SF 2930

3rd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to commerce; regulating debt management services; repealing an
obsolete criminal provision; amending Minnesota Statutes 2007 Supplement,
sections 332A.02, subdivision 2; 332A.04, subdivisions 1, 2, 4; 332A.06;
332A.10, subdivision 5; 332A.12, by adding a subdivision; 332A.13, subdivision
8; repealing Minnesota Statutes 2006, section 609B.163.

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

Section 1.

Minnesota Statutes 2007 Supplement, section 332A.02, subdivision 2,
is amended to read:

Subd. 2.

Accreditation.

"Accreditation" means certification as an accredited credit
counseling provider by the Council on Accreditation new text begin , the Bureau Veritas Certification
North America, Inc., or BSI Management Systems America, Inc new text end .

Sec. 2.

Minnesota Statutes 2007 Supplement, section 332A.04, subdivision 1, is
amended to read:

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 new text begin , unless the applicant was licensed in Minnesota as a debt
prorater immediately before August 1, 2007 new text end ; and

(9) any other information and material as the commissioner may require.

new text begin The commissioner may, for good cause shown, temporarily waive any requirement
of this subdivision.
new text end

Sec. 3.

Minnesota Statutes 2007 Supplement, section 332A.04, subdivision 2, is
amended to read:

Subd. 2.

Term and scope of registration.

deleted text begin The deleted text end new text begin A new text end registration deleted text begin must remain in full
force and effect for one year deleted text end new text begin is effective until 11:59 p.m. on December 31 of the year for
which the application for registration is filed new text end 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.

Sec. 4.

Minnesota Statutes 2007 Supplement, section 332A.04, subdivision 4, is
amended to read:

Subd. 4.

Bond.

The registration application must be accompanied by deleted text begin payment of
the premium for deleted text end 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.

Sec. 5.

Minnesota Statutes 2007 Supplement, section 332A.06, is amended to read:

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. new text begin The commissioner
may, for good cause shown, temporarily waive any requirement of this section.
new text end

Sec. 6.

Minnesota Statutes 2007 Supplement, section 332A.10, subdivision 5, is
amended to read:

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 new text begin , except that the signature of the debtor is
not required if:
new text end

new text begin (1) a creditor is added to or deleted from a debt management services agreement
at the request of the debtor or a debtor voluntarily increases the amount of a payment,
provided the debt management services provider must provide an updated payment
schedule to the debtor within seven days; or
new text end

new text begin (2) the payment amount to a creditor in the agreement increases by $10 or less
and the total payment amount to all creditors increases a total of $20 or less as a result
of incorrect or incomplete information provided by the debtor regarding the amount of
debt owed a creditor, provided the debt management services provider must notify the
debtor of the increase within seven days new text end .

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.

Sec. 7.

Minnesota Statutes 2007 Supplement, section 332A.12, is amended by adding a
subdivision to read:

new text begin Subd. 1a. new text end

new text begin Annual report. new text end

new text begin On or before March 15 of each calendar year, each
registrant must file a report with the commissioner containing such information as the
commissioner may require about the preceding calendar year. The report must be in a
form the commissioner prescribes.
new text end

Sec. 8.

Minnesota Statutes 2007 Supplement, section 332A.13, subdivision 8, is
amended to read:

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 deleted text begin they are
received deleted text end new text begin the funds are available new text end , 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 new text begin , except that
disbursements may be made from a trust account to an account established solely for the
purpose of making disbursements to debtors and creditors new text end .

Sec. 9. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 609B.163, new text end new text begin is repealed.
new text end

Sec. 10. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 9 are effective the day following final enactment.
new text end