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 law
authorized to practice in Indiana or to a depository financial
institution (as defined in IC 28-1-1-6).
(b) This chapter does not apply to a third-party bill paying service
with which the customer contracts solely for the customer's
convenience of paying routine bills, in an arrangement in which the
customer retains full control over all funds deposited. The types of
payments made by a bill paying service are exempt from this chapter
as long as the company's actions are not an attempt, as determined by
the 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 have
the meaning ascribed to them unless the context clearly requires a
different meaning:
(1) "Person" includes individuals, sole proprietorships,
partnerships, limited liability companies, trusts, joint ventures,
corporations, unincorporated organizations, other entities, and
their affiliates, however organized.
(2) "Debt management company" is any person doing business
as a budget counseling, credit counseling, debt management, or
debt pooling service or holding the person out, by words of
similar import, as providing services to debtors in the
management of their finances and debts, and having a written
agreement with the debtor to disburse money or anything of
value. 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 service
company".
(3) "License" means a license issued under the provisions of
this chapter.
(4) "Licensee" means any person to whom a license has been
issued pursuant to the provisions of this chapter.
(5) "Contract debtor" means a debtor who has entered into a
written 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 and
obligations arise out of personal, family, or household use and
shall not apply to persons whose principal indebtedness arises
out of business purpose transactions.
(8) "Department" means the members of the department of
financial 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 debtor
and not a licensee who has a power of attorney of the
contract debtor; and
(C) placed in a bank or savings institution chartered by the
state 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 a
contract debtor by a debt management company for the
administration of a debt management plan.
(12) "Plan" means a written debt repayment program in which
a debt management company furnishes debt management
services to a contract debtor and that includes a schedule of
payments to be made by or on behalf of the contract debtor and
used to pay debts owed by the contract debtor.
(13) "Principal amount of the debt" means the total amount of
a debt at the time the contract debtor enters into an agreement.
(14) "Agreement" means an agreement between a debt
management company and a debtor for the performance of debt
management services.
(15) "Trust account" means an account held by a licensee that
is:
(A) established in a bank insured by the Federal Deposit
Insurance Corporation;
(B) separate from other accounts held by the licensee;
(C) designated as a trust account or other account designated
to indicate that the money in the account is not the money of
the licensee; and
(D) used to hold money of one (1) or more contract debtors
for 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 on
terms more favorable to a contract debtor than the terms of the
contract between the debtor and a creditor.
(19) "Good faith" means honesty in fact and the observance of
reasonable standards of fair dealing.
(20) "Control of a related interest" refers to a situation in which
a person, directly or indirectly, or through or in concert with
one (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 a
related interest.
(B) The control in any manner of the election of a majority
of the directors of a related interest.
(C) The power to exercise a controlling influence over the
management or policies of a related interest. For purposes of
this clause, a person is presumed to have control, including
the power to exercise a controlling influence over the
management or policies of the related interest, if the person:
(i) is an executive officer or a director of the related
interest and directly or indirectly owns, controls, or has the
power to vote more than ten percent (10%) of any class of
voting securities of the related interest; or
(ii) directly or indirectly owns, controls, or has the power
to vote more than ten percent (10%) of any class of voting
securities of the related interest and no other person owns,
controls, or has the power to vote a greater percentage of
that 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 as
it deems advisable for the administration of this chapter, and to
provide such forms and procedures as it determines to be necessary
to 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 of
compliance; fees; violations; renewal
Sec. 3. (a) No person shall operate a debt management company
in 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 are
located in Indiana; or
(2) the person:
(A) contracts with debtors who are residents of Indiana; or
(B) solicits business from residents of Indiana by
advertisements or other communications sent or delivered
through 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 this
section 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 with
this section may include:
(1) criminal background checks, including a national criminal
history background check (as defined in IC 10-13-3-12) by the
Federal Bureau of Investigation for any individual described in
section 5(b)(2) or 5(b)(3) of this chapter;
(2) credit histories; and
(3) other background checks considered necessary by the
director.
If the director requests a national criminal history background check
under subdivision (1) for an individual described in that subdivision,
the director shall require the individual to submit fingerprints to the
department or to the state police department, as appropriate, at the
time evidence of compliance is requested under subsection (b). The
individual to whom the request is made shall pay any fees or costs
associated with the fingerprints and the national criminal history
background check. The national criminal history background check
may be used by the director to determine the individual's compliance
with this section. The director or the department may not release the
results of the national criminal history background check to any
private entity.
(d) The fee for a license or renewal shall be fixed by the
department under IC 28-11-3-5 and shall be nonrefundable. The
department may impose a fee under IC 28-11-3-5 for each day that
a renewal fee and any related documents that are required to be
submitted with the renewal are delinquent.
(e) If a person knowingly acts as a debt management company in
violation of this chapter, any agreement the person has made under
this chapter is void and the debtor under the agreement is not
obligated to pay any fees. If the debtor has paid any amounts to the
person, the debtor, or the department on behalf of the debtor, may
recover 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 the
director of the department.
The director of the department shall prescribe the form of the
renewal application. In order to be accepted for processing, a renewal
application must be accompanied by the license renewal fee imposed
under subsection (d) and all information and documents requested by
the 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,
IC 28-1-29-4 Denial, suspension, or revocation of license; grounds; procedure
Sec. 4. (a) The department may revoke or suspend any license
issued under this chapter for the following causes:
(1) Conviction of or a plea of guilty or nolo contendere to a
felony 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 or
renewal under this chapter.
(4) Indulging in a continuous course of unfair conduct.
(5) Insolvency, bankruptcy, receivership, or assignment for the
benefit of creditors by a licensee.
(6) Licensee lending money to any contract debtor that has
subscribed to the licensee's services.
(7) Except as provided in subsection (c), offering to pay or give
any cash, gift, bonus, premiums, reward, or other compensation
to any person for referring any prospective customer to the
licensee.
(8) Except as provided in subsection (d), receiving any cash,
gift, bonus, premium, reward, or other compensation from any
person other than the contract debtor in connection with the
licensee's activities as a licensee.
(9) Licensee requiring a debtor to purchase or agree to purchase
a policy of insurance from which licensee receives a fee or
other remuneration.
(10) If the licensee violates any reasonable rule or regulation
made by the department under and within the authority of this
chapter.
(11) Misleading advertising or representing that the licensee can
provide protection from legal recourse or suits of creditors.
(12) Engaging in an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(13) Providing a contract debtor less than the full benefit of a
compromise of a debt arranged by the licensee.
(14) Furnishing legal advice or performing legal services,
unless the person furnishing the advice or performing the
services:
(A) is licensed to practice law; and
(B) has been engaged by a debtor to provide legal services
to the debtor.
(15) A fact or condition exists that, if the fact or condition had
existed when the licensee applied for licensure as a debt
management company, would have been a reason for denying
the license.
(b) Except as provided in section 4.1 of this chapter, the denial,
revocation, or suspension shall be made only after specific charges
have been filed in writing, under oath, with the department or by the
department, whereupon a hearing shall be had as to the reasons for
such denial, revocation, or suspension and a certified copy of the
charges shall be served on the licensee or the applicant for license
not less than ten (10) days prior to the hearing.
(c) Notwithstanding subsection (a)(7), a licensee may reduce the
fees of a contract debtor who is a client of the licensee if the contract
debtor refers a prospective customer to the licensee.
(d) Notwithstanding subsection (a)(8), a licensee may receive a
fair share creditor fee, based on disbursements made to the creditor,
from a contract debtor's creditors. If any creditor refuses to pay the
fair share creditor fee, the creditor must still be included in the
contract debtor's payment plan.
(e) If the director of the department:
(1) has just cause to believe an emergency exists from which it
is 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 under
IC 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; revocation
of license
Sec. 4.1. (a) A license issued by the department under this chapter
shall 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 this
chapter;
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 an
administrative review under IC 4-21.5-3. Pending the decision
resulting from the hearing under IC 4-21.5-3 concerning the
license 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 a
license to any person who is an employee of, owner of, or affiliated
in 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 management
company shall make application to the department for a license to
engage in such business. Such application shall be in the form
prescribed by the department and shall contain such information as
the department may require.
(b) The department may not issue a license unless the department
finds 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 a
similar function for the applicant; and
(3) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
warrant belief that the business will be operated honestly and fairly
under this chapter. The department is entitled to request evidence of
an applicant's financial responsibility, character, and fitness.
(c) An application submitted under this section must indicate
whether any individuals described in subsection (b)(2) or (b)(3):
(1) are, at the time of the application, under indictment for a
felony under the laws of Indiana or any other jurisdiction; or
(2) have been convicted of or pleaded guilty or nolo contendere
to a felony under the laws of Indiana or any other jurisdiction.
(d) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(e) Upon written request, an applicant is entitled to a hearing
under IC 4-21.5 on the question of the qualifications of the applicant
for 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 by
proof that the applicant has executed a bond, payable to the
department, in an amount determined by the director and in
accordance with the standards adopted by the director. Said bond
shall also indemnify any person damaged by failure on the part of the
licensee to conduct the business in accordance with the provisions of
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.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 issued
a license or renewal license under this chapter, any individuals
described in section 5(b)(2) or 5(b)(3) of this chapter have been
convicted of or pleaded guilty or nolo contendere to a felony under
the laws of Indiana or any other jurisdiction.
(b) If this section applies, the licensee shall provide to the
department the information required under section 5(c) of this
chapter:
(1) not later than thirty (30) days after any person described in
subsection (a) has been convicted of or pleaded guilty or nolo
contendere 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 under
section 3(d) of this chapter.
