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IC 28-1-29-1
Definitions
Sec. 1. The following words, when used in this chapter, shall have
the meaning ascribed to them unless the context clearly requires a
different meaning:
(1) "Person" includes individuals, sole proprietorships,
partnerships, limited liability companies, trusts, joint ventures,
corporations, unincorporated organizations, other entities, and
their affiliates, however organized.
(2) "Debt management company" is any person doing business
as a budget counseling, credit counseling, debt management, or
debt pooling service or holding the person out, by words of
similar import, as providing services to debtors in the
management of their finances and debts, and having a written
agreement with the debtor to disburse money or anything of
value. The term includes the following:
(A) A person that simply holds any money, funds, check,
personal check, money order, personal money order, draft,
or any other instrument for the transmission of money.
(B) A person or an entity known as a "budget service
company".
The term does not include a person that provides debt
settlement services (as defined in IC 24-5-15-2.5).
(3) "License" means a license issued under the provisions of
this chapter.
(4) "Licensee" means any person to whom a license has been
issued pursuant to the provisions of this chapter.
(5) "Contract debtor" means a debtor who has entered into a
written agreement with a licensee.
(6) "Debt" means an obligation arising out of personal, family,
or household use.
(7) "Debtor" means an individual whose principal debts and
obligations arise out of personal, family, or household use and
shall not apply to persons whose principal indebtedness arises
out of business purpose transactions.
(8) "Department" means the members of the department of
financial institutions.
(9) "Finances" means a savings deposit that is:
(A) made on behalf of a contract debtor;
(B) owned and controlled exclusively by the contract debtor
and not a licensee who has a power of attorney of the
contract debtor; and
(C) placed in a bank or savings institution chartered by the
state or federal government.
(10) "Affiliate" means a person that, directly or indirectly,
through one (1) or more intermediaries:
(A) controls;
(B) is controlled by; or
(C) is under common control with;
a person subject to this chapter.
(11) "Fee" means the total amount of money charged to a
contract debtor by a debt management company for the
administration of a debt management plan.
(12) "Plan" means a written debt repayment program in which
a debt management company furnishes debt management
services to a contract debtor and that includes a schedule of
payments to be made by or on behalf of the contract debtor and
used to pay debts owed by the contract debtor.
(13) "Principal amount of the debt" means the total amount of
a debt at the time the contract debtor enters into an agreement.
(14) "Agreement" means an agreement between a debt
management company and a debtor for the performance of debt
management services.
(15) "Trust account" means an account held by a licensee that
is:
(A) established in a bank insured by the Federal Deposit
Insurance Corporation;
(B) separate from other accounts held by the licensee;
(C) designated as a trust account or other account designated
to indicate that the money in the account is not the money of
the licensee; and
(D) used to hold money of one (1) or more contract debtors
for disbursement to creditors of the contract debtors.
(16) "Month" means a calendar month.
(17) "Day" means a calendar day.
(18) "Concessions" means assent to repayment of a debt on
terms more favorable to a contract debtor than the terms of the
contract between the debtor and a creditor.
(19) "Good faith" means honesty in fact and the observance of
reasonable standards of fair dealing.
(20) "Control of a related interest" refers to a situation in which
a person, directly or indirectly, or through or in concert with
one (1) or more other persons, possesses any of the following:
(A) The ownership of, control of, or power to vote at least
twenty-five percent (25%) of the voting securities of a
related interest.
(B) The control in any manner of the election of a majority
of the directors of a related interest.
(C) The power to exercise a controlling influence over the
management or policies of a related interest. For purposes of
this clause, a person is presumed to have control, including
the power to exercise a controlling influence over the
management or policies of the related interest, if the person:
(i) is an executive officer or a director of the related
interest and directly or indirectly owns, controls, or has the
power to vote more than ten percent (10%) of any class of
voting securities of the related interest; or
(ii) directly or indirectly owns, controls, or has the power
to vote more than ten percent (10%) of any class of voting
securities of the related interest and no other person owns,
controls, or has the power to vote a greater percentage of
that class of voting securities.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.14-1992, SEC.107; P.L.42-1993, SEC.46;
P.L.196-1996, SEC.1; P.L.90-2008, SEC.27; P.L.35-2010, SEC.119;
P.L.89-2011, SEC.36.
IC 28-1-29-2
Administration of chapter
Sec. 2. The department shall adopt such rules and regulations as
it deems advisable for the administration of this chapter, and to
provide such forms and procedures as it determines to be necessary
to carry out the provisions of such chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.47.
IC 28-1-29-3
License required; persons operating in Indiana; evidence of
compliance; fees; violations; renewal; tax warrant list
Sec. 3. (a) No person shall operate a debt management company
in Indiana without having obtained a license from the department.
For purposes of this section, a person is operating in Indiana if:
(1) the person or any of the person's employees or agents are
located in Indiana; or
(2) the person:
(A) contracts with debtors who are residents of Indiana; or
(B) solicits business from residents of Indiana by
advertisements or other communications sent or delivered
through any of the following means:
(i) Mail.
(ii) Personal delivery.
(iii) Telephone.
the director of the department.
