation and verification, either by a current creditbureau report, current debtor account statements, or directdocumentation from the creditor, of the monthly debt paymentsand current balances to be paid through the plan.
(5) The date of the budget analysis and the signature of thedebtor.
(h) A licensee may not enter into an agreement with a contractdebtor for a period longer than sixty (60) months. Every thirty (30)
months, the licensee shall complete a thorough, written budgetanalysis of the contract debtor to ensure the debt management planis still suitable for the contract debtor and the contract debtor will beable to meet the payment obligations under the plan. Whenadjustments are needed to change the indebtedness listed in theagreement, the licensee may execute a new agreement using therevised figures. A licensee may not increase the monthly feepercentage under section 8.3(c)(2)(A) of this chapter during the termof the original debt management plan agreement.
(i) A licensee may provide services under this chapter in the sameplace of business in which another business is operating, or fromwhich other products or services are sold, if the director issues awritten determination that:
(1) the operation of the other business; or
(2) the sale of other products and services;
from the location in question is not contrary to the best interests ofthe licensee's contract debtors.
(j) A licensee without a physical location in Indiana may:
(1) solicit sales of; and
(2) sell;
additional products and services to Indiana residents if the directorissues a written determination that the proposed solicitation or saleis not contrary to the best interests of contract debtors.
(k) A licensee shall maintain a toll free communication system,staffed at a level that reasonably permits a contract debtor to speakto a counselor, debt specialist, or customer service representative, asappropriate, during ordinary business hours.
(l) A debt management company shall act in good faith in allmatters under this chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by Acts 1981, P.L.256, SEC.4; P.L.42-1993, SEC.54;P.L.196-1996, SEC.3; P.L.63-2001, SEC.13 and P.L.134-2001,SEC.14; P.L.213-2007, SEC.48; P.L.217-2007, SEC.46; P.L.3-2008,SEC.220; P.L.90-2008, SEC.31; P.L.1-2009, SEC.148; P.L.35-2010,SEC.127.
IC 28-1-29-8.3
Fees and charges; plan and written agreement required;department approval for additional charges; fees not considereddebt
Sec. 8.3. (a) Except as otherwise permitted by this section, alicensee may not:
(1) impose, directly or indirectly, a fee or other charge on adebtor; or
(2) receive money from or on behalf of a debtor for debtmanagement services.
(b) A licensee may not impose charges or receive payment fordebt management services until the licensee and the debtor haveagreed upon a plan and have signed an agreement that complies withsections 8, 8.6, and 9.5 of this chapter. All creditors must be notified
of the debtor's and licensee's relationship.
(c) If a debtor assents to a plan, the licensee may charge thefollowing:
(1) A set up fee of not more than fifty dollars ($50) forconsultation, obtaining a credit report, and setting up anaccount. Acceptance of a plan payment constitutes agreementby the creditor to the plan.
(2) A monthly service fee of the lesser of:
(A) not more than fifteen percent (15%) of the monthlyamount the contract debtor agrees to pay through thelicensee, divided into equal monthly payments over the termof the agreement; or
(B) not more than seventy-five dollars ($75) in any month.
The monthly service fee under this subdivision may be chargedfor any one (1) month or part of a month. The amount of a setup fee under subdivision (1) may not be included in thecalculation of the monthly service fee.
(d) Upon cancellation by a contract debtor or termination ofpayments by a contract debtor, a licensee may not withhold for thelicensee's own benefit more than one hundred dollars ($100), whichmay be accrued as a close-out fee.
(e) A licensee may not charge a contract debtor more than one (1)set up fee or one (1) cancellation fee unless the contract debtorleaves the services of the licensee for more than six (6) months.
(f) With respect to any additional charge not specifically providedfor in this section, the licensee must submit a written explanation ofthe charge to the department indicating how the charge would beassessed and the value or benefit to the contract debtor. Supportingdocuments may be required by the department. The department shalldetermine whether the charge:
(1) would be of benefit to the consumer; and
(2) is reasonable in relation to the benefits.
An additional charge is not permitted unless approved by thedepartment.
(g) For purposes of this chapter, the terms of an agreementcommence on the date on which the agreement is made.
(h) A licensee may assess a charge of not more than twenty-fivedollars ($25) for each return by a bank or other depository institutionof a dishonored check, negotiable order of withdrawal, or share draftissued by the contract debtor.
(i) Any fee charged by the licensee to the debtor under this sectionfor services rendered by the licensee, other than the fees describedunder subsection (e), is not considered a debt owed by the debtor tothe licensee.
As added by P.L.35-2010, SEC.128.
IC 28-1-29-8.6
Debtor's right to cancel agreement; notice; waiver of right
Sec. 8.6. (a) A debtor may cancel an agreement before midnightof the third business day after the debtor enters into the agreement
unless the agreement does not comply with subsection (b) or section8 or 9.5 of this chapter, in which event the debtor may cancel theagreement at any time after the debtor enters into the agreement andall fees paid by the debtor shall be refunded to the debtor. Toexercise the right to cancel, the debtor must give written notice to thelicensee. Notice by mail is given when mailed.