(c) Not later than thirty (30) days after a licensee has been served
with notice of a civil action for violation of this chapter by or on
behalf of a debtor who resides or resided in Indiana on:
(1) the date an agreement that is the subject of the civil action
was entered into; or
(2) the date the civil action is filed;
the licensee shall provide written notice of the civil action to the
department. 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 services
to a debtor unless:
(1) the licensee has prepared a budget analysis; and
(2) if the debtor is to make regular, periodic payments, the
licensee:
(A) has prepared a plan for the debtor;
(B) has made a determination, based on the licensee's
analysis of the information provided by the debtor and
otherwise available to the licensee, that the plan is suitable
for the debtor and the debtor will be able to meet the
payment obligations under the plan; and
(C) believes that each creditor of the debtor listed as a
participating creditor in the plan will accept payment of the
debtor's debts as provided in the plan.
(b) Before a debtor enters into an agreement with a licensee to
engage in a plan, the licensee shall:
(1) provide the debtor with a copy of the budget analysis and
plan required by subsection (a) in a form that identifies the
licensee and that the debtor may keep whether or not the debtor
enters into the agreement;
(2) inform the debtor of the availability, at the debtor's option,
of assistance provided through a toll free communication
system or in person, where reasonably available to residents in
Indiana, regarding the budget analysis and plan required by
subsection (a); and
(3) with respect to all creditors identified by the debtor or
otherwise 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 the
plan and grant concessions;
(B) creditors that the licensee expects to participate in the
plan but not grant concessions;
(C) creditors that the licensee expects not to participate in
the plan; and
(D) all other creditors.
(c) Except as provided in subsections (d), (e), and (f), before a
debtor enters into an agreement with a licensee, the licensee shall, in
a written form that is provided to the debtor separately, that contains
no other information, and that the debtor may keep whether or not
the debtor enters into the agreement, provide the following
information 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 and
the debtor may ask the licensee about other ways, including
bankruptcy, to deal with indebtedness;
(B) nonpayment of debt may lead creditors to increase
finance and other charges or undertake collection activity,
including litigation;
(C) unless the statement would be untrue, the licensee may
receive compensation from the creditors of the debtor; and
(D) unless the debtor is insolvent, if a creditor settles for less
than the full amount of the debt, the plan may result in the
creation of taxable income to the debtor, even though the
debtor does not receive any money.
(d) If a licensee may receive payments from a debtor's creditors
and the plan contemplates that the debtor's creditors will reduce
finance charges or fees for late payment, default, or delinquency, the
licensee may comply with subsection (c) by providing the following
disclosure 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, and
you 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 your
creditors.
_______________________________________
Name and business address of licensee".
(e) If a licensee will not receive payments from a debtor's
creditors and the plan contemplates that the debtor's creditors will
reduce finance charges or fees for late payment, default, or
delinquency, a licensee may comply with subsection (c) by providing
the following disclosure in clear and conspicuous type, surrounded
by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
Debt management plans are not right for all individuals, and
you 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 for
less than the full principal amount of debt owed, a licensee may
comply with subsection (c) by providing the following disclosure in
clear 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 ask
us to provide information about bankruptcy and other ways to
deal 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, including
lawsuits, to collect the debts.
(3) Reduction of debt under our program may result in taxable
income to you, even though you will not actually receive any
money.
_________________________________________
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; notice
to creditors; payments; cancellation by contract debtor; budget
analysis; periodic reviews; operation of other businesses or sale of
other products and services; out-of-state licensees; toll free
communication 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 the
debtor resides;
(4) include the name, business address, and telephone number
of the licensee;
(5) be delivered to the debtor immediately upon formation of
the agreement; and
(6) disclose the following:
(A) The services to be provided.
(B) The amount or method of determining the amount of all
fees, individually itemized, to be paid by the debtor.
(C) The schedule of payments to be made by or on behalf of
the debtor, including the amount of each payment, the date
on which each payment is due, and an estimate of the date of
the final payment.
(D) If a plan provides for regular periodic payments to
creditors:
(i) each creditor of the debtor to which payment will be
made, the amount owed to each creditor, and any
concessions the licensee reasonably believes each creditor
will offer; and
(ii) the schedule of expected payments to each creditor,
including the amount of each payment and the date on
which the payment will be made.
(E) Each creditor that the licensee believes will not
participate in the plan and to which the licensee will not
direct payment.
(F) The manner in which the licensee will comply with the
licensee's obligations under section 9(j) of this chapter.
(G) A statement that:
(i) the licensee may terminate the agreement for good
cause, upon return of unexpended money of the debtor;
(ii) the debtor may cancel the agreement as provided in
section 8.6 of this chapter; and
(iii) the debtor may contact the department with any
questions or complaints regarding the licensee.
(H) The address, telephone number, and Internet address or
web site of the department.
(b) For purposes of subsection (a)(5), delivery of an electronic
record occurs when:
(1) the record is made available in a format in which the debtor
may 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 time
without penalty, notwithstanding the close-out fee as permitted
by section 8.3(d) of this chapter, or obligation, by giving the
licensee written or electronic notice, in which event:
(A) the licensee shall refund all unexpended money that the
licensee or the licensee's agent has received from or on
behalf of the debtor for the reduction or satisfaction of the
debtor's debt; and
(B) all powers of attorney granted by the debtor to the
licensee are revoked and ineffective;
(2) the debtor authorizes any bank insured by the federal
deposit insurance corporation in which the licensee or the
licensee's agent has established a trust account to disclose to the
department any financial records relating to the trust account;
(3) the licensee shall notify the debtor within five (5) days after
learning of a creditor's final decision to reject or withdraw from
a 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 or
terminate the agreement.
(d) All creditors must be notified of the debtor's and licensee's
relationship.
(e) A licensee shall give to the contract debtor a dated receipt for
each payment, at the time of the payment, unless the payment is
made by check, money order, or automated clearinghouse withdrawal
as authorized by the contract debtor.
(f) A licensee shall, upon cancellation by a contract debtor of the
agreement, notify immediately in writing all creditors in the debt
management plan of the cancellation by the contract debtor.
(g) A licensee may not enter into an agreement with a debtor
unless a thorough, written budget analysis of the debtor indicates that
the debtor can reasonably meet the payments required under a
proposed plan. The following must be included in the budget
analysis:
(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 the
particular family size and part of the state.
(3) Documentation and verification, either by a current credit
bureau report, current debtor account statements, or direct
documentation from the creditor, of monthly debt payments and
balances to be paid outside the plan.
(4) Documentation and verification, either by a current credit
bureau report, current debtor account statements, or direct
documentation from the creditor, of the monthly debt payments
and current balances to be paid through the plan.
(5) The date of the budget analysis and the signature of the
debtor.
(h) A licensee may not enter into an agreement with a contract
debtor for a period longer than sixty (60) months. Every thirty (30)
months, the licensee shall complete a thorough, written budget
analysis of the contract debtor to ensure the debt management plan
is still suitable for the contract debtor and the contract debtor will be
able to meet the payment obligations under the plan. When
adjustments are needed to change the indebtedness listed in the
agreement, the licensee may execute a new agreement using the
revised figures. A licensee may not increase the monthly fee
percentage under section 8.3(c)(2)(A) of this chapter during the term
of the original debt management plan agreement.
(i) A licensee may provide services under this chapter in the same
place of business in which another business is operating, or from
which other products or services are sold, if the director issues a
written 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 of
the 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 director
issues a written determination that the proposed solicitation or sale
is 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 speak
to a counselor, debt specialist, or customer service representative, as
appropriate, during ordinary business hours.
(l) A debt management company shall act in good faith in all
matters 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 considered
debt
Sec. 8.3. (a) Except as otherwise permitted by this section, a
licensee may not:
(1) impose, directly or indirectly, a fee or other charge on a
debtor; or
(2) receive money from or on behalf of a debtor for debt
management services.
(b) A licensee may not impose charges or receive payment for
debt management services until the licensee and the debtor have
agreed upon a plan and have signed an agreement that complies with
sections 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 the
following:
(1) A set up fee of not more than fifty dollars ($50) for
consultation, obtaining a credit report, and setting up an
account. Acceptance of a plan payment constitutes agreement
by the creditor to the plan.
(2) A monthly service fee of the lesser of:
(A) not more than fifteen percent (15%) of the monthly
amount the contract debtor agrees to pay through the
licensee, divided into equal monthly payments over the term
of the agreement; or
(B) not more than seventy-five dollars ($75) in any month.
The monthly service fee under this subdivision may be charged
for any one (1) month or part of a month. The amount of a set
up fee under subdivision (1) may not be included in the
calculation of the monthly service fee.
(d) Upon cancellation by a contract debtor or termination of
payments by a contract debtor, a licensee may not withhold for the
licensee's own benefit more than one hundred dollars ($100), which
may 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 debtor
leaves the services of the licensee for more than six (6) months.
(f) With respect to any additional charge not specifically provided
for in this section, the licensee must submit a written explanation of
the charge to the department indicating how the charge would be
assessed and the value or benefit to the contract debtor. Supporting
documents may be required by the department. The department shall
determine 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 the
department.
(g) For purposes of this chapter, the terms of an agreement
commence on the date on which the agreement is made.
(h) A licensee may assess a charge of not more than twenty-five
dollars ($25) for each return by a bank or other depository institution
of a dishonored check, negotiable order of withdrawal, or share draft
issued by the contract debtor.
(i) Any fee charged by the licensee to the debtor under this section
for services rendered by the licensee, other than the fees described
under subsection (e), is not considered a debt owed by the debtor to
the 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 midnight
of the third business day after the debtor enters into the agreement
unless the agreement does not comply with subsection (b) or section
8 or 9.5 of this chapter, in which event the debtor may cancel the
agreement at any time after the debtor enters into the agreement and
all fees paid by the debtor shall be refunded to the debtor. To
exercise the right to cancel, the debtor must give written notice to the
licensee. Notice by mail is given when mailed.
(b) An agreement must be accompanied by a form that contains
in clear and conspicuous type, surrounded by bold black lines:
"NOTICE OF RIGHT TO CANCEL
You may cancel this agreement, without any penalty or
obligation, at any time before midnight of the third business day
that begins the day after you agree to it by electronic
communication or by signing it.
To cancel this agreement during this period, send an electronic
mail 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 will
refund all the money you have already paid us.