(g) If the department of state revenue notifies the department that
a person is on the most recent tax warrant list, the department shall
not issue or renew the person's license until:
(1) the person provides to the department a statement from the
department of state revenue that the person's tax warrant has
been satisfied; or
(2) the department receives a notice from the commissioner of
the department of state revenue under IC 6-8.1-8-2(k).
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.48; P.L.172-1997, SEC.18;
P.L.63-2001, SEC.12 and P.L.134-2001, SEC.13; P.L.10-2006,
SEC.33 and P.L.57-2006, SEC.33; P.L.213-2007, SEC.44;
P.L.217-2007, SEC.42; P.L.90-2008, SEC.28; P.L.35-2010,
SEC.120; P.L.89-2011, SEC.37; P.L.172-2011, SEC.132.
IC 28-1-29-3.1
Change in control of licensee; application to department;
timeframe for department's decision; conditions for approval; duty
of licensee to report transfer of securities; director's discretion to
require new license
Sec. 3.1. (a) As used in this section, "control" means possession
of the power directly or indirectly to:
(1) direct or cause the direction of the management or policies
of a licensee, whether through the beneficial ownership of
voting securities, by contract, or otherwise; or
(2) vote at least twenty-five percent (25%) of the voting
securities of a licensee, whether the voting rights are derived
through the beneficial ownership of voting securities, by
contract, or otherwise.
(b) An organization or an individual acting directly, indirectly, or
through or in concert with one (1) or more other organizations or
individuals may not acquire control of any licensee unless the
department has received and approved an application for change in
control. The department has not more than one hundred twenty (120)
days after receipt of an application to issue a notice approving the
proposed change in control. The application must contain the name
and address of the organization, individual, or individuals who
propose to acquire control and any other information required by the
director.
(c) The period for approval under subsection (b) may be extended:
(1) in the discretion of the director for an additional thirty (30)
days; and
(2) not more than two (2) additional times for not more than
forty-five (45) days each time if:
(A) the director determines that the organization, individual,
or individuals who propose to acquire control have not
submitted substantial evidence of the qualifications
described in subsection (d);
(B) the director determines that any material information
submitted is substantially inaccurate; or
(C) the director has been unable to complete the
investigation of the organization, individual, or individuals
who propose to acquire control because of any delay caused
by or the inadequate cooperation of the organization,
individual, or individuals.
(d) The department shall issue a notice approving the application
only after it is satisfied that both of the following apply:
(1) The organization, individual, or individuals who propose to
acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate the
licensee in a legal and proper manner.
(2) The interests of the owners and creditors of the licensee and
the interests of the public generally will not be jeopardized by
the proposed change in control.
(e) The director may determine, in the director's discretion, that
subsection (b) does not apply to a transaction if the director
determines that the direct or beneficial ownership of the licensee will
not change as a result of the transaction.
(f) The president or other chief executive officer of a licensee
shall report to the director any transfer or sale of securities of the
licensee that results in direct or indirect ownership by a holder or an
affiliated group of holders of at least ten percent (10%) of the
outstanding securities of the licensee. The report required by this
subsection must be made not later than ten (10) days after the
transfer of the securities on the books of the licensee.
(g) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization, individual,
or individuals who propose to acquire control of a licensee to apply
for a new license under section 3 of this chapter, instead of acquiring
control of the licensee under this section.
As added by P.L.89-2011, SEC.38. Amended by P.L.6-2012,
SEC.193.
IC 28-1-29-4
Suspension or revocation of license; order to show cause; order of
suspension or revocation; relinquishment of license; existing
contracts; emergency order for revocation
Sec. 4. (a) The department may issue to a licensee an order to
show cause why the licensee's license should not be revoked or
suspended for a period determined by the department.
(b) An order issued under subsection (a) must:
(1) include:
(A) a statement of the place, date, and time for a meeting
with the department, which date may not be less than ten
(10) days from the date of the order;
(B) a description of the action contemplated by the
department; and
(C) a statement of the facts or conduct supporting the
issuance of the order; and
emergency exists from which it is necessary to protect the interests
of the public, the director may proceed with the revocation of a
license through an emergency or another temporary order under
IC 4-21.5-4.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.49; P.L.176-1996, SEC.15;
P.L.196-1996, SEC.2; P.L.80-1998, SEC.10; P.L.213-2007, SEC.45;
P.L.217-2007, SEC.43; P.L.35-2010, SEC.121; P.L.27-2012,
SEC.71.
IC 28-1-29-4.1
Failure to file renewal application or pay renewal fee; revocation
or suspension of license
Sec. 4.1. (a) A license issued by the department under this chapter
shall be revoked or suspended by the department if the licensee fails
to:
(1) file any renewal application prescribed by the director; or
(2) pay any license renewal fee described under section 3 of this
chapter;
within sixty (60) days after the date the renewal is due.
(b) A person whose license is revoked or suspended under this
section may:
(1) pay all delinquent fees and apply for reinstatement of the
license; or
(2) appeal the revocation or suspension to the department for an
administrative review under IC 4-21.5-3.
Pending the decision resulting from a hearing under IC 4-21.5-3
concerning a license revocation or suspension, the license remains in
force.