(b) An agreement must be accompanied by a form that containsin clear and conspicuous type, surrounded by bold black lines:
"NOTICE OF RIGHT TO CANCEL
You may cancel this agreement, without any penalty orobligation, at any time before midnight of the third business daythat begins the day after you agree to it by electroniccommunication or by signing it.
To cancel this agreement during this period, send an electronicmail message to
____________________________ or mail or deliver a signed,
Electronic mail address of licensee
dated copy of this notice, or any other written notice to
___________________________________________________
Name of licensee
at _______________________________ before midnight on
Address of licensee
_________________.
Date
If you cancel this agreement within the 3 day period, we willrefund all the money you have already paid us.
You also may terminate this agreement at any later time, but wemay not be required to refund fees you have paid us.
I cancel this agreement,
__________________________________
Print your name
__________________________________
Signature
__________________________________
Date".
(c) If a personal financial emergency necessitates thedisbursement of a debtor's money to one (1) or more of the debtor'screditors before the expiration of the third business day after the datean agreement is signed, a debtor may waive the right to cancel. Towaive the right, the individual must send or deliver a signed, datedstatement in the debtor's own words describing the circumstancesthat necessitate a waiver. The waiver must explicitly waive the rightto cancel. A waiver by means of a standard form record is void.
As added by P.L.35-2010, SEC.129.
IC 28-1-29-8.8
Debtor's failure to make payment; cancellation of agreement;letter of continuation; return of money to contract debtor
Sec. 8.8. (a) If a contract debtor fails to make a payment to alicensee within sixty (60) days after the date a payment is due under
an agreement, the agreement is considered canceled by the contractdebtor. A contract debtor may file a letter of continuation of anagreement even if the contract debtor did not make a payment withinsixty (60) days after a payment was due. All of the following applyto a letter of continuation of an agreement:
(1) A contract debtor may file only one (1) letter of continuationwith a licensee for any agreement.
(2) A letter of continuation must contain a detailed explanationof the reason or reasons for the missed payment.
(3) If an agreement for which a letter of continuation that meetsthe requirements of this subsection is filed, the agreementremains in effect and subject to cancellation for any futurefailure to make a payment as described in this subsection.
(4) An agreement between a licensee and a contract debtor mustclearly provide for one (1) letter of continuation by a contractdebtor.
(5) A contract debtor may not file a letter of continuation witha licensee at the beginning of an agreement.
(b) If a licensee or a contract debtor terminates an agreement, thelicensee shall immediately return to the contract debtor any moneyof the contract debtor held in trust for the benefit of the contractdebtor.
As added by P.L.35-2010, SEC.130.
IC 28-1-29-9
Trust accounts; requirements and restrictions; quarterlyaccountings; statement upon completion or termination of contract
Sec. 9. (a) All money paid to a licensee by or on behalf of acontract debtor for distribution to creditors under a plan is held intrust. On or before the close of the same banking day followingreceipt, the licensee shall deposit the money in a trust accountestablished for the benefit of the contract debtor to whom thelicensee is furnishing debt management services.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual towhom the licensee is furnishing debt management services.
(2) Disburse money paid by or on behalf of the contract debtorto creditors of the contract debtor as disclosed in the agreement.
(3) Make remittances not later than thirty (30) days after initialreceipt of funds. After the initial receipt of funds, remittancesshall be made not later than fifteen (15) days after receipt offunds, less fees and costs, unless the reasonable payment of one(1) or more of the contract debtor's obligations requires that thefunds be held for a longer period to accumulate a sum certain.For purposes of this section, the close-out fee set forth insection 8.3(d) of this chapter is not considered an obligation ofthe contract debtor.
(4) Retain in the contract debtor's trust account, for charges, anamount less than or equal to the sum of one (1) month's fee aspermitted by section 8.3(c)(2) of this chapter plus the close-out
fee as permitted by section 8.3(d) of this chapter, unless agreater amount is approved in writing by the department.
(5) Promptly:
(A) correct any payments that are not made or that aremisdirected as a result of an error by the licensee or otherperson in control of the trust account; and
(B) reimburse the contract debtor for any costs or feesimposed by a creditor as a result of the failure to pay ormisdirection.
(c) A licensee may not commingle money in a trust accountestablished for the benefit of contract debtors to whom the licenseeis furnishing debt management services with money of other persons.
(d) A trust account must at all times have a cash balance equal tothe sum of the balances of each contract debtor's account.
(e) If a licensee has established a trust account under subsection(a), the licensee shall reconcile the trust account at least every thirty(30) days after receipt of the bank statement. The reconciliation mustcompare the cash balance in the trust account with the sum of thebalances in each contract debtor's account. If the licensee or thelicensee's designee has more than one (1) trust account, each trustaccount must be individually reconciled.