You also may terminate this agreement at any later time, but we
may 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 the
disbursement of a debtor's money to one (1) or more of the debtor's
creditors before the expiration of the third business day after the date
an agreement is signed, a debtor may waive the right to cancel. To
waive the right, the individual must send or deliver a signed, dated
statement in the debtor's own words describing the circumstances
that necessitate a waiver. The waiver must explicitly waive the right
to 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 a
licensee within sixty (60) days after the date a payment is due under
an agreement, the agreement is considered canceled by the contract
debtor. A contract debtor may file a letter of continuation of an
agreement even if the contract debtor did not make a payment within
sixty (60) days after a payment was due. All of the following apply
to a letter of continuation of an agreement:
(1) A contract debtor may file only one (1) letter of continuation
with a licensee for any agreement.
(2) A letter of continuation must contain a detailed explanation
of the reason or reasons for the missed payment.
(3) If an agreement for which a letter of continuation that meets
the requirements of this subsection is filed, the agreement
remains in effect and subject to cancellation for any future
failure to make a payment as described in this subsection.
(4) An agreement between a licensee and a contract debtor must
clearly provide for one (1) letter of continuation by a contract
debtor.
(5) A contract debtor may not file a letter of continuation with
a licensee at the beginning of an agreement.
(b) If a licensee or a contract debtor terminates an agreement, the
licensee shall immediately return to the contract debtor any money
of the contract debtor held in trust for the benefit of the contract
debtor. As added by P.L.35-2010, SEC.130.
IC 28-1-29-9 Trust accounts; requirements and restrictions; quarterly
accountings; statement upon completion or termination of contract
Sec. 9. (a) All money paid to a licensee by or on behalf of a
contract debtor for distribution to creditors under a plan is held in
trust. On or before the close of the same banking day following
receipt, the licensee shall deposit the money in a trust account
established for the benefit of the contract debtor to whom the
licensee is furnishing debt management services.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual to
whom the licensee is furnishing debt management services.
(2) Disburse money paid by or on behalf of the contract debtor
to creditors of the contract debtor as disclosed in the agreement.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds. After the initial receipt of funds, remittances
shall be made not later than fifteen (15) days after receipt of
funds, less fees and costs, unless the reasonable payment of one
(1) or more of the contract debtor's obligations requires that the
funds be held for a longer period to accumulate a sum certain.
For purposes of this section, the close-out fee set forth in
section 8.3(d) of this chapter is not considered an obligation of
the contract debtor.
(4) Retain in the contract debtor's trust account, for charges, an
amount less than or equal to the sum of one (1) month's fee as
permitted 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 a
greater amount is approved in writing by the department.
(5) Promptly:
(A) correct any payments that are not made or that are
misdirected as a result of an error by the licensee or other
person in control of the trust account; and
(B) reimburse the contract debtor for any costs or fees
imposed by a creditor as a result of the failure to pay or
misdirection.
(c) A licensee may not commingle money in a trust account
established for the benefit of contract debtors to whom the licensee
is furnishing debt management services with money of other persons.
(d) A trust account must at all times have a cash balance equal to
the 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 must
compare the cash balance in the trust account with the sum of the
balances in each contract debtor's account. If the licensee or the
licensee's designee has more than one (1) trust account, each trust
account must be individually reconciled.
(f) If a licensee discovers, or has a reasonable suspicion of,
embezzlement or other unlawful appropriation of money held in
trust, the licensee shall:
(1) immediately notify the department in writing; and
(2) unless the department by rule provides otherwise, give
notice to the department describing the remedial action taken or
to be taken not later than five (5) days after the licensee
discovers, or has a reasonable suspicion of, the embezzlement
or other unlawful appropriation.
(g) If a contract debtor terminates an agreement or it becomes
reasonably apparent to a licensee that a plan has failed, the licensee
shall promptly refund to the contract debtor all money paid by or on
behalf of the contract debtor that has not been paid to creditors less
fees that are payable to the licensee under section 8.3(e) of this
chapter.
(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, the
licensee shall inform the department of the account number of the
trust account at the new bank.
(i) At least once every three (3) months the licensee shall render
an accounting to the contract debtor which must itemize the total
amount received from the contract debtor, the total amount paid each
creditor, the amount of charges deducted, the amount of fair share
fees received or withheld by the licensee from each of the contract
debtor's creditors, and any amount held in reserve. A licensee shall,
in addition thereto, render such an accounting to a contract debtor
within 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 a
licensee and a contract debtor, the licensee shall mail to the contract
debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the 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; compensation
prohibited
Sec. 9.5. (a) A licensee may not, directly or indirectly, do any of
the following:
(1) Misappropriate or misapply money held in trust.
(2) Exercise or attempt to exercise a power of attorney after a
contract debtor has terminated an agreement.
(3) Initiate a transfer from a contract debtor's account at a bank
or with another person unless the transfer is:
(A) a return of money to the contract debtor; or
(B) before the termination of an agreement, properly
authorized by the agreement and this chapter, and for:
(i) payment to one (1) or more creditors under an
agreement; or
(ii) payment of a fee.
(4) Offer a gift or bonus, premium, reward, or other
compensation 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 person
making the referral has a financial interest in the outcome of
debt management services provided to the customer.
(6) Receive a bonus, a commission, or other benefit for
referring a debtor to a person.
(7) Structure a plan in a manner that would result in a negative
amortization of any of a debtor's debts, unless a creditor that is
owed a negatively amortizing debt agrees to refund or waive the
finance charge upon payment of the principal amount of the
debt.
(8) Compensate the licensee's employees on the basis of a
formula that incorporates the number of debtors the employee
induces to enter into agreements. It is not a violation of this
subsection for a licensee to use the number of successfully
completed 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 a
payment to a creditor is in settlement of a debt to the creditor
unless, at the time of settlement, the contract debtor receives a
certification by the creditor that the payment is in full
settlement of the debt.
(10) Make a representation that:
(A) the licensee will furnish money to pay bills or prevent
attachments;
(B) payment of a certain amount will permit satisfaction of
a 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 competent
to furnish legal advice or perform legal services.
(12) Represent in the licensee's agreements, disclosures
required by this chapter, advertisements, or Internet web site
that the licensee is:
(A) a nonprofit entity unless the licensee is organized and
properly operating as a nonprofit entity under the law of the
state in which entity was formed; or
(B) a tax exempt entity unless the entity has received
certification of tax exempt status from the Internal Revenue
Service and is properly operating as a nonprofit entity under
the law of the state in which the entity was formed.
(13) Take a confession of judgment or power of attorney to
confess judgment against a contract debtor.
(14) Employ an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(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 other
than 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
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 law
authorized to practice in Indiana or to a depository financial
institution (as defined in IC 28-1-1-6).
(b) This chapter does not apply to a third-party bill paying service
with which the customer contracts solely for the customer's
convenience of paying routine bills, in an arrangement in which the
customer retains full control over all funds deposited. The types of
payments made by a bill paying service are exempt from this chapter
as long as the company's actions are not an attempt, as determined by
the 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 have
the meaning ascribed to them unless the context clearly requires a
different meaning:
(1) "Person" includes individuals, sole proprietorships,
partnerships, limited liability companies, trusts, joint ventures,
corporations, unincorporated organizations, other entities, and
their affiliates, however organized.
(2) "Debt management company" is any person doing business
as a budget counseling, credit counseling, debt management, or
debt pooling service or holding the person out, by words of
similar import, as providing services to debtors in the
management of their finances and debts, and having a written
agreement with the debtor to disburse money or anything of
value. 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 service
company".
(3) "License" means a license issued under the provisions of
this chapter.
(4) "Licensee" means any person to whom a license has been
issued pursuant to the provisions of this chapter.
(5) "Contract debtor" means a debtor who has entered into a
written 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 and
obligations arise out of personal, family, or household use and
shall not apply to persons whose principal indebtedness arises
out of business purpose transactions.
(8) "Department" means the members of the department of
financial 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 debtor
and not a licensee who has a power of attorney of the
contract debtor; and
(C) placed in a bank or savings institution chartered by the
state 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 a
contract debtor by a debt management company for the
administration of a debt management plan.
(12) "Plan" means a written debt repayment program in which
a debt management company furnishes debt management
services to a contract debtor and that includes a schedule of
payments to be made by or on behalf of the contract debtor and
used to pay debts owed by the contract debtor.
(13) "Principal amount of the debt" means the total amount of
a debt at the time the contract debtor enters into an agreement.
(14) "Agreement" means an agreement between a debt
management company and a debtor for the performance of debt
management services.
(15) "Trust account" means an account held by a licensee that
is:
(A) established in a bank insured by the Federal Deposit
Insurance Corporation;
(B) separate from other accounts held by the licensee;
(C) designated as a trust account or other account designated
to indicate that the money in the account is not the money of
the licensee; and
(D) used to hold money of one (1) or more contract debtors
for 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 on
terms more favorable to a contract debtor than the terms of the
contract between the debtor and a creditor.
(19) "Good faith" means honesty in fact and the observance of
reasonable standards of fair dealing.
(20) "Control of a related interest" refers to a situation in which
a person, directly or indirectly, or through or in concert with
one (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 a
related interest.
(B) The control in any manner of the election of a majority
of the directors of a related interest.
(C) The power to exercise a controlling influence over the
management or policies of a related interest. For purposes of
this clause, a person is presumed to have control, including
the power to exercise a controlling influence over the
management or policies of the related interest, if the person:
(i) is an executive officer or a director of the related
interest and directly or indirectly owns, controls, or has the
power to vote more than ten percent (10%) of any class of
voting securities of the related interest; or
(ii) directly or indirectly owns, controls, or has the power
to vote more than ten percent (10%) of any class of voting
securities of the related interest and no other person owns,
controls, or has the power to vote a greater percentage of
that 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 as
it deems advisable for the administration of this chapter, and to
provide such forms and procedures as it determines to be necessary
to 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 of
compliance; fees; violations; renewal
Sec. 3. (a) No person shall operate a debt management company
in 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 are
located in Indiana; or
(2) the person:
(A) contracts with debtors who are residents of Indiana; or
(B) solicits business from residents of Indiana by
advertisements or other communications sent or delivered
through 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 this
section 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 with
this section may include:
(1) criminal background checks, including a national criminal
history background check (as defined in IC 10-13-3-12) by the
Federal Bureau of Investigation for any individual described in
section 5(b)(2) or 5(b)(3) of this chapter;
(2) credit histories; and
(3) other background checks considered necessary by the
director.
