2003 Minnesota Statutes

     332.23 Fees, payments, and cancellations. 

    Subdivision 1.    Origination fee, credit background 
 report cost.  The licensee may charge an origination fee of 
 not more than $25 and collect from the debtor the actual cost of 
 a credit background report obtained from a credit reporting 
 agency not related to or affiliated with the licensee or if 
 affiliated, the total cost of the report may not exceed $8.  The 
 costs to the debtor of said origination fee and credit 
 background report may be made from the originating amount paid 
 by the debtor to the licensee.  The cost of only one credit 
 background report may be collected from the debtor in any 
 12-month period. 

    Subd. 2.    Withdrawal of fee.  The licensee may 
 withdraw and retain as partial payment of the licensee's total 
 fee not more than 15 percent of any sum deposited with the 
 licensee by the debtor for distribution.  The remaining 85 
 percent must be disbursed to listed creditors pursuant to and in 
 accordance with the contract between the debtor and the licensee 
 within 35 days after receipt 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 nonsufficient funds, 
 then no longer than 42 days.  Total payment to licensee for 
 services rendered, excluding the origination fee and any credit 
 background report, shall not exceed 15 percent of funds 
 deposited with licensee by debtor for distribution. 

    Subd. 3.    Cancellation.  All contracts with debtors 
 for debt prorating service shall contain on their face, in 
 easily readable characters, a provision entitling either party 
 to cancel the contract without cause upon 30 days' written 
 notice.  The contract shall automatically terminate upon the 
 payment of all listed debts and fees.  In the event of 
 cancellation by either party, the licensee shall notify the 
 debtor's creditors of such cancellation within ten days thereof. 

    Subd. 4.    Additional contracts; recurring payments.  
 Separate and additional contracts shall be entered into by the 
 licensee and debtor for the management of any debt not listed in 
 any other executory contract or for any increase in the size of 
 any debt included in any other contract, provided, the licensee 
 shall not charge any origination fee for any such additional 
 contract.  No fees or charges shall be received or retained by 
 the licensee for any handling of recurrent payments.  Recurrent 
 payments shall include current rent, house, utility, telephone, 
 maintenance as defined in section 518.27, child support, 
 insurance premium and such other payments as the commissioner 
 may by rule prescribe. 

    Subd. 5.    Advance payments.  Notwithstanding anything 
 herein to the contrary no fees or charges shall 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 
 contract on which they are due:  (a) 42 days in the case of 
 contracts requiring monthly payments; (b) 15 days in the case of 
 contracts requiring biweekly payments; or (c) seven days in the 
 case of contracts requiring weekly payments.  For those 
 contracts which do not require payments in specified amounts, a 
 payment shall be deemed an advance payment to the extent it 
 exceeds twice the average regular payment theretofore made by 
 the debtor pursuant to that contract.  This subdivision shall 
 not apply when it is the intention of the debtor to use such 
 advance payments to satisfy future payment of obligations due 
 within 30 days under the contract. 

    Subd. 6.    Consent of creditors.  The licensee shall 
 actively seek to obtain the consent of all creditors to the plan 
 of distribution set forth in the contract. Failure to obtain 
 such consent of all such creditors within 60 days of the date 
 upon which the contract is executed shall entitle the debtor to 
 cancel the contract within 120 days of the date of such 
 execution without liability to pay any cancellation fee.  
 Consent by a creditor may be express and in writing, or may be 
 evidenced by acceptance of a payment made pursuant to the plan 
 of distribution set forth in the contract.  The licensee shall 
 notify the debtor within ten days after the expiration of the 60 
 day period prescribed in this subdivision of any failure to 
 obtain the required consent and of the debtor's right to cancel 
 without penalty.  Such notice shall be in such form as the 
 commissioner shall prescribe.  Nothing contained in this section 
 shall be deemed to require the return of any origination fee and 
 any fees earned by the licensee prior to cancellation or default.

    Subd. 7.    Excess charges.  If a licensee contracts 
 for, receives or makes any charge in excess of the maximum 
 permitted by sections 332.12 to 332.29, except as the result of 
 an accidental and bona fide error, the licensee's contract with 
 the debtor shall be void and the licensee shall return to the 
 debtor the amount of all moneys received from the debtor or on 
 the debtor's behalf from the commencement of the contract which 
 have not been distributed to creditors. 

    Subd. 8.    Payments held in trust.  Any payment 
 received by a licensee from or on behalf of a debtor shall be 
 held in trust by the licensee from the moment it is received.  
 The licensee shall not commingle such payment with the 
 licensee's own property or funds, but shall maintain a separate 
 trust account and deposit in such account all such payments 
 received.  All disbursements, whether to the debtor or to the 
 creditors of the debtor, or to the licensee, shall be made from 
 such account. 

    HIST: 1969 c 1120 s 12; 1971 c 441 s 5-8; 1978 c 772 s 62; 
 1985 c 248 s 70; 1986 c 444; 1995 c 202 art 2 s 30,31; 1997 c 
 157 s 62-64