2007 Minnesota Statutes

CHAPTER 332A. DEBT MANAGEMENT SERVICES

332A.02 DEFINITIONS.
    Subdivision 1. Scope. Unless a different meaning is clearly indicated by the context, for the
purposes of this chapter the terms defined in this section have the meanings given them.
    Subd. 2. Accreditation. "Accreditation" means certification as an accredited credit
counseling provider by the Council on Accreditation.
    Subd. 3. Attorney general. "Attorney general" means the attorney general of the state of
Minnesota.
    Subd. 4. Commissioner. "Commissioner" means commissioner of commerce.
    Subd. 5. Controlling or affiliated party. "Controlling or affiliated party" means any person
directly or indirectly controlling, controlled by, or under common control with another person.
    Subd. 6. Debt management services agreement. "Debt management services agreement"
means the written contract between the debt management services provider and the debtor.
    Subd. 7. Debt management services plan. "Debt management services plan" means the
debtor's individualized package of debt management services set forth in the debt management
services agreement.
    Subd. 8. Debt management services provider. "Debt management services provider" means
any person offering or providing debt management services to a debtor domiciled in this state,
regardless of whether or not a fee is charged for the services and regardless of whether the person
maintains a physical presence in the state. This term does not include services performed by the
following when engaged in the regular course of their respective businesses and professions:
    (1) attorneys at law, escrow agents, accountants, broker-dealers in securities;
    (2) state or national banks, trust companies, savings associations, title insurance companies,
insurance companies, and all other lending institutions duly authorized to transact business in
Minnesota, provided no fee is charged for the service;
    (3) persons who, as employees on a regular salary or wage of an employer not engaged in the
business of debt management, perform credit services for their employer;
    (4) public officers acting in their official capacities and persons acting as a debt management
services provider pursuant to court order;
    (5) any person while performing services incidental to the dissolution, winding up, or
liquidation of a partnership, corporation, or other business enterprise;
    (6) the state, its political subdivisions, public agencies, and their employees;
    (7) credit unions and collection agencies, provided no fee is charged for the service;
    (8) "qualified organizations" designated as representative payees for purposes of the Social
Security and Supplemental Security Income Representative Payee System and the federal
Omnibus Budget Reconciliation Act of 1990, Public Law 101-508;
    (9) accelerated mortgage payment providers. "Accelerated mortgage payment providers"
are persons who, after satisfying the requirements of sections 332.30 to 332.303, receive funds
to make mortgage payments to a lender or lenders, on behalf of mortgagors, in order to exceed
regularly scheduled minimum payment obligations under the terms of the indebtedness. The term
does not include: (i) persons or entities described in clauses (1) to (8); (ii) mortgage lenders or
servicers, industrial loan and thrift companies, or regulated lenders under chapter 56; or (iii)
persons authorized to make loans under section 47.20, subdivision 1. For purposes of this clause
and sections 332.30 to 332.303, "lender" means the original lender or that lender's assignee,
whichever is the current mortgage holder;
    (10) trustees, guardians, and conservators; and
    (11) debt settlement providers.
    Subd. 9. Debt management services. "Debt management services" means the provision
of any one or more of the following services in connection with debt incurred primarily for
personal, family, or household services:
    (1) managing the financial affairs of an individual by distributing income or money to the
individual's creditors;
    (2) receiving funds for the purpose of distributing the funds among creditors in payment or
partial payment of obligations of a debtor; or
    (3) adjusting, prorating, pooling, or liquidating the indebtedness of a debtor. Any person
so engaged or holding out as so engaged is deemed to be engaged in the provision of debt
management services regardless of whether or not a fee is charged for such services.
    Subd. 10. Debtor. "Debtor" means the person for whom the debt prorating service is
performed.
    Subd. 11. Person. "Person" means any individual, firm, partnership, association, or
corporation.
    Subd. 12. Registrant. "Registrant" means any person registered by the commissioner
pursuant to this chapter and, where used in conjunction with an act or omission required or
prohibited by this chapter, shall mean any person performing debt management services.
    Subd. 13. Debt settlement provider. "Debt settlement provider" means any person engaging
in or holding out as engaging in the business of negotiating, adjusting, or settling debt incurred
primarily for personal, family, or household purposes without holding or receiving the debtor's
funds or personal property and without paying the debtor's funds to, or distributing the debtor's
property among, creditors. The term shall not include persons listed in subdivision 8, clauses
(1) to (10).
History: 2007 c 57 art 3 s 45