If the director requests a national criminal history background check
under subdivision (1) for an individual described in that subdivision,
the director shall require the individual to submit fingerprints to the
department or to the state police department, as appropriate, at the
time evidence of compliance is requested under subsection (b). The
individual to whom the request is made shall pay any fees or costs
associated with the fingerprints and the national criminal history
background check. The national criminal history background check
may be used by the director to determine the individual's compliance
with this section. The director or the department may not release the
results of the national criminal history background check to any
private entity.
(d) The fee for a license or renewal shall be fixed by the
department under IC 28-11-3-5 and shall be nonrefundable. The
department may impose a fee under IC 28-11-3-5 for each day that
a renewal fee and any related documents that are required to be
submitted with the renewal are delinquent.
(e) If a person knowingly acts as a debt management company in
violation of this chapter, any agreement the person has made under
this chapter is void and the debtor under the agreement is not
obligated to pay any fees. If the debtor has paid any amounts to the
person, the debtor, or the department on behalf of the debtor, may
recover 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 the
director of the department.
The director of the department shall prescribe the form of the
renewal application. In order to be accepted for processing, a renewal
application must be accompanied by the license renewal fee imposed
under subsection (d) and all information and documents requested by
the 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,
IC 28-1-29-4 Denial, suspension, or revocation of license; grounds; procedure
Sec. 4. (a) The department may revoke or suspend any license
issued under this chapter for the following causes:
(1) Conviction of or a plea of guilty or nolo contendere to a
felony 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 or
renewal under this chapter.
(4) Indulging in a continuous course of unfair conduct.
(5) Insolvency, bankruptcy, receivership, or assignment for the
benefit of creditors by a licensee.
(6) Licensee lending money to any contract debtor that has
subscribed to the licensee's services.
(7) Except as provided in subsection (c), offering to pay or give
any cash, gift, bonus, premiums, reward, or other compensation
to any person for referring any prospective customer to the
licensee.
(8) Except as provided in subsection (d), receiving any cash,
gift, bonus, premium, reward, or other compensation from any
person other than the contract debtor in connection with the
licensee's activities as a licensee.
(9) Licensee requiring a debtor to purchase or agree to purchase
a policy of insurance from which licensee receives a fee or
other remuneration.
(10) If the licensee violates any reasonable rule or regulation
made by the department under and within the authority of this
chapter.
(11) Misleading advertising or representing that the licensee can
provide protection from legal recourse or suits of creditors.
(12) Engaging in an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(13) Providing a contract debtor less than the full benefit of a
compromise of a debt arranged by the licensee.
(14) Furnishing legal advice or performing legal services,
unless the person furnishing the advice or performing the
services:
(A) is licensed to practice law; and
(B) has been engaged by a debtor to provide legal services
to the debtor.
(15) A fact or condition exists that, if the fact or condition had
existed when the licensee applied for licensure as a debt
management company, would have been a reason for denying
the license.
(b) Except as provided in section 4.1 of this chapter, the denial,
revocation, or suspension shall be made only after specific charges
have been filed in writing, under oath, with the department or by the
department, whereupon a hearing shall be had as to the reasons for
such denial, revocation, or suspension and a certified copy of the
charges shall be served on the licensee or the applicant for license
not less than ten (10) days prior to the hearing.
(c) Notwithstanding subsection (a)(7), a licensee may reduce the
fees of a contract debtor who is a client of the licensee if the contract
debtor refers a prospective customer to the licensee.
(d) Notwithstanding subsection (a)(8), a licensee may receive a
fair share creditor fee, based on disbursements made to the creditor,
from a contract debtor's creditors. If any creditor refuses to pay the
fair share creditor fee, the creditor must still be included in the
contract debtor's payment plan.
(e) If the director of the department:
(1) has just cause to believe an emergency exists from which it
is 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 under
IC 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; revocation
of license
Sec. 4.1. (a) A license issued by the department under this chapter
shall 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 this
chapter;
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 an
administrative review under IC 4-21.5-3. Pending the decision
resulting from the hearing under IC 4-21.5-3 concerning the
license 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 a
license to any person who is an employee of, owner of, or affiliated
in 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 management
company shall make application to the department for a license to
engage in such business. Such application shall be in the form
prescribed by the department and shall contain such information as
the department may require.
(b) The department may not issue a license unless the department
finds 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 a
similar function for the applicant; and
(3) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
warrant belief that the business will be operated honestly and fairly
under this chapter. The department is entitled to request evidence of
an applicant's financial responsibility, character, and fitness.
(c) An application submitted under this section must indicate
whether any individuals described in subsection (b)(2) or (b)(3):
(1) are, at the time of the application, under indictment for a
felony under the laws of Indiana or any other jurisdiction; or
(2) have been convicted of or pleaded guilty or nolo contendere
to a felony under the laws of Indiana or any other jurisdiction.
(d) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(e) Upon written request, an applicant is entitled to a hearing
under IC 4-21.5 on the question of the qualifications of the applicant
for 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 by
proof that the applicant has executed a bond, payable to the
department, in an amount determined by the director and in
accordance with the standards adopted by the director. Said bond
shall also indemnify any person damaged by failure on the part of the
licensee to conduct the business in accordance with the provisions of
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.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 issued
a license or renewal license under this chapter, any individuals
described in section 5(b)(2) or 5(b)(3) of this chapter have been
convicted of or pleaded guilty or nolo contendere to a felony under
the laws of Indiana or any other jurisdiction.
(b) If this section applies, the licensee shall provide to the
department the information required under section 5(c) of this
chapter:
(1) not later than thirty (30) days after any person described in
subsection (a) has been convicted of or pleaded guilty or nolo
contendere 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 under
section 3(d) of this chapter.
(c) Not later than thirty (30) days after a licensee has been served
with notice of a civil action for violation of this chapter by or on
behalf of a debtor who resides or resided in Indiana on:
(1) the date an agreement that is the subject of the civil action
was entered into; or
(2) the date the civil action is filed;
the licensee shall provide written notice of the civil action to the
department. 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 services
to a debtor unless:
(1) the licensee has prepared a budget analysis; and
(2) if the debtor is to make regular, periodic payments, the
licensee:
(A) has prepared a plan for the debtor;
(B) has made a determination, based on the licensee's
analysis of the information provided by the debtor and
otherwise available to the licensee, that the plan is suitable
for the debtor and the debtor will be able to meet the
payment obligations under the plan; and
(C) believes that each creditor of the debtor listed as a
participating creditor in the plan will accept payment of the
debtor's debts as provided in the plan.
(b) Before a debtor enters into an agreement with a licensee to
engage in a plan, the licensee shall:
(1) provide the debtor with a copy of the budget analysis and
plan required by subsection (a) in a form that identifies the
licensee and that the debtor may keep whether or not the debtor
enters into the agreement;
(2) inform the debtor of the availability, at the debtor's option,
of assistance provided through a toll free communication
system or in person, where reasonably available to residents in
Indiana, regarding the budget analysis and plan required by
subsection (a); and
(3) with respect to all creditors identified by the debtor or
otherwise 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 the
plan and grant concessions;
(B) creditors that the licensee expects to participate in the
plan but not grant concessions;
(C) creditors that the licensee expects not to participate in
the plan; and
(D) all other creditors.
(c) Except as provided in subsections (d), (e), and (f), before a
debtor enters into an agreement with a licensee, the licensee shall, in
a written form that is provided to the debtor separately, that contains
no other information, and that the debtor may keep whether or not
the debtor enters into the agreement, provide the following
information 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 and
the debtor may ask the licensee about other ways, including
bankruptcy, to deal with indebtedness;
(B) nonpayment of debt may lead creditors to increase
finance and other charges or undertake collection activity,
including litigation;
(C) unless the statement would be untrue, the licensee may
receive compensation from the creditors of the debtor; and
(D) unless the debtor is insolvent, if a creditor settles for less
than the full amount of the debt, the plan may result in the
creation of taxable income to the debtor, even though the
debtor does not receive any money.
(d) If a licensee may receive payments from a debtor's creditors
and the plan contemplates that the debtor's creditors will reduce
finance charges or fees for late payment, default, or delinquency, the
licensee may comply with subsection (c) by providing the following
disclosure 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, and
you 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 your
creditors.
_______________________________________
Name and business address of licensee".
(e) If a licensee will not receive payments from a debtor's
creditors and the plan contemplates that the debtor's creditors will
reduce finance charges or fees for late payment, default, or
delinquency, a licensee may comply with subsection (c) by providing
the following disclosure in clear and conspicuous type, surrounded
by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
Debt management plans are not right for all individuals, and
you 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 for
less than the full principal amount of debt owed, a licensee may
comply with subsection (c) by providing the following disclosure in
clear 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 ask
us to provide information about bankruptcy and other ways to
deal 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, including
lawsuits, to collect the debts.
(3) Reduction of debt under our program may result in taxable
income to you, even though you will not actually receive any
money.
_________________________________________
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; notice
to creditors; payments; cancellation by contract debtor; budget
analysis; periodic reviews; operation of other businesses or sale of
other products and services; out-of-state licensees; toll free
communication 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 the
debtor resides;
(4) include the name, business address, and telephone number
of the licensee;
(5) be delivered to the debtor immediately upon formation of
the agreement; and
(6) disclose the following:
(A) The services to be provided.