As added by P.L.176-1996, SEC.16. Amended by P.L.35-2010,
SEC.122; P.L.89-2011, SEC.39.
IC 28-1-29-4.5
Collection agencies or process servers; licenses; restriction
Sec. 4.5. After August 31, 1981, the department may not issue a
license to any person who is an employee of, owner of, or affiliated
in any way with a collection agency or a process serving business.
Any person who was granted a license before September 1, 1981, is
not affected by the restriction imposed in this section.
As added by Acts 1981, P.L.256, SEC.1. Amended by P.L.42-1993,
SEC.50.
IC 28-1-29-4.6
Repealed
(Repealed by P.L.196-1996, SEC.5.)
IC 28-1-29-5
License application; findings by the department; felonies; denial;
hearing
Sec. 5. (a) Every person doing business as a debt management
company shall make application to the department for a license to
engage in such business. Such application shall be in the form
prescribed by the department and shall contain such information as
the department may require.
(b) The department may not issue a license unless the department
finds that the financial responsibility, character, and fitness of:
(1) the applicant and any significant affiliate of the applicant;
(2) each executive officer, director, or manager of the applicant,
or any other individual having a similar status or performing a
similar function for the applicant; and
(3) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
warrant belief that the business will be operated honestly and fairly
under this chapter. The department is entitled to request evidence of
an applicant's financial responsibility, character, and fitness.
(c) An application submitted under this section must indicate
whether any individuals described in subsection (b)(2) or (b)(3):
(1) are, at the time of the application, under indictment for a
felony under the laws of Indiana or any other jurisdiction; or
(2) have been convicted of or pleaded guilty or nolo contendere
to a felony under the laws of Indiana or any other jurisdiction.
(d) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(e) Upon written request, an applicant is entitled to a hearing
under IC 4-21.5 on the question of the qualifications of the applicant
for a license.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.52; P.L.80-1998, SEC.11;
P.L.10-2006, SEC.34 and P.L.57-2006, SEC.34; P.L.213-2007,
SEC.46; P.L.217-2007, SEC.44; P.L.90-2008, SEC.29; P.L.35-2010,
SEC.123.
IC 28-1-29-6
Bond
Sec. 6. Each application for a license shall be accompanied by
proof that the applicant has executed a bond, payable to the
department, in an amount determined by the director and in
accordance with the standards adopted by the director. Said bond
shall also indemnify any person damaged by failure on the part of the
licensee to conduct the business in accordance with the provisions of
this chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1981, P.L.256, SEC.3; P.L.42-1993, SEC.53;
P.L.35-2010, SEC.124.
IC 28-1-29-7.7
Budget analysis and plan; written statement to debtor; creditor's
reduction of amount owed; disclosure of tax implications
Sec. 7.7. (a) A licensee may not furnish debt management services
to a debtor unless:
(1) the licensee has prepared a budget analysis; and
(2) if the debtor is to make regular, periodic payments, the
licensee:
(A) has prepared a plan for the debtor;
(B) has made a determination, based on the licensee's
analysis of the information provided by the debtor and
otherwise available to the licensee, that the plan is suitable
for the debtor and the debtor will be able to meet the
payment obligations under the plan; and
(C) believes that each creditor of the debtor listed as a
participating creditor in the plan will accept payment of the
debtor's debts as provided in the plan.
(b) Before a debtor enters into an agreement with a licensee to
engage in a plan, the licensee shall:
(1) provide the debtor with a copy of the budget analysis and
plan required by subsection (a) in a form that identifies the
licensee and that the debtor may keep whether or not the debtor
enters into the agreement;
(2) inform the debtor of the availability, at the debtor's option,
of assistance provided through a toll free communication
system or in person, where reasonably available to residents in
Indiana, regarding the budget analysis and plan required by
subsection (a); and
(3) with respect to all creditors identified by the debtor or
otherwise known by the licensee to be creditors of the debtor,
provide the debtor with a list of:
(A) creditors that the licensee expects to participate in the
plan and grant concessions;
(B) creditors that the licensee expects to participate in the
plan but not grant concessions;
(C) creditors that the licensee expects not to participate in
the plan; and
(D) all other creditors.
(c) Before a debtor enters into an agreement with a licensee, the
licensee shall, in a written form that is provided to the debtor
separately, that contains no other information, and that the debtor
may keep whether or not the debtor enters into the agreement,
provide the following information to the debtor in clear and
conspicuous type, surrounded by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Debt management plans are not right for all individuals, and
you may ask us to provide information about other ways,
including bankruptcy, to deal with your debts.
(2) We may receive compensation for our services from your
creditors.
_________________________________________
(Name and business address of licensee)".
(d) If during the term of a debt management agreement a creditor
that is a participating creditor in the plan agrees to reduce the amount
owed by the debtor, the licensee must, not later than fourteen (14)
days after the date the creditor agrees to the reduction, provide the
following disclosure in clear and conspicuous type, surrounded by
black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) (Description of the terms of the reduction).
(2) Reduction of debt as described in item (1) above may result
in taxable income to you, even though you will not actually
receive any money.".
