Bill Summary for H 481 (2023-2024)
|View NCGA Bill Details||2023-2024 Session|
AN ACT TO MODERNIZE AND EXPAND THE PROHIBITION OF DEBT SETTLEMENT BY MAKING DEBT SETTLEMENT AN UNFAIR TRADE PRACTICE, CLARIFYING THE DEFINITION OF DEBT SETTLEMENT, EXPANDING CIVIL REMEDIES AVAILABLE TO DEBTORS, AND LIMITING DEBT SETTLEMENT ACTS THAT ARE AUTHORIZED AND TO MAKE OTHER ADMINISTRATIVE AND TECHNICAL CHANGES.Intro. by Howard, Setzer, Saine, Everitt.
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Recodifies Article 56 of GS Chapter 14 as Article 7 of GS Chapter 75, now titled Adjusting and Debt Settlement Prohibited (was, Debt Adjusting). Makes the following changes to the Article.
Modifies and adds to the Article’s defined terms. Defines debt adjusting as entering into or making a contract with a debtor whereby the debtor agrees to pay a certain amount of money periodically to the person engaged in the debt adjusting business and that person, for consideration, agrees to distribute or distributes the money among one or more creditors pursuant to an agreed upon plan. Modifies the definition used for debt adjusting to no longer include the business or practice of holding oneself out as acting or offering or attempting to act for consideration as an intermediary between debtor and creditors to settle, compound, or alter payment terms of a debtor, and receiving money or other property for payment to or distribution among the debtor’s creditors. Adds the defined term debt settlement, defined to mean the business whereby any person holds themselves out as acting for consideration as an intermediary between a debtor and one or more of the debtor’s creditors for the purpose of reducing, settling, or altering the terms of the payment of any debt of the debtor (previously, included in the definition of debt adjusting; eliminates further specifications previously provided). Amends the definition of person to include “other entity.” Eliminates the defined terms debt adjuster and nominal consideration. Adds the defined term affiliate.
Adds a new provision to expressly prohibit any person, directly or through affiliates, from engaging in, offering to engage in, or attempting to engage in debt adjusting or debt settlement. Modifies the existing language concerning criminal punishment for a violation of the Article to include debt settlement, thereby making both debt adjusting and debt settlement a Class 2 misdemeanor. Additionally, expands the provisions regarding enjoining actions brought under the Article, to include debt settlement, and allow a superior court judge to enjoin the continuation or offering of any debt adjusting or debt settlement business or services as an unfair trade practice. Adds that the authorized actions and remedies are in addition to other remedies available under GS Chapter 75.
Makes clarifying changes to the provisions providing for authorized acts under the Article and modifies the language to reflect the Article’s defined terms, as amended. More specifically includes as an authorized act a licensed attorney acting within the attorney-client relationship with the debtor who has entered into any arrangement with a person engaged in, directly or through affiliates, in debt adjusting or debt settlement, excluding services provided to a debtor by an attorney or in the name of an attorney. Adds to the conditions for credit counseling, education and debt management by an organization to qualify as an authorized act to now require that the organization charges no fee or a fee to cover debt management plan administration that is no more than $40 for origination or setup and 10% of the monthly payment disbursed under the plan, which is no more than $40. Eliminates the previously authorized act of intermittent or casual adjustment of a debtor’s debt for compensation for an individual or person who is not a debt adjuster, not engaged in or holding oneself out as being engaged in debt adjusting.
Deems contracts for debt adjusting or debt settlement void per se and deems any violation of the Article as an unfair trade practice under GS 75-1.1.
Applies to offenses committed on or after July 1, 2023.