(B) The amount or method of determining the amount of all
fees, individually itemized, to be paid by the debtor.
(C) The schedule of payments to be made by or on behalf of
the debtor, including the amount of each payment, the date
on which each payment is due, and an estimate of the date of
the final payment.
(D) If a plan provides for regular periodic payments to
creditors:
(i) each creditor of the debtor to which payment will be
made, the amount owed to each creditor, and any
concessions the licensee reasonably believes each creditor
will offer; and
(ii) the schedule of expected payments to each creditor,
including the amount of each payment and the date on
which the payment will be made.
(E) Each creditor that the licensee believes will not
participate in the plan and to which the licensee will not
direct payment.
(F) The manner in which the licensee will comply with the
licensee's obligations under section 9(j) of this chapter.
(G) A statement that:
(i) the licensee may terminate the agreement for good
cause, upon return of unexpended money of the debtor;
(ii) the debtor may cancel the agreement as provided in
section 8.6 of this chapter; and
(iii) the debtor may contact the department with any
questions or complaints regarding the licensee.
(H) The address, telephone number, and Internet address or
web site of the department.
(b) For purposes of subsection (a)(5), delivery of an electronic
record occurs when:
(1) the record is made available in a format in which the debtor
may 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 time
without penalty, notwithstanding the close-out fee as permitted
by section 8.3(d) of this chapter, or obligation, by giving the
licensee written or electronic notice, in which event:
(A) the licensee shall refund all unexpended money that the
licensee or the licensee's agent has received from or on
behalf of the debtor for the reduction or satisfaction of the
debtor's debt; and
(B) all powers of attorney granted by the debtor to the
licensee are revoked and ineffective;
(2) the debtor authorizes any bank insured by the federal
deposit insurance corporation in which the licensee or the
licensee's agent has established a trust account to disclose to the
department any financial records relating to the trust account;
(3) the licensee shall notify the debtor within five (5) days after
learning of a creditor's final decision to reject or withdraw from
a 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 or
terminate the agreement.
(d) All creditors must be notified of the debtor's and licensee's
relationship.
(e) A licensee shall give to the contract debtor a dated receipt for
each payment, at the time of the payment, unless the payment is
made by check, money order, or automated clearinghouse withdrawal
as authorized by the contract debtor.
(f) A licensee shall, upon cancellation by a contract debtor of the
agreement, notify immediately in writing all creditors in the debt
management plan of the cancellation by the contract debtor.
(g) A licensee may not enter into an agreement with a debtor
unless a thorough, written budget analysis of the debtor indicates that
the debtor can reasonably meet the payments required under a
proposed plan. The following must be included in the budget
analysis:
(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 the
particular family size and part of the state.
(3) Documentation and verification, either by a current credit
bureau report, current debtor account statements, or direct
documentation from the creditor, of monthly debt payments and
balances to be paid outside the plan.
(4) Documentation and verification, either by a current credit
bureau report, current debtor account statements, or direct
documentation from the creditor, of the monthly debt payments
and current balances to be paid through the plan.
(5) The date of the budget analysis and the signature of the
debtor.
(h) A licensee may not enter into an agreement with a contract
debtor for a period longer than sixty (60) months. Every thirty (30)
months, the licensee shall complete a thorough, written budget
analysis of the contract debtor to ensure the debt management plan
is still suitable for the contract debtor and the contract debtor will be
able to meet the payment obligations under the plan. When
adjustments are needed to change the indebtedness listed in the
agreement, the licensee may execute a new agreement using the
revised figures. A licensee may not increase the monthly fee
percentage under section 8.3(c)(2)(A) of this chapter during the term
of the original debt management plan agreement.
(i) A licensee may provide services under this chapter in the same
place of business in which another business is operating, or from
which other products or services are sold, if the director issues a
written 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 of
the 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 director
issues a written determination that the proposed solicitation or sale
is 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 speak
to a counselor, debt specialist, or customer service representative, as
appropriate, during ordinary business hours.
(l) A debt management company shall act in good faith in all
matters 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 considered
debt
Sec. 8.3. (a) Except as otherwise permitted by this section, a
licensee may not:
(1) impose, directly or indirectly, a fee or other charge on a
debtor; or
(2) receive money from or on behalf of a debtor for debt
management services.
(b) A licensee may not impose charges or receive payment for
debt management services until the licensee and the debtor have
agreed upon a plan and have signed an agreement that complies with
sections 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 the
following:
(1) A set up fee of not more than fifty dollars ($50) for
consultation, obtaining a credit report, and setting up an
account. Acceptance of a plan payment constitutes agreement
by the creditor to the plan.
(2) A monthly service fee of the lesser of:
(A) not more than fifteen percent (15%) of the monthly
amount the contract debtor agrees to pay through the
licensee, divided into equal monthly payments over the term
of the agreement; or
(B) not more than seventy-five dollars ($75) in any month.
The monthly service fee under this subdivision may be charged
for any one (1) month or part of a month. The amount of a set
up fee under subdivision (1) may not be included in the
calculation of the monthly service fee.
(d) Upon cancellation by a contract debtor or termination of
payments by a contract debtor, a licensee may not withhold for the
licensee's own benefit more than one hundred dollars ($100), which
may 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 debtor
leaves the services of the licensee for more than six (6) months.
(f) With respect to any additional charge not specifically provided
for in this section, the licensee must submit a written explanation of
the charge to the department indicating how the charge would be
assessed and the value or benefit to the contract debtor. Supporting
documents may be required by the department. The department shall
determine 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 the
department.
(g) For purposes of this chapter, the terms of an agreement
commence on the date on which the agreement is made.
(h) A licensee may assess a charge of not more than twenty-five
dollars ($25) for each return by a bank or other depository institution
of a dishonored check, negotiable order of withdrawal, or share draft
issued by the contract debtor.
(i) Any fee charged by the licensee to the debtor under this section
for services rendered by the licensee, other than the fees described
under subsection (e), is not considered a debt owed by the debtor to
the 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 midnight
of the third business day after the debtor enters into the agreement
unless the agreement does not comply with subsection (b) or section
8 or 9.5 of this chapter, in which event the debtor may cancel the
agreement at any time after the debtor enters into the agreement and
all fees paid by the debtor shall be refunded to the debtor. To
exercise the right to cancel, the debtor must give written notice to the
licensee. Notice by mail is given when mailed.
(b) An agreement must be accompanied by a form that contains
in clear and conspicuous type, surrounded by bold black lines:
"NOTICE OF RIGHT TO CANCEL
You may cancel this agreement, without any penalty or
obligation, at any time before midnight of the third business day
that begins the day after you agree to it by electronic
communication or by signing it.
To cancel this agreement during this period, send an electronic
mail 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 will
refund all the money you have already paid us.
You also may terminate this agreement at any later time, but we
may 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 the
disbursement of a debtor's money to one (1) or more of the debtor's
creditors before the expiration of the third business day after the date
an agreement is signed, a debtor may waive the right to cancel. To
waive the right, the individual must send or deliver a signed, dated
statement in the debtor's own words describing the circumstances
that necessitate a waiver. The waiver must explicitly waive the right
to 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 a
licensee within sixty (60) days after the date a payment is due under
an agreement, the agreement is considered canceled by the contract
debtor. A contract debtor may file a letter of continuation of an
agreement even if the contract debtor did not make a payment within
sixty (60) days after a payment was due. All of the following apply
to a letter of continuation of an agreement:
(1) A contract debtor may file only one (1) letter of continuation
with a licensee for any agreement.
(2) A letter of continuation must contain a detailed explanation
of the reason or reasons for the missed payment.
(3) If an agreement for which a letter of continuation that meets
the requirements of this subsection is filed, the agreement
remains in effect and subject to cancellation for any future
failure to make a payment as described in this subsection.
(4) An agreement between a licensee and a contract debtor must
clearly provide for one (1) letter of continuation by a contract
debtor.
(5) A contract debtor may not file a letter of continuation with
a licensee at the beginning of an agreement.
(b) If a licensee or a contract debtor terminates an agreement, the
licensee shall immediately return to the contract debtor any money
of the contract debtor held in trust for the benefit of the contract
debtor. As added by P.L.35-2010, SEC.130.
IC 28-1-29-9 Trust accounts; requirements and restrictions; quarterly
accountings; statement upon completion or termination of contract
Sec. 9. (a) All money paid to a licensee by or on behalf of a
contract debtor for distribution to creditors under a plan is held in
trust. On or before the close of the same banking day following
receipt, the licensee shall deposit the money in a trust account
established for the benefit of the contract debtor to whom the
licensee is furnishing debt management services.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual to
whom the licensee is furnishing debt management services.
(2) Disburse money paid by or on behalf of the contract debtor
to creditors of the contract debtor as disclosed in the agreement.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds. After the initial receipt of funds, remittances
shall be made not later than fifteen (15) days after receipt of
funds, less fees and costs, unless the reasonable payment of one
(1) or more of the contract debtor's obligations requires that the
funds be held for a longer period to accumulate a sum certain.
For purposes of this section, the close-out fee set forth in
section 8.3(d) of this chapter is not considered an obligation of
the contract debtor.
(4) Retain in the contract debtor's trust account, for charges, an
amount less than or equal to the sum of one (1) month's fee as
permitted 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 a
greater amount is approved in writing by the department.
(5) Promptly:
(A) correct any payments that are not made or that are
misdirected as a result of an error by the licensee or other
person in control of the trust account; and
(B) reimburse the contract debtor for any costs or fees
imposed by a creditor as a result of the failure to pay or
misdirection.
(c) A licensee may not commingle money in a trust account
established for the benefit of contract debtors to whom the licensee
is furnishing debt management services with money of other persons.
(d) A trust account must at all times have a cash balance equal to
the 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 must
compare the cash balance in the trust account with the sum of the
balances in each contract debtor's account. If the licensee or the
licensee's designee has more than one (1) trust account, each trust
account must be individually reconciled.
