Pennsylvania Provides For Licensing, Regulation Of Debt Settlement Providers


On July 9, Pennsylvania Governor Tom Corbett signed SB 622, which directs the Department of Banking and Securities to establish licensing requirements, including fees, for providers of debt settlement services. Such a license will be a “covered license” under state law, and, as such, will require employees of entities seeking a license to submit to criminal history checks. In addition, licensed debt settlement firms would be required to provide written disclosures regarding, among other things: (i) the amount of time necessary to achieve the represented results; (ii) the extent to which debt settlement services may include settlement offers to creditors and debt collectors, including the time by which bona fide offers will be made; (iii) the cost to the individual for providing debt settlement services and the method by which any fee will be calculated; (iv) that the use of a debt settlement service will likely adversely impact the credit worthiness of the individual; and (v) the total estimated program costs if the individual completes the program. The bill does not apply to (i) judicial officers; (ii) depository licensees; (iii) title insurers, escrow companies, or other persons that provide bill paying services and offer debt settlement incidental to those services; or (iv) attorneys who act as intermediaries. The bill defines certain prohibited activities, and grants the regulator authority to supervise licensed firms, enforce the requirements, and impose civil penalties of up to $10,000 for each violation. Most provisions of the bill take effect November 1, 2014.

Topics:  Debt, Debt Settlement Services, Debtors

Published In: General Business Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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