332A.03 REQUIREMENT OF REGISTRATION.
    On or after August 1, 2007, it is unlawful for any person, whether or not located in this
state, to operate as a debt management services provider or provide debt management services,
including but not limited to offering, advertising, or executing or causing to be executed any
debt management services or debt management services agreement, except as authorized by
law without first becoming registered as provided in this chapter. A person who possesses a
valid license as a debt prorater that was issued by the commissioner before August 1, 2007, is
deemed to be registered as a debt management services provider until the date the debt prorater
license expires, at which time the licensee must obtain a renewal as a debt management services
provider in compliance with this chapter. Debt proraters who were not required to be licensed
as debt proraters before August 1, 2007, may continue to provide debt management services
without complying with this chapter to those debtors who entered into a contract to participate
in a debt management plan before August 1, 2007, except that the debt prorater must comply
with section 332A.13, subdivision 2.
History: 2007 c 57 art 3 s 46

332A.04 REGISTRATION.
    Subdivision 1. Form. Application for registration to operate as a debt management services
provider in this state must be made in writing to the commissioner, under oath, in the form
prescribed by the commissioner, and must contain:
    (1) the full name of each principal of the entity applying;
    (2) the address, which must not be a post office box, and the telephone number and, if
applicable, e-mail address, of the applicant;
    (3) identification of the trust account required under section 332A.13;
    (4) consent to the jurisdiction of the courts of this state;
    (5) the name and address of the registered agent authorized to accept service of process on
behalf of the applicant or appointment of the commissioner as the applicant's agent for purposes
of accepting service of process;
    (6) disclosure of:
    (i) whether any controlling or affiliated party has ever been convicted of a crime or found
civilly liable for an offense involving moral turpitude, including forgery, embezzlement, obtaining
money under false pretenses, larceny, extortion, conspiracy to defraud, or any other similar
offense or violation, or any violation of a federal or state law or regulation in connection with
activities relating to the rendition of debt management services or involving any consumer fraud,
false advertising, deceptive trade practices, or similar consumer protection law;
    (ii) any judgments, private or public litigation, tax liens, written complaints, administrative
actions, or investigations by any government agency against the applicant or any officer, director,
manager, or shareholder owning more than five percent interest in the applicant, unresolved or
otherwise, filed or otherwise commenced within the preceding ten years;
    (iii) whether the applicant or any person employed by the applicant has had a record of
having defaulted in the payment of money collected for others, including the discharge of debts
through bankruptcy proceedings; and
    (iv) whether the applicant's license or registration to provide debt management services in
any other state has ever been revoked or suspended;
    (7) a copy of the applicant's standard debt management services agreement that the applicant
intends to execute with debtors;
    (8) proof of accreditation; and
    (9) any other information and material as the commissioner may require.
    Subd. 2. Term and scope of registration. The registration must remain in full force and
effect for one year or until it is surrendered by the registrant or revoked or suspended by the
commissioner. The registration is limited solely to the business of providing debt management
services.
    Subd. 3. Fees. The registration application must be accompanied by payment of $1,000
as a registration fee.
    Subd. 4. Bond. The registration application must be accompanied by payment of the
premium for a surety bond in which the applicant shall be the obligor, in a sum to be determined
by the commissioner but not less than $5,000, and in which an insurance company, which is duly
authorized by the state of Minnesota to transact the business of fidelity and surety insurance, shall
be a surety. However, the commissioner may accept a deposit in cash, or securities that may
legally be purchased by savings banks or for trust funds of an aggregate market value equal to the
bond requirement, in lieu of the surety bond. The cash or securities must be deposited with the
commissioner of finance. The commissioner may also require a fidelity bond in an appropriate
amount covering employees of any applicant. Each branch office or additional place of business
in this state of an applicant must be bonded as provided in this subdivision. In determining the
bond amount necessary for the maintenance of any office, whether it is a surety bond, fidelity
bond, or both, the commissioner shall consider the financial responsibility, experience, character,
and general fitness of the debt management services provider and its operators and owners;
the volume of business handled or proposed to be handled; the location of the office and the
geographical area served or proposed to be served; and other information the commissioner
may deem pertinent based upon past performance, previous examinations, annual reports, and
manner of business conducted in other states.
    Subd. 5. Condition of bond. The bond must run to the state of Minnesota for the use of the
state and of any person or persons who may have a cause of action against the obligor arising out
of the obligor's activities as a debt management services provider to a debtor domiciled in this
state. The bond must be conditioned that the obligor will not commit any fraudulent act and will
faithfully conform to and abide by the provisions of this chapter and of all rules lawfully made by
the commissioner under this chapter and pay to the state and to any such person or persons any
and all money that may become due or owing to the state or to such person or persons from the
obligor under and by virtue of this chapter.
    Subd. 6. Right of action on bond. If the registrant has failed to account to a debtor
or distribute to the debtor's creditors the amounts required by this chapter and the debt
management services agreement between the debtor and registrant, the debtor or the debtor's legal
representative or receiver, the commissioner, or the attorney general, shall have, in addition to all
other legal remedies, a right of action in the name of the debtor on the bond or the security given
under this section, for loss suffered by the debtor, not exceeding the face amount of the bond or
security, and without the necessity of joining the registrant in the suit or action.
    Subd. 7. Registrant list. The commissioner must maintain a list of registered debt
management services providers. The list must be made available to the public in written form
upon request and on the Department of Commerce Web site.
History: 2007 c 57 art 3 s 47