(f) If a licensee discovers, or has a reasonable suspicion of,
embezzlement or other unlawful appropriation of money held in
trust, the licensee shall:
(1) immediately notify the department in writing; and
(2) unless the department by rule provides otherwise, give
notice to the department describing the remedial action taken or
to be taken not later than five (5) days after the licensee
discovers, or has a reasonable suspicion of, the embezzlement
or other unlawful appropriation.
(g) If a contract debtor terminates an agreement or it becomes
reasonably apparent to a licensee that a plan has failed, the licensee
shall promptly refund to the contract debtor all money paid by or on
behalf of the contract debtor that has not been paid to creditors less
fees that are payable to the licensee under section 8.3(e) of this
chapter.
(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, the
licensee shall inform the department of the account number of the
trust account at the new bank.
(i) At least once every three (3) months the licensee shall render
an accounting to the contract debtor which must itemize the total
amount received from the contract debtor, the total amount paid each
creditor, the amount of charges deducted, the amount of fair share
fees received or withheld by the licensee from each of the contract
debtor's creditors, and any amount held in reserve. A licensee shall,
in addition thereto, render such an accounting to a contract debtor
within 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 a
licensee and a contract debtor, the licensee shall mail to the contract
debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the 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; compensation
prohibited
Sec. 9.5. (a) A licensee may not, directly or indirectly, do any of
the following:
(1) Misappropriate or misapply money held in trust.
(2) Exercise or attempt to exercise a power of attorney after a
contract debtor has terminated an agreement.
(3) Initiate a transfer from a contract debtor's account at a bank
or with another person unless the transfer is:
(A) a return of money to the contract debtor; or
(B) before the termination of an agreement, properly
authorized by the agreement and this chapter, and for:
(i) payment to one (1) or more creditors under an
agreement; or
(ii) payment of a fee.
(4) Offer a gift or bonus, premium, reward, or other
compensation 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 person
making the referral has a financial interest in the outcome of
debt management services provided to the customer.
(6) Receive a bonus, a commission, or other benefit for
referring a debtor to a person.
(7) Structure a plan in a manner that would result in a negative
amortization of any of a debtor's debts, unless a creditor that is
owed a negatively amortizing debt agrees to refund or waive the
finance charge upon payment of the principal amount of the
debt.
(8) Compensate the licensee's employees on the basis of a
formula that incorporates the number of debtors the employee
induces to enter into agreements. It is not a violation of this
subsection for a licensee to use the number of successfully
completed 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 a
payment to a creditor is in settlement of a debt to the creditor
unless, at the time of settlement, the contract debtor receives a
certification by the creditor that the payment is in full
settlement of the debt.
(10) Make a representation that:
(A) the licensee will furnish money to pay bills or prevent
attachments;
(B) payment of a certain amount will permit satisfaction of
a 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 competent
to furnish legal advice or perform legal services.
(12) Represent in the licensee's agreements, disclosures
required by this chapter, advertisements, or Internet web site
that the licensee is:
(A) a nonprofit entity unless the licensee is organized and
properly operating as a nonprofit entity under the law of the
state in which entity was formed; or
(B) a tax exempt entity unless the entity has received
certification of tax exempt status from the Internal Revenue
Service and is properly operating as a nonprofit entity under
the law of the state in which the entity was formed.
(13) Take a confession of judgment or power of attorney to
confess judgment against a contract debtor.
(14) Employ an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(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 other
than 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
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 law
authorized to practice in Indiana or to a depository financial
institution (as defined in IC 28-1-1-6).
(b) This chapter does not apply to a third-party bill paying service
with which the customer contracts solely for the customer's
convenience of paying routine bills, in an arrangement in which the
customer retains full control over all funds deposited. The types of
payments made by a bill paying service are exempt from this chapter
as long as the company's actions are not an attempt, as determined by
the 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 have
the meaning ascribed to them unless the context clearly requires a
different meaning:
(1) "Person" includes individuals, sole proprietorships,
partnerships, limited liability companies, trusts, joint ventures,
corporations, unincorporated organizations, other entities, and
their affiliates, however organized.
(2) "Debt management company" is any person doing business
as a budget counseling, credit counseling, debt management, or
debt pooling service or holding the person out, by words of
similar import, as providing services to debtors in the
management of their finances and debts, and having a written
agreement with the debtor to disburse money or anything of
value. 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 service
company".
(3) "License" means a license issued under the provisions of
this chapter.
(4) "Licensee" means any person to whom a license has been
issued pursuant to the provisions of this chapter.
(5) "Contract debtor" means a debtor who has entered into a
written 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 and
obligations arise out of personal, family, or household use and
shall not apply to persons whose principal indebtedness arises
out of business purpose transactions.
(8) "Department" means the members of the department of
financial 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 debtor
and not a licensee who has a power of attorney of the
contract debtor; and
(C) placed in a bank or savings institution chartered by the
state 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 a
contract debtor by a debt management company for the
administration of a debt management plan.
(12) "Plan" means a written debt repayment program in which
a debt management company furnishes debt management
services to a contract debtor and that includes a schedule of
payments to be made by or on behalf of the contract debtor and
used to pay debts owed by the contract debtor.
(13) "Principal amount of the debt" means the total amount of
a debt at the time the contract debtor enters into an agreement.
(14) "Agreement" means an agreement between a debt
management company and a debtor for the performance of debt
management services.
(15) "Trust account" means an account held by a licensee that
is:
(A) established in a bank insured by the Federal Deposit
Insurance Corporation;
(B) separate from other accounts held by the licensee;
(C) designated as a trust account or other account designated
to indicate that the money in the account is not the money of
the licensee; and
(D) used to hold money of one (1) or more contract debtors
for 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 on
terms more favorable to a contract debtor than the terms of the
contract between the debtor and a creditor.
(19) "Good faith" means honesty in fact and the observance of
reasonable standards of fair dealing.
(20) "Control of a related interest" refers to a situation in which
a person, directly or indirectly, or through or in concert with
one (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 a
related interest.
(B) The control in any manner of the election of a majority
of the directors of a related interest.
(C) The power to exercise a controlling influence over the
management or policies of a related interest. For purposes of
this clause, a person is presumed to have control, including
the power to exercise a controlling influence over the
management or policies of the related interest, if the person:
(i) is an executive officer or a director of the related
interest and directly or indirectly owns, controls, or has the
power to vote more than ten percent (10%) of any class of
voting securities of the related interest; or
(ii) directly or indirectly owns, controls, or has the power
to vote more than ten percent (10%) of any class of voting
securities of the related interest and no other person owns,
controls, or has the power to vote a greater percentage of
that 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 as
it deems advisable for the administration of this chapter, and to
provide such forms and procedures as it determines to be necessary
to 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 of
compliance; fees; violations; renewal
Sec. 3. (a) No person shall operate a debt management company
in 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 are
located in Indiana; or
(2) the person:
(A) contracts with debtors who are residents of Indiana; or
(B) solicits business from residents of Indiana by
advertisements or other communications sent or delivered
through 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 this
section 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 with
this section may include:
(1) criminal background checks, including a national criminal
history background check (as defined in IC 10-13-3-12) by the
Federal Bureau of Investigation for any individual described in
section 5(b)(2) or 5(b)(3) of this chapter;
(2) credit histories; and
(3) other background checks considered necessary by the
director.
If the director requests a national criminal history background check
under subdivision (1) for an individual described in that subdivision,
the director shall require the individual to submit fingerprints to the
department or to the state police department, as appropriate, at the
time evidence of compliance is requested under subsection (b). The
individual to whom the request is made shall pay any fees or costs
associated with the fingerprints and the national criminal history
background check. The national criminal history background check
may be used by the director to determine the individual's compliance
with this section. The director or the department may not release the
results of the national criminal history background check to any
private entity.
(d) The fee for a license or renewal shall be fixed by the
department under IC 28-11-3-5 and shall be nonrefundable. The
department may impose a fee under IC 28-11-3-5 for each day that
a renewal fee and any related documents that are required to be
submitted with the renewal are delinquent.
(e) If a person knowingly acts as a debt management company in
violation of this chapter, any agreement the person has made under
this chapter is void and the debtor under the agreement is not
obligated to pay any fees. If the debtor has paid any amounts to the
person, the debtor, or the department on behalf of the debtor, may
recover 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 the
director of the department.
The director of the department shall prescribe the form of the
renewal application. In order to be accepted for processing, a renewal
application must be accompanied by the license renewal fee imposed
under subsection (d) and all information and documents requested by
the 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,
IC 28-1-29-4 Denial, suspension, or revocation of license; grounds; procedure
Sec. 4. (a) The department may revoke or suspend any license
issued under this chapter for the following causes:
(1) Conviction of or a plea of guilty or nolo contendere to a
felony 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 or
renewal under this chapter.
(4) Indulging in a continuous course of unfair conduct.
(5) Insolvency, bankruptcy, receivership, or assignment for the
benefit of creditors by a licensee.
(6) Licensee lending money to any contract debtor that has
subscribed to the licensee's services.
(7) Except as provided in subsection (c), offering to pay or give
any cash, gift, bonus, premiums, reward, or other compensation
to any person for referring any prospective customer to the
licensee.
(8) Except as provided in subsection (d), receiving any cash,
gift, bonus, premium, reward, or other compensation from any
person other than the contract debtor in connection with the
licensee's activities as a licensee.
(9) Licensee requiring a debtor to purchase or agree to purchase
a policy of insurance from which licensee receives a fee or
other remuneration.
(10) If the licensee violates any reasonable rule or regulation
made by the department under and within the authority of this
chapter.
(11) Misleading advertising or representing that the licensee can
provide protection from legal recourse or suits of creditors.
(12) Engaging in an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(13) Providing a contract debtor less than the full benefit of a
compromise of a debt arranged by the licensee.
(14) Furnishing legal advice or performing legal services,
unless the person furnishing the advice or performing the
services:
(A) is licensed to practice law; and
(B) has been engaged by a debtor to provide legal services
to the debtor.