As added by P.L.35-2010, SEC.126. Amended by P.L.89-2011,
SEC.40; P.L.27-2012, SEC.72.
IC 28-1-29-8
Agreement between licensee and debtor; contents; delivery; notice
to creditors; payments; cancellation by contract debtor; budget
analysis; periodic reviews; operation of other businesses or sale of
other products and services; out-of-state licensees; toll free
communication system; good faith required
Sec. 8. (a) An agreement between a licensee and a debtor must:
(1) be in a written form;
(2) be dated and signed by the licensee and the debtor;
(3) include the name of the debtor and the address where the
debtor resides;
(4) include the name, business address, and telephone number
of the licensee;
(5) be delivered to the debtor immediately upon formation of
the agreement; and
(6) disclose the following:
(A) The services to be provided.
(B) The amount or method of determining the amount of all
fees, individually itemized, to be paid by the debtor.
(C) The schedule of payments to be made by or on behalf of
the debtor, including the amount of each payment, the date
on which each payment is due, and an estimate of the date of
the final payment.
(D) If a plan provides for regular periodic payments to
creditors:
(i) each creditor of the debtor to which payment will be
made, the amount owed to each creditor, and any
concessions the licensee reasonably believes each creditor
will offer; and
(ii) the schedule of expected payments to each creditor,
including the amount of each payment and the date on
which the payment will be made.
(E) Each creditor that the licensee believes will not
participate in the plan and to which the licensee will not
direct payment.
(F) The manner in which the licensee will comply with the
licensee's obligations under section 9(j) of this chapter.
(G) A statement that:
(i) the licensee may terminate the agreement for good
cause, upon return of unexpended money of the debtor;
(ii) the debtor may cancel the agreement as provided in
section 8.6 of this chapter; and
(iii) the debtor may contact the department with any
questions or complaints regarding the licensee.
(H) The address, telephone number, and Internet address or
web site of the department.
(b) For purposes of subsection (a)(5), delivery of an electronic
record occurs when:
(1) the record is made available in a format in which the debtor
may retrieve, save, and print the record; and
(2) the debtor is notified that the record is available.
(c) An agreement must provide that:
IC 28-1-29-8.3 Version a
Fees and charges; plan, written agreement, and payment to
creditor required; set up fee; monthly service fee; close-out fee;
department approval for additional charges; fees not considered
debt
Note: This version of section effective until 7-1-2012. See also
following version of this section, effective 7-1-2012.
Sec. 8.3. (a) Except as otherwise permitted by this section, a
licensee may not:
(1) impose, directly or indirectly, a fee or other charge on a
debtor; or
(2) receive money from or on behalf of a debtor for debt
management services.
(b) A licensee may not impose charges or receive payment for
debt management services until:
(1) the licensee and the debtor have agreed upon a plan and
have signed an agreement that complies with sections 8, 8.6,
and 9.5 of this chapter; and
(2) at least one (1) payment has been made to a creditor under
the plan.
All creditors must be notified of the debtor's and licensee's
relationship.
(c) If a debtor assents to a plan, the licensee may charge the
following:
(1) A set up fee of not more than fifty dollars ($50) for
consultation, obtaining a credit report, and setting up an
account. Acceptance of a plan payment constitutes agreement
by the creditor to the plan. A set up fee under this subdivision
may not be collected until the debtor, or the licensee on behalf
of the debtor, has made at least one (1) payment to a creditor
under the plan.
(2) A monthly service fee of the lesser of:
(A) not more than fifteen percent (15%) of the amount the
contract debtor agrees to pay through the licensee, divided
into equal monthly payments over the term of the agreement;
or
(B) not more than seventy-five dollars ($75) in any month.
The monthly service fee under this subdivision may be charged
for any one (1) month or part of a month. The amount of a set
up fee under subdivision (1) may not be included in the
calculation of the monthly service fee.
(d) Upon cancellation by a contract debtor or termination of
payments by a contract debtor, a licensee may not withhold for the
licensee's own benefit more than one hundred dollars ($100), which
may be accrued as a close-out fee.
(e) A licensee may not charge a contract debtor more than one (1)
set up fee or one (1) close-out fee unless the contract debtor leaves
the services of the licensee for more than six (6) months.
(f) With respect to any additional charge not specifically provided
for in this section, the licensee must submit a written explanation of
the charge to the department indicating how the charge would be
assessed and the value or benefit conferred on the contract debtor in
connection with the charge. Supporting documents may be required
by the department. The department shall determine whether the
charge:
(1) would be imposed in relation to some benefit conferred on
the consumer; and
(2) is reasonable in relation to the benefit conferred.
An additional charge is not permitted unless approved by the
department.
(g) For purposes of this chapter, the terms of an agreement
commence on the date on which the agreement is made.
(h) A licensee may assess a charge of not more than twenty-five
dollars ($25) for each return by a bank or other depository institution
of a dishonored check, negotiable order of withdrawal, or share draft
issued by the contract debtor.
(i) Any fee charged by the licensee to the debtor under this section
for services rendered by the licensee, other than the fees described
under subsection (e), is not considered a debt owed by the debtor to
the licensee.