332A.05 NONASSIGNMENT OF REGISTRATION.
    A registration must not be transferred or assigned without the consent of the commissioner.
History: 2007 c 57 art 3 s 48

332A.06 RENEWAL OF REGISTRATION.
    Each year, each registrant under the provisions of this chapter must, not more than 60 nor
less than 30 days before its registration is to expire, apply to the commissioner for renewal of its
registration on a form prescribed by the commissioner. The application must be signed by the
registrant under penalty of perjury, contain current information on all matters required in the
original application, and be accompanied by a payment of $250. The registrant must maintain
a continuous surety bond that satisfies the requirements of section 332A.04, subdivision 4,
provided that the commissioner may require a different amount that is at least equal to the largest
amount that has accrued in the registrant's trust account during the previous year. The renewal is
effective for one year.
History: 2007 c 57 art 3 s 49

332A.07 OTHER DUTIES OF REGISTRANT.
    Subdivision 1. Requirement to update information. A registrant must update any
information required by this chapter provided in its original or renewal application not later than
90 days after the date the events precipitating the update occurred.
    Subd. 2. Inspection of debtor of registration. Each registrant must maintain a copy of its
registration in its files. The registrant must allow a debtor, upon request, to inspect the registration.
History: 2007 c 57 art 3 s 50