(15) A fact or condition exists that, if the fact or condition had
existed when the licensee applied for licensure as a debt
management company, would have been a reason for denying
the license.
(b) Except as provided in section 4.1 of this chapter, the denial,
revocation, or suspension shall be made only after specific charges
have been filed in writing, under oath, with the department or by the
department, whereupon a hearing shall be had as to the reasons for
such denial, revocation, or suspension and a certified copy of the
charges shall be served on the licensee or the applicant for license
not less than ten (10) days prior to the hearing.
(c) Notwithstanding subsection (a)(7), a licensee may reduce the
fees of a contract debtor who is a client of the licensee if the contract
debtor refers a prospective customer to the licensee.
(d) Notwithstanding subsection (a)(8), a licensee may receive a
fair share creditor fee, based on disbursements made to the creditor,
from a contract debtor's creditors. If any creditor refuses to pay the
fair share creditor fee, the creditor must still be included in the
contract debtor's payment plan.
(e) If the director of the department:
(1) has just cause to believe an emergency exists from which it
is 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 under
IC 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; revocation
of license
Sec. 4.1. (a) A license issued by the department under this chapter
shall 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 this
chapter;
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 an
administrative review under IC 4-21.5-3. Pending the decision
resulting from the hearing under IC 4-21.5-3 concerning the
license 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 a
license to any person who is an employee of, owner of, or affiliated
in 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 management
company shall make application to the department for a license to
engage in such business. Such application shall be in the form
prescribed by the department and shall contain such information as
the department may require.
(b) The department may not issue a license unless the department
finds 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 a
similar function for the applicant; and
(3) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
warrant belief that the business will be operated honestly and fairly
under this chapter. The department is entitled to request evidence of
an applicant's financial responsibility, character, and fitness.
(c) An application submitted under this section must indicate
whether any individuals described in subsection (b)(2) or (b)(3):
(1) are, at the time of the application, under indictment for a
felony under the laws of Indiana or any other jurisdiction; or
(2) have been convicted of or pleaded guilty or nolo contendere
to a felony under the laws of Indiana or any other jurisdiction.
(d) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(e) Upon written request, an applicant is entitled to a hearing
under IC 4-21.5 on the question of the qualifications of the applicant
for 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 by
proof that the applicant has executed a bond, payable to the
department, in an amount determined by the director and in
accordance with the standards adopted by the director. Said bond
shall also indemnify any person damaged by failure on the part of the
licensee to conduct the business in accordance with the provisions of
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.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 issued
a license or renewal license under this chapter, any individuals
described in section 5(b)(2) or 5(b)(3) of this chapter have been
convicted of or pleaded guilty or nolo contendere to a felony under
the laws of Indiana or any other jurisdiction.
(b) If this section applies, the licensee shall provide to the
department the information required under section 5(c) of this
chapter:
(1) not later than thirty (30) days after any person described in
subsection (a) has been convicted of or pleaded guilty or nolo
contendere 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 under
section 3(d) of this chapter.
(c) Not later than thirty (30) days after a licensee has been served
with notice of a civil action for violation of this chapter by or on
behalf of a debtor who resides or resided in Indiana on:
(1) the date an agreement that is the subject of the civil action
was entered into; or
(2) the date the civil action is filed;
the licensee shall provide written notice of the civil action to the
department. 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 services
to a debtor unless:
(1) the licensee has prepared a budget analysis; and
(2) if the debtor is to make regular, periodic payments, the
licensee:
(A) has prepared a plan for the debtor;
(B) has made a determination, based on the licensee's
analysis of the information provided by the debtor and
otherwise available to the licensee, that the plan is suitable
for the debtor and the debtor will be able to meet the
payment obligations under the plan; and
(C) believes that each creditor of the debtor listed as a
participating creditor in the plan will accept payment of the
debtor's debts as provided in the plan.
(b) Before a debtor enters into an agreement with a licensee to
engage in a plan, the licensee shall:
(1) provide the debtor with a copy of the budget analysis and
plan required by subsection (a) in a form that identifies the
licensee and that the debtor may keep whether or not the debtor
enters into the agreement;
(2) inform the debtor of the availability, at the debtor's option,
of assistance provided through a toll free communication
system or in person, where reasonably available to residents in
Indiana, regarding the budget analysis and plan required by
subsection (a); and
(3) with respect to all creditors identified by the debtor or
otherwise 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 the
plan and grant concessions;
(B) creditors that the licensee expects to participate in the
plan but not grant concessions;
(C) creditors that the licensee expects not to participate in
the plan; and
(D) all other creditors.
(c) Except as provided in subsections (d), (e), and (f), before a
debtor enters into an agreement with a licensee, the licensee shall, in
a written form that is provided to the debtor separately, that contains
no other information, and that the debtor may keep whether or not
the debtor enters into the agreement, provide the following
information 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 and
the debtor may ask the licensee about other ways, including
bankruptcy, to deal with indebtedness;
(B) nonpayment of debt may lead creditors to increase
finance and other charges or undertake collection activity,
including litigation;
(C) unless the statement would be untrue, the licensee may
receive compensation from the creditors of the debtor; and
(D) unless the debtor is insolvent, if a creditor settles for less
than the full amount of the debt, the plan may result in the
creation of taxable income to the debtor, even though the
debtor does not receive any money.
(d) If a licensee may receive payments from a debtor's creditors
and the plan contemplates that the debtor's creditors will reduce
finance charges or fees for late payment, default, or delinquency, the
licensee may comply with subsection (c) by providing the following
disclosure 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, and
you 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 your
creditors.
_______________________________________
Name and business address of licensee".
(e) If a licensee will not receive payments from a debtor's
creditors and the plan contemplates that the debtor's creditors will
reduce finance charges or fees for late payment, default, or
delinquency, a licensee may comply with subsection (c) by providing
the following disclosure in clear and conspicuous type, surrounded
by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
Debt management plans are not right for all individuals, and
you 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 for
less than the full principal amount of debt owed, a licensee may
comply with subsection (c) by providing the following disclosure in
clear 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 ask
us to provide information about bankruptcy and other ways to
deal 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, including
lawsuits, to collect the debts.
(3) Reduction of debt under our program may result in taxable
income to you, even though you will not actually receive any
money.
_________________________________________
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; notice
to creditors; payments; cancellation by contract debtor; budget
analysis; periodic reviews; operation of other businesses or sale of
other products and services; out-of-state licensees; toll free
communication 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 the
debtor resides;
(4) include the name, business address, and telephone number
of the licensee;
(5) be delivered to the debtor immediately upon formation of
the agreement; and
(6) disclose the following:
(A) The services to be provided.
(B) The amount or method of determining the amount of all
fees, individually itemized, to be paid by the debtor.
(C) The schedule of payments to be made by or on behalf of
the debtor, including the amount of each payment, the date
on which each payment is due, and an estimate of the date of
the final payment.
(D) If a plan provides for regular periodic payments to
creditors:
(i) each creditor of the debtor to which payment will be
made, the amount owed to each creditor, and any
concessions the licensee reasonably believes each creditor
will offer; and
(ii) the schedule of expected payments to each creditor,
including the amount of each payment and the date on
which the payment will be made.
(E) Each creditor that the licensee believes will not
participate in the plan and to which the licensee will not
direct payment.
(F) The manner in which the licensee will comply with the
licensee's obligations under section 9(j) of this chapter.
(G) A statement that:
(i) the licensee may terminate the agreement for good
cause, upon return of unexpended money of the debtor;
(ii) the debtor may cancel the agreement as provided in
section 8.6 of this chapter; and
(iii) the debtor may contact the department with any
questions or complaints regarding the licensee.
(H) The address, telephone number, and Internet address or
web site of the department.
(b) For purposes of subsection (a)(5), delivery of an electronic
record occurs when:
(1) the record is made available in a format in which the debtor
may 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 time
without penalty, notwithstanding the close-out fee as permitted
by section 8.3(d) of this chapter, or obligation, by giving the
licensee written or electronic notice, in which event:
(A) the licensee shall refund all unexpended money that the
licensee or the licensee's agent has received from or on
behalf of the debtor for the reduction or satisfaction of the
debtor's debt; and
(B) all powers of attorney granted by the debtor to the
licensee are revoked and ineffective;
(2) the debtor authorizes any bank insured by the federal
deposit insurance corporation in which the licensee or the
licensee's agent has established a trust account to disclose to the
department any financial records relating to the trust account;
(3) the licensee shall notify the debtor within five (5) days after
learning of a creditor's final decision to reject or withdraw from
a 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 or
terminate the agreement.
(d) All creditors must be notified of the debtor's and licensee's
relationship.
(e) A licensee shall give to the contract debtor a dated receipt for
each payment, at the time of the payment, unless the payment is
made by check, money order, or automated clearinghouse withdrawal
as authorized by the contract debtor.
(f) A licensee shall, upon cancellation by a contract debtor of the
agreement, notify immediately in writing all creditors in the debt
management plan of the cancellation by the contract debtor.
(g) A licensee may not enter into an agreement with a debtor
unless a thorough, written budget analysis of the debtor indicates that
the debtor can reasonably meet the payments required under a
proposed plan. The following must be included in the budget
analysis:
(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 the
particular family size and part of the state.
(3) Documentation and verification, either by a current credit
bureau report, current debtor account statements, or direct
documentation from the creditor, of monthly debt payments and
balances to be paid outside the plan.
(4) Documentation and verification, either by a current credit
bureau report, current debtor account statements, or direct
documentation from the creditor, of the monthly debt payments
and current balances to be paid through the plan.
(5) The date of the budget analysis and the signature of the
debtor.
(h) A licensee may not enter into an agreement with a contract
debtor for a period longer than sixty (60) months. Every thirty (30)
months, the licensee shall complete a thorough, written budget
analysis of the contract debtor to ensure the debt management plan
is still suitable for the contract debtor and the contract debtor will be
able to meet the payment obligations under the plan. When
adjustments are needed to change the indebtedness listed in the
agreement, the licensee may execute a new agreement using the
revised figures. A licensee may not increase the monthly fee
percentage under section 8.3(c)(2)(A) of this chapter during the term
of the original debt management plan agreement.