As added by P.L.35-2010, SEC.128. Amended by P.L.89-2011,
SEC.42; P.L.6-2012, SEC.194.
IC 28-1-29-8.3 Version b
Fees and charges; plan, written agreement, and payment to
creditor required; set up fee; monthly service fee; modified or new
agreement; close-out fee; department approval for additional
charges; fees not considered debt
Note: This version of section effective 7-1-2012. See also
preceding version of this section, effective until 7-1-2012.
Sec. 8.3. (a) Except as otherwise permitted by this section, a
licensee may not:
(1) impose, directly or indirectly, a fee or other charge on a
debtor; or
(2) receive money from or on behalf of a debtor for debt
management services.
(b) A licensee may not impose charges or receive payment for
debt management services until:
(1) the licensee and the debtor have agreed upon a plan and
have signed an agreement that complies with sections 8, 8.6,
and 9.5 of this chapter; and
(2) at least one (1) payment has been made to a creditor under
the plan.
All creditors must be notified of the debtor's and licensee's
relationship.
(c) If a debtor assents to a plan, the licensee may charge the
following:
(1) A set up fee of not more than fifty dollars ($50) for
consultation, obtaining a credit report, and setting up an
account. Acceptance of a plan payment by a creditor constitutes
agreement by the creditor to the plan. A set up fee under this
subdivision may not be collected until the debtor, or the
licensee on behalf of the debtor, has made at least one (1)
payment to a creditor under the plan.
(2) Subject to subsection (d), a monthly service fee of the lesser
of:
(A) not more than fifteen percent (15%) of the amount the
contract debtor agrees to pay through the licensee, divided
into equal monthly payments over the term of the agreement;
or
(B) not more than seventy-five dollars ($75) in any month.
The monthly service fee under this subdivision may be charged
for any one (1) month or part of a month. The amount of a set
up fee under subdivision (1) may not be included in the
calculation of the monthly service fee.
(d) If during the term of the original agreement, the agreement is
modified in writing or a new agreement is executed, a licensee:
(1) may not increase the amount of the monthly fee as originally
calculated under subsection (c)(2); and
(2) must decrease the amount of the monthly fee as originally
calculated under subsection (c)(2) if applying the percentage
specified in subsection (c)(2)(A) to the monthly amount of
indebtedness to be paid through the licensee as of the date of
the modification of the original agreement or the execution of
the new agreement, as applicable, would result in an amount
that is less than seventy-five dollars ($75) in any month.
(e) Upon cancellation by a contract debtor or termination of
payments by a contract debtor, a licensee may withhold for the
licensee's own benefit not more than one hundred dollars ($100),
which may be accrued as a close-out fee.
(f) A licensee may not charge a contract debtor more than one (1)
set up fee or one (1) close-out fee unless the contract debtor leaves
the services of the licensee for more than six (6) months.
(g) With respect to any additional charge not specifically provided
for in this section, the licensee must submit a written explanation of
the charge to the department indicating how the charge would be
assessed and the value or benefit conferred on the contract debtor in
connection with the charge. Supporting documents may be required
by the department. The department shall determine whether the
charge:
(1) would be imposed in relation to some benefit conferred on
the consumer; and
(2) is reasonable in relation to the benefit conferred.
An additional charge is not permitted unless approved by the
department.
(h) For purposes of this chapter, the terms of an agreement
commence on the date on which the agreement is made.
(i) A licensee may assess a charge of not more than twenty-five
dollars ($25) for each return by a bank or other depository institution
of a dishonored check, negotiable order of withdrawal, or share draft
issued by the contract debtor.
(j) Any fee charged by the licensee to the debtor under this section
for services rendered by the licensee, other than the fees described
under subsection (f), is not considered a debt owed by the debtor to
the licensee.
As added by P.L.35-2010, SEC.128. Amended by P.L.89-2011,
SEC.42; P.L.6-2012, SEC.194; P.L.27-2012, SEC.74.
IC 28-1-29-8.6
Debtor's right to cancel agreement; notice; waiver of right
Sec. 8.6. (a) A debtor may cancel an agreement before midnight
of the third business day after the debtor enters into the agreement
unless the agreement does not comply with subsection (b) or section
8 or 9.5 of this chapter, in which event the debtor may cancel the
agreement at any time after the debtor enters into the agreement and
all fees paid by the debtor shall be refunded to the debtor. To
exercise the right to cancel, the debtor must give written notice to the
licensee. Notice by mail is given when mailed.
(b) An agreement must be accompanied by a form that contains
in clear and conspicuous type, surrounded by bold black lines:
"NOTICE OF RIGHT TO CANCEL
You may cancel this agreement, without any penalty or
obligation, at any time before midnight of the third business day
that begins the day after you agree to it by electronic
communication or by signing it.
To cancel this agreement during this period, send an electronic
mail message to
____________________________ or mail or deliver a signed,
Electronic mail address of licensee
dated copy of this notice, or any other written notice to
___________________________________________________
Name of licensee
at _______________________________ before midnight on
Address of licensee
_________________.
Date
If you cancel this agreement within the 3 day period, we will
refund all the money you have already paid us.