332A.08 DENIAL OF REGISTRATION.
    The commissioner, with notice to the applicant by certified mail sent to the address listed on
the application, may deny an application for a registration upon finding that the applicant:
    (1) has submitted an application required under section 332A.04 that contains incorrect,
misleading, incomplete, or materially untrue information. An application is incomplete if it does
not include all the information required in section 332A.04;
    (2) has failed to pay any fee or pay or maintain any bond required by this chapter, or failed
to comply with any order, decision, or finding of the commissioner made under and within the
authority of this chapter;
    (3) has violated any provision of this chapter or any rule or direction lawfully made by the
commissioner under and within the authority of this chapter;
    (4) or any controlling or affiliated party has ever been convicted of a crime or found civilly
liable for an offense involving moral turpitude, including forgery, embezzlement, obtaining
money under false pretenses, larceny, extortion, conspiracy to defraud, or any other similar
offense or violation, or any violation of a federal or state law or regulation in connection with
activities relating to the rendition of debt management services or any consumer fraud, false
advertising, deceptive trade practices, or similar consumer protection law;
    (5) has had a registration or license previously revoked or suspended in this state or any
other state or the applicant or licensee has been permanently or temporarily enjoined by any court
of competent jurisdiction from engaging in or continuing any conduct or practice involving any
aspect of the debt management services provider business; or any controlling or affiliated party
has been an officer, director, manager, or shareholder owning more than a ten percent interest in a
debt management services provider whose registration has previously been revoked or suspended
in this state or any other state, or who has been permanently or temporarily enjoined by any court
of competent jurisdiction from engaging in or continuing any conduct or practice involving any
aspect of the debt management services provider business;
    (6) has made any false statement or representation to the commissioner;
    (7) is insolvent;
    (8) refuses to fully comply with an investigation or examination of the debt management
services provider by the commissioner;
    (9) has improperly withheld, misappropriated, or converted any money or properties received
in the course of doing business;
    (10) has failed to have a trust account with an actual cash balance equal to or greater than the
sum of the escrow balances of each debtor's account;
    (11) has defaulted in making payments to creditors on behalf of debtors as required by
agreements between the provider and debtor; or
    (12) has used fraudulent, coercive, or dishonest practices, or demonstrated incompetence,
untrustworthiness, or financial irresponsibility in this state or elsewhere.
History: 2007 c 57 art 3 s 51

332A.09 SUSPENDING, REVOKING, OR REFUSING TO RENEW REGISTRATION.
    Subdivision 1. Procedure. The commissioner may revoke, suspend, or refuse to renew any
registration issued under this chapter, or may levy a civil penalty under section 45.027, or any
combination of actions, if the debt management services provider or any controlling or affiliated
person has committed any act or omission for which the commissioner could have refused to
issue an initial registration or renew an existing registration. Revocation of or refusal to renew a
registration must be upon notice and hearing as prescribed in the Administrative Procedure
Act, sections 14.57 to 14.69. The notice must set a time for hearing before the commissioner
not less than 20 nor more than 30 days after service of the notice, provided the registrant may
waive the 20-day minimum. The commissioner may, in the notice, suspend the registration for a
period not to exceed 60 days. Unless the notice states that the registration is suspended, pending
the determination of the main issue, the registrant may continue to transact business until the
final decision of the commissioner. If the registration is suspended, the commissioner shall hold
a hearing and render a final determination within ten days of a request by the registrant. If the
commissioner fails to do so, the suspension shall terminate and be of no force or effect.
    Subd. 2. Notification of interested persons. After the notice and hearing required in
subdivision 1, upon issuing an order suspending or revoking a registration or refusing to renew a
registration, the commissioner may notify all individuals who have contracts with the affected
registrant and all creditors who have agreed to a debt management services plan that the
registration has been revoked and that the order is subject to appeal.
    Subd. 3. Receiver for funds of sanctioned registrant. When an order is issued revoking
or refusing to renew a registration, the commissioner may apply for, and the district court must
appoint, a receiver to temporarily or permanently receive the assets of the registrant pending a
final determination of the validity of the order.
History: 2007 c 57 art 3 s 52