(f) If a licensee discovers, or has a reasonable suspicion of,embezzlement or other unlawful appropriation of money held intrust, the licensee shall:
(1) immediately notify the department in writing; and
(2) unless the department by rule provides otherwise, givenotice to the department describing the remedial action taken orto be taken not later than five (5) days after the licenseediscovers, or has a reasonable suspicion of, the embezzlementor other unlawful appropriation.
(g) If a contract debtor terminates an agreement or it becomesreasonably apparent to a licensee that a plan has failed, the licenseeshall promptly refund to the contract debtor all money paid by or onbehalf of the contract debtor that has not been paid to creditors lessfees that are payable to the licensee under section 8.3(e) of thischapter.
(h) Before relocating a trust account from one (1) bank to another,a licensee shall inform the department of the name, business address,and telephone number of the new bank. As soon as practicable, thelicensee shall inform the department of the account number of thetrust account at the new bank.
(i) At least once every three (3) months the licensee shall renderan accounting to the contract debtor which must itemize the totalamount received from the contract debtor, the total amount paid eachcreditor, the amount of charges deducted, the amount of fair sharefees received or withheld by the licensee from each of the contractdebtor's creditors, and any amount held in reserve. A licensee shall,in addition thereto, render such an accounting to a contract debtorwithin seven (7) days after written demand, but not more than three(3) per six (6) month period. (j) Upon the completion or termination of a contract between alicensee and a contract debtor, the licensee shall mail to the contractdebtor a statement:
(1) indicating that the licensee no longer holds funds in trust forthe contract debtor; and
(2) listing the name and address of:
(A) each creditor paid in full; and
(B) any creditors remaining unpaid.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)As amended by P.L.196-1996, SEC.4; P.L.213-2007, SEC.49;P.L.217-2007, SEC.47; P.L.35-2010, SEC.131.
IC 28-1-29-9.5
Prohibited acts; unauthorized practice of law; compensationprohibited
Sec. 9.5. (a) A licensee may not, directly or indirectly, do any ofthe following:
(1) Misappropriate or misapply money held in trust.
(2) Exercise or attempt to exercise a power of attorney after acontract debtor has terminated an agreement.
(3) Initiate a transfer from a contract debtor's account at a bankor with another person unless the transfer is:
(A) a return of money to the contract debtor; or
(B) before the termination of an agreement, properlyauthorized by the agreement and this chapter, and for:
(i) payment to one (1) or more creditors under anagreement; or
(ii) payment of a fee.
(4) Offer a gift or bonus, premium, reward, or othercompensation to a debtor for executing an agreement.
(5) Offer, pay, or give:
(A) a gift or bonus;
(B) a premium;
(C) a reward; or
(D) other compensation;
to a person for referring a prospective customer if the personmaking the referral has a financial interest in the outcome ofdebt management services provided to the customer.
(6) Receive a bonus, a commission, or other benefit forreferring a debtor to a person.
(7) Structure a plan in a manner that would result in a negativeamortization of any of a debtor's debts, unless a creditor that isowed a negatively amortizing debt agrees to refund or waive thefinance charge upon payment of the principal amount of thedebt.
(8) Compensate the licensee's employees on the basis of aformula that incorporates the number of debtors the employeeinduces to enter into agreements. It is not a violation of thissubsection for a licensee to use the number of successfullycompleted debt management plans as a criterion for
compensation for the licensee's employees.
(9) Settle a debt or lead a contract debtor to believe that apayment to a creditor is in settlement of a debt to the creditorunless, at the time of settlement, the contract debtor receives acertification by the creditor that the payment is in fullsettlement of the debt.
(10) Make a representation that:
(A) the licensee will furnish money to pay bills or preventattachments;
(B) payment of a certain amount will permit satisfaction ofa certain amount or range of indebtedness; or
(C) participation in a plan will or may prevent litigation,garnishment, attachment, repossession, foreclosure, eviction,or loss of employment.
(11) Misrepresent that the licensee is authorized or competentto furnish legal advice or perform legal services.
(12) Represent in the licensee's agreements, disclosuresrequired by this chapter, advertisements, or Internet web sitethat the licensee is:
(A) a nonprofit entity unless the licensee is organized andproperly operating as a nonprofit entity under the law of thestate in which entity was formed; or
(B) a tax exempt entity unless the entity has receivedcertification of tax exempt status from the Internal RevenueService and is properly operating as a nonprofit entity underthe law of the state in which the entity was formed.
(13) Take a confession of judgment or power of attorney toconfess judgment against a contract debtor.
(14) Employ an unfair, unconscionable, or deceptive act orpractice, including the knowing omission of any materialinformation.
(b) If a licensee furnishes debt management services to a debtor,the licensee may not, directly or indirectly, do any of the following:
(1) Purchase a debt or obligation of the debtor.
(2) Receive from or on behalf of the debtor:
(A) a promissory note or other negotiable instrument otherthan a check or a demand draft; or
(B) a postdated check or demand draft.
(3) Lend money or provide credit to the debtor.
(4) Obtain a mortgage or other security interest fro