You also may terminate this agreement at any later time, but we
may not be required to refund fees you have paid us.
I cancel this agreement,
__________________________________
Print your name
__________________________________
Signature
__________________________________
Date".
(c) If a personal financial emergency necessitates the
disbursement of a debtor's money to one (1) or more of the debtor's
creditors before the expiration of the third business day after the date
an agreement is signed, a debtor may waive the right to cancel. To
waive the right, the individual must send or deliver a signed, dated
statement in the debtor's own words describing the circumstances
that necessitate a waiver. The waiver must explicitly waive the right
to cancel. A waiver by means of a standard form record is void.
As added by P.L.35-2010, SEC.129.
IC 28-1-29-8.8
Debtor's failure to make payment; cancellation of agreement;
letter of continuation; return of money to contract debtor
Sec. 8.8. (a) If a contract debtor fails to make a payment to a
licensee within sixty (60) days after the date a payment is due under
an agreement, the agreement is considered canceled by the contract
debtor. A contract debtor may file a letter of continuation of an
agreement even if the contract debtor did not make a payment within
sixty (60) days after a payment was due. All of the following apply
to a letter of continuation of an agreement:
(1) A contract debtor may file only one (1) letter of continuation
with a licensee for any agreement.
(2) A letter of continuation must contain a detailed explanation
of the reason or reasons for the missed payment.
(3) If an agreement for which a letter of continuation that meets
the requirements of this subsection is filed, the agreement
remains in effect and subject to cancellation for any future
failure to make a payment as described in this subsection.
(4) An agreement between a licensee and a contract debtor must
clearly provide for one (1) letter of continuation by a contract
debtor.
(5) A contract debtor may not file a letter of continuation with
a licensee at the beginning of an agreement.
(b) If a licensee or a contract debtor terminates an agreement, the
licensee shall immediately return to the contract debtor any money
of the contract debtor held in trust for the benefit of the contract
debtor.
As added by P.L.35-2010, SEC.130.
IC 28-1-29-9 Version a
Trust accounts; requirements and restrictions; quarterly
accountings; statement upon completion or termination of contract
Note: This version of section effective until 7-1-2012. See also
following version of this section, effective 7-1-2012.
Sec. 9. (a) All money paid to a licensee by or on behalf of a
contract debtor for distribution to creditors under a plan is held in
trust. On or before the close of the same banking day the funds are
received, the licensee shall deposit the money in a trust account
established for the benefit of the contract debtor to whom the
licensee is furnishing debt management services.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual to
whom the licensee is furnishing debt management services.
(2) Disburse money paid by or on behalf of the contract debtor
to creditors of the contract debtor as disclosed in the agreement.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds. After the initial receipt of funds, remittances
shall be made not later than thirty (30) days after receipt of
funds, less fees and costs, unless the reasonable payment of one
(1) or more of the contract debtor's obligations requires that the
funds be held for a longer period to accumulate a sum certain.
For purposes of this section, the close-out fee set forth in
section 8.3(d) of this chapter is not considered an obligation of
the contract debtor.
(4) Retain in the contract debtor's trust account, for charges, an
amount less than or equal to the sum of one (1) month's fee as
permitted by section 8.3(c)(2) of this chapter plus the close-out
fee as permitted by section 8.3(d) of this chapter, unless a
greater amount is approved in writing by the department.
(5) Promptly:
(A) correct any payments that are not made or that are
misdirected as a result of an error by the licensee or other
person in control of the trust account; and
(B) reimburse the contract debtor for any costs or fees
imposed by a creditor as a result of the failure to pay or
misdirection.
(c) A licensee may not commingle money in a trust account
established for the benefit of a contract debtor to whom the licensee
is furnishing debt management services with money of other persons.
(d) A trust account must at all times have a cash balance equal to
the sum of the balances of each contract debtor's account.
(e) If a licensee has established a trust account under subsection
(a), the licensee shall reconcile the trust account at least every thirty
(30) days after receipt of the bank statement. The reconciliation must
compare the cash balance in the trust account with the sum of the
balances in each contract debtor's account. If the licensee or the
licensee's designee has more than one (1) trust account, each trust
account must be individually reconciled.
(f) If a licensee or a licensee's employee discovers, or has a
reasonable suspicion of, embezzlement or other unlawful
appropriation of money held in trust, the licensee or the licensee's
employee shall:
(1) immediately notify the department in writing; and
(2) unless the department by rule provides otherwise, give
notice to the department describing the remedial action taken or
to be taken not later than five (5) days after the licensee or the
licensee's employee discovers, or has a reasonable suspicion of,
the embezzlement or other unlawful appropriation.
(g) If a contract debtor terminates an agreement or it becomes
reasonably apparent to a licensee that a plan has failed, the licensee
shall promptly refund to the contract debtor all money paid by or on
behalf of the contract debtor that has not been paid to creditors less
the fee that is payable to the licensee under section 8.3(e) of this
chapter.
(h) Before relocating a trust account from one (1) bank to another,
a licensee shall inform the department of the name, business address,
and telephone number of the new bank. As soon as practicable, the
licensee shall inform the department of the account number of the
trust account at the new bank.