332A.10 WRITTEN DEBT MANAGEMENT SERVICES AGREEMENT.
    Subdivision 1. Written agreement required. A debt management services provider may
not perform any debt management services or receive any money related to a debt management
services plan until the provider has obtained a debt management services agreement that contains
all terms of the agreement between the debt management services provider and the debtor. A debt
management services agreement must be in writing, dated, and signed by the debt management
services provider and the debtor. The registrant must furnish the debtor with a copy of the signed
contract upon execution.
    Subd. 2. Actions prior to written agreement. No person may provide debt management
services for a debtor unless the person first has:
    (1) provided the debtor individualized counseling and educational information that, at a
minimum, addresses managing household finances, managing credit and debt, budgeting, and
personal savings strategies;
    (2) prepared in writing and provided to the debtor, in a form that the debtor may keep,
an individualized financial analysis and a proposed debt management services plan listing the
debtor's known debts with specific recommendations regarding actions the debtor should take to
reduce or eliminate the amount of the debts, including written disclosure that debt management
services are not suitable for all debtors and that there are other ways, including bankruptcy,
to deal with indebtedness;
    (3) made a determination supported by an individualized financial analysis that the debtor
can reasonably meet the requirements of the proposed debt management services plan and that
there is a net tangible benefit to the debtor of entering into the proposed debt management
services plan; and
    (4) prepared, in a form the debtor may keep, a written list identifying all known creditors
of the debtor that the provider reasonably expects to participate in the plan and the creditors,
including secured creditors, that the provider reasonably expects not to participate.
    Subd. 3. Required terms. (a) Each debt management services agreement must contain the
following terms, which must be disclosed prominently and clearly in bold print on the front page
of the agreement, segregated by bold lines from all other information on the page:
    (1) the fee amount to be paid by the debtor and whether the initial fee amount is refundable
or nonrefundable;
    (2) the monthly fee amount or percentage to be paid by the debtor; and
    (3) the total amount of fees reasonably anticipated to be paid by the debtor over the term of
the agreement.
    (b) Each debt management services agreement must also contain the following:
    (1) a disclosure that if the amount of debt owed is increased by interest, late fees, over
the limit fees, and other amounts imposed by the creditors, the length of the debt management
services agreement will be extended and remain in force and that the total dollar charges agreed
upon may increase at the rate agreed upon in the original contract agreement;
    (2) a prominent statement describing the terms upon which the debtor may cancel the
contract as set forth in section 332A.11;
    (3) a detailed description of all services to be performed by the debt management services
provider for the debtor;
    (4) the debt management services provider's refund policy; and
    (5) the debt management services provider's principal business address and the name and
address of its agent in this state authorized to receive service of process.
    Subd. 4. Prohibited terms. The following terms shall not be included in the debt
management services agreement:
    (1) a hold harmless clause;
    (2) a confession of judgment, or a power of attorney to confess judgment against the debtor
or appear as the debtor in any judicial proceeding;
    (3) a waiver of the right to a jury trial, if applicable, in any action brought by or against
a debtor;
    (4) an assignment of or an order for payment of wages or other compensation for services;
    (5) a provision in which the debtor agrees not to assert any claim or defense arising out
of the debt management services agreement;
    (6) a waiver of any provision of this chapter or a release of any obligation required to be
performed on the part of the debt management services provider; or
    (7) a mandatory arbitration clause.
    Subd. 5. New debt management services agreements; modification of existing
agreements. (a) Separate and additional debt management services agreements that comply
with this chapter may be entered into by the debt management services provider and the debtor
provided that no additional initial fee may be charged by the debt management services provider.
    (b) Any modification of an existing debt management services agreement, including any
increase in the number or amount of debts included in the debt management service, must be in
writing and signed by both parties. No fees, charges, or other consideration may be demanded
from the debtor for the modification, other than an increase in the amount of the monthly
maintenance fee established in the original debt management services agreement.
History: 2007 c 57 art 3 s 53

332A.11 RIGHT TO CANCEL.
    Subdivision 1. Debtor's right to cancel. A debtor has the right to cancel the debt
management services agreement without cause at any time upon ten days' written notice to the
debt management services provider. In the event of cancellation, the debt management services
provider must, within ten days of the cancellation, notify the debtor's creditors of the cancellation
and provide a refund of all unexpended funds paid by or for the debtor to the debt management
services provider.
    Subd. 2. Notice of debtor's right to cancel. A debt management services agreement must
contain, on its face, in an easily readable typeface immediately adjacent to the space for signature
by the debtor, the following notice: "Right To Cancel: You have the right to cancel this contract at
any time on ten days' written notice."
    Subd. 3. Automatic termination. Upon the payment of all listed debts and fees, the debt
management services agreement must automatically terminate, and all unexpended funds paid
by or for the debtor to the debt management services provider must be immediately returned to
the debtor.
    Subd. 4. Debt management services provider's right to cancel. A debt management
services provider may cancel a debt management services agreement with good cause upon 30
days' written notice to the debtor. Within ten days after the cancellation, the debt management
services provider must: (1) notify the debtor's creditors of the cancellation; and (2) return to the
debtor all unexpended funds paid by or for the debtor.
History: 2007 c 57 art 3 s 54

