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
(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
(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
(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
(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
(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