(i) At least once every three (3) months the licensee shall render
an accounting to the contract debtor which must itemize the total
amount received from the contract debtor, the total amount paid each
creditor, the amount of charges deducted, and any amount held in
reserve. A licensee shall provide such an accounting to a contract
debtor not later than seven (7) days after written demand, but is not
required to provide more than three (3) such accountings per six (6)
month period.
(j) Upon the completion or termination of a contract between a
licensee and a contract debtor, the licensee shall provide to the
contract debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the contract debtor; and
(2) listing the name and address of:
(A) each creditor paid in full; and
(B) any creditors remaining unpaid.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.196-1996, SEC.4; P.L.213-2007, SEC.49;
P.L.217-2007, SEC.47; P.L.35-2010, SEC.131; P.L.89-2011,
SEC.43; P.L.6-2012, SEC.195.
IC 28-1-29-9 Version b
Trust accounts; requirements and restrictions; reconciliation of
bank statements; embezzlement; quarterly accountings;
completion or termination of contract
Note: This version of section effective 7-1-2012. See also
preceding version of this section, effective until 7-1-2012.
Sec. 9. (a) All money paid to a licensee by or on behalf of a
contract debtor for distribution to creditors under a plan is held in
trust. Before the close of the same banking day the funds are
received, the licensee shall deposit the money in a trust account
established for the benefit of the contract debtor to whom the
licensee is furnishing debt management services.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual to
whom the licensee is furnishing debt management services.
(2) Disburse money paid by or on behalf of the contract debtor
to creditors of the contract debtor as disclosed in the agreement.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds. After the initial receipt of funds, remittances
shall be made not later than thirty (30) days after receipt of
funds, less fees and costs, unless the reasonable payment of one
(1) or more of the contract debtor's obligations requires that the
funds be held for a longer period to accumulate a sum certain.
For purposes of this section, the close-out fee set forth in
section 8.3(e) of this chapter is not considered an obligation of
the contract debtor.
debtor not later than seven (7) days after written demand, but is not
required to provide more than three (3) such accountings per six (6)
month period.
(j) Upon the completion or termination of a contract between a
licensee and a contract debtor, the licensee shall provide to the
contract debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the contract debtor; and
(2) listing the name and address of:
(A) each creditor paid in full; and
(B) any creditors remaining unpaid.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.196-1996, SEC.4; P.L.213-2007, SEC.49;
P.L.217-2007, SEC.47; P.L.35-2010, SEC.131; P.L.89-2011,
SEC.43; P.L.6-2012, SEC.195; P.L.27-2012, SEC.75.
IC 28-1-29-9.5
Prohibited acts; unauthorized practice of law; compensation
prohibited
Sec. 9.5. (a) A licensee may not, directly or indirectly, do any of
the following:
(1) Misappropriate or misapply money held in trust.
(2) Exercise or attempt to exercise a power of attorney after a
contract debtor has terminated an agreement.
(3) Initiate a transfer from a contract debtor's account at a bank
or with another person unless the transfer is:
(A) a return of money to the contract debtor; or
(B) before the termination of an agreement, properly
authorized by the agreement and this chapter, and for:
(i) payment to one (1) or more creditors under an
agreement; or
(ii) payment of a fee.
(4) Offer a gift or bonus, premium, reward, or other
compensation to a debtor for executing an agreement.
(5) Offer, pay, or give:
(A) a gift or bonus;
(B) a premium;
(C) a reward; or
(D) other compensation;
to a person for referring a prospective customer if the person
making the referral has a financial interest in the outcome of
debt management services provided to the customer.
(6) Receive a bonus, a commission, or other benefit for
referring a debtor to a person.
(7) Structure a plan in a manner that would result in a negative
amortization of any of a debtor's debts, unless a creditor that is
owed a negatively amortizing debt agrees to refund or waive the
finance charge upon payment of the principal amount of the
debt.
(8) Compensate the licensee's employees on the basis of a
formula that incorporates the number of debtors the employee
induces to enter into agreements. It is not a violation of this
subsection for a licensee to use the number of successfully
completed debt management plans as a criterion for
compensation for the licensee's employees.
(9) Settle a debt or lead a contract debtor to believe that a
payment to a creditor is in settlement of a debt to the creditor
unless, at the time of settlement, the contract debtor receives a
certification by the creditor that the payment is in full
settlement of the debt.
(10) Make a representation that:
(A) the licensee will furnish money to pay bills or prevent
attachments;
(B) payment of a certain amount will permit satisfaction of
a certain amount or range of indebtedness; or
(C) participation in a plan will or may prevent litigation,
garnishment, attachment, repossession, foreclosure, eviction,
or loss of employment.
(11) Misrepresent that the licensee is authorized or competent
to furnish legal advice or perform legal services.
(12) Represent in the licensee's agreements, disclosures
required by this chapter, advertisements, or Internet web site
that the licensee is:
(A) a nonprofit entity unless the licensee is organized and
properly operating as a nonprofit entity under the law of the
state in which entity was formed; or
(B) a tax exempt entity unless the entity has received
certification of tax exempt status from the Internal Revenue
Service and is properly operating as a nonprofit entity under
the law of the state in which the entity was formed.