332A.12 BOOKS, RECORDS, AND INFORMATION.
    Subdivision 1. Records retention. Every registrant must keep, and use in the registrant's
business, such books, accounts, and records, including electronic records, as will enable the
commissioner to determine whether the registrant is complying with this chapter and of the rules,
orders, and directives adopted by the commissioner under this chapter. Every registrant must
preserve such books, accounts, and records for at least six years after making the final entry on
any transaction recorded therein. Examinations of the books, records, and method of operations
conducted under the supervision of the commissioner shall be done at the cost of the registrant.
The cost must be assessed as determined under section 46.131.
    Subd. 2. Statements to debtors. Each registrant must maintain and must make available
records and accounts that will enable each debtor to ascertain the amounts paid to the creditors
of the debtor. A statement showing amounts received from the debtor, disbursements to each
creditor, amounts which any creditor has agreed to accept as payment in full for any debt owed
the creditor by the debtor, charges deducted by the registrant, and such other information as the
commissioner may prescribe, must be furnished by the registrant to the debtor at least monthly
and, in addition, upon any cancellation or termination of the contract. In addition to the statements
required by this subdivision, each debtor must have reasonable access, without cost, by electronic
or other means, to information in the registrant's files applicable to the debtor. These statements,
records, and accounts must otherwise remain confidential except for duly authorized state and
government officials, the commissioner, the attorney general, the debtor, and the debtor's
representative and designees. Each registrant must prepare and retain in the file of each debtor
a written analysis of the debtor's income and expenses to substantiate that the plan of payment
is feasible and practicable.
History: 2007 c 57 art 3 s 55

332A.13 FEES, PAYMENTS, AND CONSENT OF CREDITORS.
    Subdivision 1. Origination fee. The registrant may charge a nonrefundable origination fee
of not more than $50, which may be retained by the registrant from the initial amount paid by
the debtor to the registrant.
    Subd. 2. Monthly maintenance fee. The registrant may charge a periodic fee for account
maintenance or other purposes, but only if the fee is reasonable for the services provided and does
not exceed the lesser of 15 percent of the monthly payment amount or $75.
    Subd. 3. Additional fees unauthorized. A registrant may not impose any fee or other charge
or receive any funds or other payment other than the initial fee or monthly maintenance fee
authorized by this section.
    Subd. 4. Amount of periodic payments retained. The registrant may retain as payment for
the fees authorized by this section no more than 15 percent of any periodic payment made to the
registrant by the debtor. The remaining 85 percent must be disbursed to listed creditors under and
in accordance with the debt management services agreement. No fees or charges may be received
or retained by the registrant for any handling of recurring payments. Recurring payments include
current rent, mortgage, utility, telephone, maintenance as defined in section 518.27, child support,
insurance premiums, and such other payments as the commissioner may by rule prescribe.
    Subd. 5. Advance payments. No fees or charges may be received or retained for any
payments by the debtor made more than the following number of days in advance of the date
specified in the debt management services agreement on which they are due: (1) 42 days in the
case of contracts requiring monthly payments; (2) 15 days in the case of agreements requiring
biweekly payments; or (3) seven days in the case of agreements requiring weekly payments. For
those agreements which do not require payments in specified amounts, a payment is deemed an
advance payment to the extent it exceeds twice the average regular payment previously made by
the debtor under that contract. This subdivision does not apply when the debtor intends to use the
advance payments to satisfy future payment of obligations due within 30 days under the contract.
This subdivision supersedes any inconsistent provision of this chapter.
    Subd. 6. Consent of creditors. A registrant must actively seek to obtain the consent of
all creditors to the debt management services plan set forth in the debt management services
agreement. Consent by a creditor may be express and in writing, or may be evidenced by
acceptance of a payment made under the debt management services plan set forth in the contract.
The registrant must notify the debtor within ten days after any failure to obtain the required
consent and of the debtor's right to cancel without penalty. The notice must be in a form as the
commissioner shall prescribe. Nothing contained in this section is deemed to require the return of
any origination fee and any fees earned by the registrant prior to cancellation or default.
    Subd. 7. Withdrawal of creditor. Whenever a creditor withdraws from a debt management
services plan, or refuses to participate in a debt management services plan, the registrant must
promptly notify the debtor of the withdrawal or refusal. In no case may this notice be provided
more than 15 days after the debt management services provider learns of the creditor's decision
to withdraw from or refuse to participate in a plan. This notice must include the identity of the
creditor withdrawing from the plan, the amount of the monthly payment to that creditor, and the
right of the debtor to cancel the agreement under section 332A.11.
    Subd. 8. Payments held in trust. The registrant must maintain a separate trust account and
deposit in the account all payments received from the moment that they are received, except that
the registrant may commingle the payment with the registrant's own property or funds, but only to
the extent necessary to ensure the maintenance of a minimum balance if the financial institution at
which the trust account is held requires a minimum balance to avoid the assessment of fees or
penalties for failure to maintain a minimum balance. All disbursements, whether to the debtor or
to the creditors of the debtor, or to the registrant, must be made from such account.
    Subd. 9. Timely payment of creditors. The registrant must disburse any funds paid by or on
behalf of a debtor to creditors of the consumer within 42 days after receipt of the funds, or earlier
if necessary to comply with the due date in the agreement between the debtor and the creditor,
unless the reasonable payment of one or more of the debtor's obligations requires that the funds
be held for a longer period so as to accumulate a sum certain, or where the debtor's payment is
returned for insufficient funds or other reason that makes the withholding of such payments in the
net interest of the debtor.
History: 2007 c 57 art 3 s 56

