Minnesota Session Laws - 2016, Regular Session

CHAPTER 100--S.F.No. 2869

An act

relating to commerce; including tax debt as debt that is covered under debt settlement services regulation;

amending Minnesota Statutes 2014, sections 332A.02, subdivision 8; 332A.10, subdivision 4; 332B.02, subdivisions 9, 10.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 332A.02, subdivision 8, is amended to read:

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 includes any person to whom debt management services are delegated, and does not include services performed by the following when engaged in the regular course of their respective businesses and professions:

(1) exempt attorneys at law, escrow agents, accountants, broker-dealers in securities;

(2) state or national banks, credit unions, trust companies, savings associations, title insurers, insurance companies, and all other lending institutions duly authorized to transact business in Minnesota;

(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) new text begin the federal government, new text end the state, deleted text begin its deleted text end new text begin their new text end political subdivisions, public agencies, and deleted text begin their deleted text end employees;

(7) collection agencies, provided that the services are provided to a creditor;

(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 services providers.

Sec. 2.

Minnesota Statutes 2014, section 332A.10, subdivision 4, is amended to read:

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; deleted text begin or deleted text end

(7) a mandatory arbitration clause new text begin ; new text end or

new text begin (8) new text end a clause selecting a law other than the laws of Minnesota new text begin or a venue other than the state of Minnesota new text end under which the debt management services agreement or any other dispute involving the provision of debt management services is governed or enforced.

Sec. 3.

Minnesota Statutes 2014, section 332B.02, subdivision 9, is amended to read:

Subd. 9.

Creditor.

"Creditor" means deleted text begin any party deleted text end :

(1) new text begin a party new text end named by the debtor as a creditor in the debt settlement services plan or debt settlement services agreement;

(2) new text begin a party new text end that acquires or holds the debt; deleted text begin or deleted text end

(3) new text begin a party new text end to whom interactions with the debt settlement services is assigned in relation to the debt listed in the debt settlement services plan or debt settlement services agreement new text begin ; or new text end

new text begin (4) the federal government, state government, or their political subdivisions, to which delinquent taxes are owed new text end .

Sec. 4.

Minnesota Statutes 2014, section 332B.02, subdivision 10, is amended to read:

Subd. 10.

Debt settlement services.

"Debt settlement services" means any one or more of the following activities:

(1) offering to provide advice, or offering to act or acting as an intermediary between a debtor and one or more of the debtor's creditors, where the primary purpose of the advice or action is to obtain a settlement for less than the full amount of debt, whether in principal, interest, fees, or other charges, incurred primarily for personal, family, or household purposes including, but not limited to, offering debt negotiation, debt reduction, or debt relief services; deleted text begin or deleted text end

(2) advising, encouraging, assisting, or counseling a debtor to accumulate funds in an account for future payment of a reduced amount of debt to one or more of the debtor's creditors new text begin ; or new text end

new text begin (3) offering to provide advice, or offering to act or acting as an intermediary between a debtor and the federal government, state government, or their political subdivisions to delay payment of delinquent taxes owed, establish a payment plan for delinquent taxes owed, or obtain a settlement for less than the full amount of delinquent taxes owed new text end .

Any person so engaged or holding out as so engaged is deemed to be engaged in the provision of debt settlement services, regardless of whether or not a fee is charged for such services.

Presented to the governor May 9, 2016

Signed by the governor May 12, 2016, 1:23 p.m.