(i) A licensee may provide services under this chapter in the same
place of business in which another business is operating, or from
which other products or services are sold, if the director issues a
written 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 of
the 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 director
issues a written determination that the proposed solicitation or sale
is 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 speak
to a counselor, debt specialist, or customer service representative, as
appropriate, during ordinary business hours.
(l) A debt management company shall act in good faith in all
matters 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 considered
debt
Sec. 8.3. (a) Except as otherwise permitted by this section, a
licensee may not:
(1) impose, directly or indirectly, a fee or other charge on a
debtor; or
(2) receive money from or on behalf of a debtor for debt
management services.
(b) A licensee may not impose charges or receive payment for
debt management services until the licensee and the debtor have
agreed upon a plan and have signed an agreement that complies with
sections 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 the
following:
(1) A set up fee of not more than fifty dollars ($50) for
consultation, obtaining a credit report, and setting up an
account. Acceptance of a plan payment constitutes agreement
by the creditor to the plan.
(2) A monthly service fee of the lesser of:
(A) not more than fifteen percent (15%) of the monthly
amount the contract debtor agrees to pay through the
licensee, divided into equal monthly payments over the term
of the agreement; or
(B) not more than seventy-five dollars ($75) in any month.
The monthly service fee under this subdivision may be charged
for any one (1) month or part of a month. The amount of a set
up fee under subdivision (1) may not be included in the
calculation of the monthly service fee.
(d) Upon cancellation by a contract debtor or termination of
payments by a contract debtor, a licensee may not withhold for the
licensee's own benefit more than one hundred dollars ($100), which
may 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 debtor
leaves the services of the licensee for more than six (6) months.
(f) With respect to any additional charge not specifically provided
for in this section, the licensee must submit a written explanation of
the charge to the department indicating how the charge would be
assessed and the value or benefit to the contract debtor. Supporting
documents may be required by the department. The department shall
determine 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 the
department.
(g) For purposes of this chapter, the terms of an agreement
commence on the date on which the agreement is made.
(h) A licensee may assess a charge of not more than twenty-five
dollars ($25) for each return by a bank or other depository institution
of a dishonored check, negotiable order of withdrawal, or share draft
issued by the contract debtor.
(i) Any fee charged by the licensee to the debtor under this section
for services rendered by the licensee, other than the fees described
under subsection (e), is not considered a debt owed by the debtor to
the 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 midnight
of the third business day after the debtor enters into the agreement
unless the agreement does not comply with subsection (b) or section
8 or 9.5 of this chapter, in which event the debtor may cancel the
agreement at any time after the debtor enters into the agreement and
all fees paid by the debtor shall be refunded to the debtor. To
exercise the right to cancel, the debtor must give written notice to the
licensee. Notice by mail is given when mailed.
(b) An agreement must be accompanied by a form that contains
in clear and conspicuous type, surrounded by bold black lines:
"NOTICE OF RIGHT TO CANCEL
You may cancel this agreement, without any penalty or
obligation, at any time before midnight of the third business day
that begins the day after you agree to it by electronic
communication or by signing it.
To cancel this agreement during this period, send an electronic
mail 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 will
refund all the money you have already paid us.
You also may terminate this agreement at any later time, but we
may 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 the
disbursement of a debtor's money to one (1) or more of the debtor's
creditors before the expiration of the third business day after the date
an agreement is signed, a debtor may waive the right to cancel. To
waive the right, the individual must send or deliver a signed, dated
statement in the debtor's own words describing the circumstances
that necessitate a waiver. The waiver must explicitly waive the right
to 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 a
licensee within sixty (60) days after the date a payment is due under
an agreement, the agreement is considered canceled by the contract
debtor. A contract debtor may file a letter of continuation of an
agreement even if the contract debtor did not make a payment within
sixty (60) days after a payment was due. All of the following apply
to a letter of continuation of an agreement:
(1) A contract debtor may file only one (1) letter of continuation
with a licensee for any agreement.
(2) A letter of continuation must contain a detailed explanation
of the reason or reasons for the missed payment.
(3) If an agreement for which a letter of continuation that meets
the requirements of this subsection is filed, the agreement
remains in effect and subject to cancellation for any future
failure to make a payment as described in this subsection.
(4) An agreement between a licensee and a contract debtor must
clearly provide for one (1) letter of continuation by a contract
debtor.
(5) A contract debtor may not file a letter of continuation with
a licensee at the beginning of an agreement.
(b) If a licensee or a contract debtor terminates an agreement, the
licensee shall immediately return to the contract debtor any money
of the contract debtor held in trust for the benefit of the contract
debtor. As added by P.L.35-2010, SEC.130.
IC 28-1-29-9 Trust accounts; requirements and restrictions; quarterly
accountings; statement upon completion or termination of contract
Sec. 9. (a) All money paid to a licensee by or on behalf of a
contract debtor for distribution to creditors under a plan is held in
trust. On or before the close of the same banking day following
receipt, the licensee shall deposit the money in a trust account
established for the benefit of the contract debtor to whom the
licensee is furnishing debt management services.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual to
whom the licensee is furnishing debt management services.
(2) Disburse money paid by or on behalf of the contract debtor
to creditors of the contract debtor as disclosed in the agreement.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds. After the initial receipt of funds, remittances
shall be made not later than fifteen (15) days after receipt of
funds, less fees and costs, unless the reasonable payment of one
(1) or more of the contract debtor's obligations requires that the
funds be held for a longer period to accumulate a sum certain.
For purposes of this section, the close-out fee set forth in
section 8.3(d) of this chapter is not considered an obligation of
the contract debtor.
(4) Retain in the contract debtor's trust account, for charges, an
amount less than or equal to the sum of one (1) month's fee as
permitted 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 a
greater amount is approved in writing by the department.
(5) Promptly:
(A) correct any payments that are not made or that are
misdirected as a result of an error by the licensee or other
person in control of the trust account; and
(B) reimburse the contract debtor for any costs or fees
imposed by a creditor as a result of the failure to pay or
misdirection.
(c) A licensee may not commingle money in a trust account
established for the benefit of contract debtors to whom the licensee
is furnishing debt management services with money of other persons.
(d) A trust account must at all times have a cash balance equal to
the 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 must
compare the cash balance in the trust account with the sum of the
balances in each contract debtor's account. If the licensee or the
licensee's designee has more than one (1) trust account, each trust
account must be individually reconciled.
(f) If a licensee discovers, or has a reasonable suspicion of,
embezzlement or other unlawful appropriation of money held in
trust, the licensee shall:
(1) immediately notify the department in writing; and
(2) unless the department by rule provides otherwise, give
notice to the department describing the remedial action taken or
to be taken not later than five (5) days after the licensee
discovers, or has a reasonable suspicion of, the embezzlement
or other unlawful appropriation.
(g) If a contract debtor terminates an agreement or it becomes
reasonably apparent to a licensee that a plan has failed, the licensee
shall promptly refund to the contract debtor all money paid by or on
behalf of the contract debtor that has not been paid to creditors less
fees that are payable to the licensee under section 8.3(e) of this
chapter.
(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, the
licensee shall inform the department of the account number of the
trust account at the new bank.
(i) At least once every three (3) months the licensee shall render
an accounting to the contract debtor which must itemize the total
amount received from the contract debtor, the total amount paid each
creditor, the amount of charges deducted, the amount of fair share
fees received or withheld by the licensee from each of the contract
debtor's creditors, and any amount held in reserve. A licensee shall,
in addition thereto, render such an accounting to a contract debtor
within 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 a
licensee and a contract debtor, the licensee shall mail to the contract
debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the 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; compensation
prohibited
Sec. 9.5. (a) A licensee may not, directly or indirectly, do any of
the following:
(1) Misappropriate or misapply money held in trust.
(2) Exercise or attempt to exercise a power of attorney after a
contract debtor has terminated an agreement.
(3) Initiate a transfer from a contract debtor's account at a bank
or with another person unless the transfer is:
(A) a return of money to the contract debtor; or
(B) before the termination of an agreement, properly
authorized by the agreement and this chapter, and for:
(i) payment to one (1) or more creditors under an
agreement; or
(ii) payment of a fee.
(4) Offer a gift or bonus, premium, reward, or other
compensation 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 person
making the referral has a financial interest in the outcome of
debt management services provided to the customer.
(6) Receive a bonus, a commission, or other benefit for
referring a debtor to a person.
(7) Structure a plan in a manner that would result in a negative
amortization of any of a debtor's debts, unless a creditor that is
owed a negatively amortizing debt agrees to refund or waive the
finance charge upon payment of the principal amount of the
debt.
(8) Compensate the licensee's employees on the basis of a
formula that incorporates the number of debtors the employee
induces to enter into agreements. It is not a violation of this
subsection for a licensee to use the number of successfully
completed 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 a
payment to a creditor is in settlement of a debt to the creditor
unless, at the time of settlement, the contract debtor receives a
certification by the creditor that the payment is in full
settlement of the debt.
(10) Make a representation that:
(A) the licensee will furnish money to pay bills or prevent
attachments;
(B) payment of a certain amount will permit satisfaction of
a 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 competent
to furnish legal advice or perform legal services.
(12) Represent in the licensee's agreements, disclosures
required by this chapter, advertisements, or Internet web site
that the licensee is:
(A) a nonprofit entity unless the licensee is organized and
properly operating as a nonprofit entity under the law of the
state in which entity was formed; or
(B) a tax exempt entity unless the entity has received
certification of tax exempt status from the Internal Revenue
Service and is properly operating as a nonprofit entity under
the law of the state in which the entity was formed.
(13) Take a confession of judgment or power of attorney to
confess judgment against a contract debtor.
(14) Employ an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(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 other
than 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