332A.14 PROHIBITIONS.
    A registrant shall not:
    (1) purchase from a creditor any obligation of a debtor;
    (2) use, threaten to use, seek to have used, or seek to have threatened the use of any legal
process, including but not limited to garnishment and repossession of personal property, against
any debtor while the debt management services agreement between the registrant and the debtor
remains executory;
    (3) advise a debtor to stop paying a creditor until a debt management services plan is in place;
    (4) require as a condition of performing debt management services the purchase of any
services, stock, insurance, commodity, or other property or any interest therein either by the
debtor or the registrant;
    (5) compromise any debts unless the prior written approval of the debtor has been obtained
to such compromise and unless such compromise inures solely to the benefit of the debtor;
    (6) receive from any debtor as security or in payment of any fee a promissory note or other
promise to pay or any mortgage or other security, whether as to real or personal property;
    (7) lend money or provide credit to any debtor if any interest or fee is charged, or directly or
indirectly collect any fee for referring, advising, procuring, arranging, or assisting a consumer
in obtaining any extension of credit or other debtor service from a lender or debt management
services provider;
    (8) structure a debt management services agreement that would result in negative
amortization of any debt in the plan;
    (9) engage in any unfair, deceptive, or unconscionable act or practice in connection with
any service provided to any debtor;
    (10) offer, pay, or give any material cash fee, gift, bonus, premium, reward, or other
compensation to any person for referring any prospective customer to the registrant or for
enrolling a debtor in a debt management services plan, or provide any other incentives for
employees or agents of the debt management services provider to induce debtors to enter into
a debt management services plan;
    (11) receive any cash, fee, gift, bonus, premium, reward, or other compensation from any
person other than the debtor or a person on the debtor's behalf in connection with activities as a
registrant, provided that this paragraph does not apply to a registrant which is a bona fide nonprofit
corporation duly organized under chapter 317A or under the similar laws of another state;
    (12) enter into a contract with a debtor unless a thorough written budget analysis indicates
that the debtor can reasonably meet the requirements of the financial adjustment plan and will be
benefited by the plan;
    (13) in any way charge or purport to charge or provide any debtor credit insurance in
conjunction with any contract or agreement involved in the debt management services plan;
    (14) operate or employ a person who is an employee or owner of a collection agency or
process-serving business; or
    (15) solicit, demand, collect, require, or attempt to require payment of a sum that the
registrant states, discloses, or advertises to be a voluntary contribution from the debtor.
History: 2007 c 57 art 3 s 57

332A.16 ADVERTISEMENT OF DEBT MANAGEMENT SERVICES PLANS.
    No debt management services provider may make false, deceptive, or misleading statements
or omissions about the rates, terms, or conditions of an actual or proposed debt management
services plan or its debt management services, or create the likelihood of consumer confusion or
misunderstanding regarding its services, including but not limited to the following:
    (1) represent that the debt management services provider is a nonprofit, not-for-profit, or
has similar status or characteristics if some or all of the debt management services will be
provided by a for-profit company that is a controlling or affiliated party to the debt management
services provider; or
    (2) make any communication that gives the impression that the debt management services
provider is acting on behalf of a government agency.
History: 2007 c 57 art 3 s 58

332A.17 DEBT MANAGEMENT SERVICES AGREEMENT RESCISSION.
    Any debtor has the right to rescind any debt management services agreement with a debt
management services provider that commits a material violation of this chapter. On rescission, all
fees paid to the debt management services provider or any other person other than creditors of
the debtor must be returned to the debtor entering into the debt management services agreement
within ten days of rescission of the debt management services agreement.
History: 2007 c 57 art 3 s 59

332A.18 ENFORCEMENT; REMEDIES.
    Subdivision 1. Violation a deceptive practice. A violation of any of the provisions of this
chapter is considered an unfair or deceptive trade practice under section 8.31, subdivision 1. A
private right of action under section 8.31 by an aggrieved debtor is in the public interest.
    Subd. 2. Private right of action. (a) A debt management services provider who fails to
comply with any of the provisions of this chapter is liable under this section in an individual
action for the sum of (i) actual, incidental, and consequential damages sustained by the debtor as a
result of the failure; and (ii) statutory damages of up to $1,000.
    (b) A debt management services provider who fails to comply with any of the provisions of
this chapter is liable to the named plaintiffs under this section in a class action for the amount
that each named plaintiff could recover under paragraph (a), clause (i), and to the other class
members for such amount as the court may allow.
    (c) In determining the amount of statutory damages, the court shall consider, among other
relevant factors:
    (1) the frequency, nature, and persistence of noncompliance;
    (2) the extent to which the noncompliance was intentional; and
    (3) in the case of a class action, the number of debtors adversely affected.
    (d) A plaintiff or class successful in a legal or equitable action under this section is entitled to
the costs of the action, plus reasonable attorney fees.
    Subd. 3. Injunctive relief. A debtor may sue a debt management services provider for
temporary or permanent injunctive or other appropriate equitable relief to prevent violations of
any provision of this chapter. A court must grant injunctive relief on a showing that the debt
management services provider has violated any provision of this chapter, or in the case of a
temporary injunction, on a showing that the debtor is likely to prevail on allegations that the debt
management services provider violated any provision of this chapter.
    Subd. 4. Remedies cumulative. The remedies provided in this section are cumulative and do
not restrict any remedy that is otherwise available. The provisions of this chapter are not exclusive
and are in addition to any other requirements, rights, remedies, and penalties provided by law.
    Subd. 5. Public enforcement. The attorney general shall enforce this chapter under section
8.31.
History: 2007 c 57 art 3 s 60

332A.19 INVESTIGATION.
    At any reasonable time, the commissioner may examine the books and records of every
registrant and of any person engaged in the business of providing debt management services as
defined in section 332A.02. The commissioner once during any calendar year may require the
submission of an audit prepared by a certified public accountant of the books and records of each
registrant. If the registrant has, within one year previous to the commissioner's demand, had an
audit prepared for some other purpose, this audit may be submitted to satisfy the requirement
of this section. The commissioner may investigate any complaint concerning violations of this
chapter and may require the attendance and sworn testimony of witnesses and the production
of documents.
History: 2007 c 57 art 3 s 61