(13) Take a confession of judgment or power of attorney to
confess judgment against a contract debtor.
(14) Employ an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(b) If a licensee furnishes debt management services to a debtor,
the licensee may not, directly or indirectly, do any of the following:
(1) Purchase a debt or obligation of the debtor.
(2) Receive from or on behalf of the debtor:
(A) a promissory note or other negotiable instrument other
than a check or a demand draft; or
(B) a postdated check or demand draft.
(3) Lend money or provide credit to the debtor.
(4) Obtain a mortgage or other security interest from any person
in connection with the services provided to the debtor.
(5) Except as permitted by federal law, disclose the identity or
identifying information of the debtor or the identity of the
debtor's creditors, except:
(A) to the department, upon proper demand;
(B) to a creditor of the debtor, to the extent necessary to
secure the cooperation of the creditor in a plan; or
(C) to the extent necessary to administer the plan.
(6) Charge the debtor for or provide credit or other insurance,
coupons for goods or services, membership in a club, access to
computers or the Internet, or any other matter not directly
related to debt management services or educational services
concerning personal finance.
(7) Furnish legal advice or perform legal services unless the
person furnishing the advice or performing the services is
licensed to practice law.
(c) This chapter does not authorize any person to engage in the
practice of law.
(d) A licensee may not receive a gift, bonus, premium, reward, or
other compensation, directly or indirectly, for advising, arranging, or
assisting a debtor in connection with obtaining an extension of credit
or other service from a lender or service provider.
As added by P.L.35-2010, SEC.132.
IC 28-1-29-9.7
Advertising
Sec. 9.7. A licensee:
(1) may not use false, misleading, or deceptive advertising; and
(2) shall meet the following conditions in advertising:
(A) An advertisement may not include a statement that states
or implies that no financial problem is too great for the
licensee to solve.
(B) An advertisement may not include a statement that states
or implies that the licensee will use the licensee's own cash
to pay the debtor's accounts.
(C) All advertisements must contain the statement "We do
not lend money.".
(D) All advertisements must contain the true name and
address of the licensee.
As added by P.L.35-2010, SEC.133.
IC 28-1-29-10
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 28-1-29-10.5
Record keeping and retention; examinations and investigations;
payment of costs; records outside Indiana; court order compelling
compliance; confidentiality; department's authority to enter into
cooperative regulatory agreements; examination of vendors
Sec. 10.5. (a) A licensee shall maintain in the licensee's business
any books, accounts, and records that enable the department to
determine whether the licensee is complying with this chapter. The
books, accounts, and records shall be preserved for at least two (2)
years after making the final entry of any agreement recorded in the
books, accounts, and records. A licensee is subject to IC 28-1-2-30.5
with respect to any records maintained by the licensee.
(b) In administering this chapter and in order to determine
whether this chapter is being complied with by a person engaging in
acts subject to this chapter, the department may examine the records
of a person and may make investigations of a person as necessary to
determine compliance. Records subject to examination under this
section include the following:
(1) Training, operating, and policy manuals.
(2) Minutes of:
(A) management meetings; and
(B) other meetings.
(3) Other records that the department determines are necessary
to perform the department's investigation or examination.
(c) The department may also administer oaths or affirmations,
subpoena witnesses, compel a witness's attendance, adduce evidence,
and require the production of any matter that is relevant to the
investigation. The department shall determine whether:
(1) the records maintained are sufficient; and
(2) the person has made the required information reasonably
available.
(d) If the department:
(1) investigates; or
(2) examines the books and records of;
a person that is subject to this chapter, the person shall pay all
reasonably incurred costs of the investigation or examination in
accordance with the fee schedule adopted by the department under
IC 28-11-3-5. Any costs required to be paid under this subsection
shall be paid not later than sixty (60) days after the person receives
a notice from the department of the costs being assessed. The
department may impose a fee, in an amount fixed by the department
under IC 28-11-3-5, for each day that the assessed costs are not paid,
beginning on the first day after the sixty (60) day period described in
this subsection.
(e) The department shall be given free access to the records
wherever located. If the person's records are located outside Indiana,
at the discretion of the director, the records shall be made available
to the department at a convenient location within Indiana, or the
person shall pay the reasonable and necessary expenses for the
department or the department's representative to examine the records
where the records are maintained.
(f) If a person fails to:
(1) obey a subpoena without a lawful excuse; or
(2) give testimony;
the department may apply to a civil court for an order compelling
compliance.
(g) The department shall not make public the name or identity of
a person whose acts or conduct the department investigates under
this section or the facts disclosed in the investigation. However, this
subsection does not apply to disclosures of enforcement proceedings
under this chapter.
IC 28-1-29-11
Impounding books, records, and accounts
Sec. 11. Upon affidavit of any person, or other information that
the licensee has failed to comply with the provisions of this chapter,
and after a preliminary investigation indicates probable cause that a
violation has occurred, the department shall have authority to
impound such books, records, and accounts as it deems necessary.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.263-1985, SEC.108; P.L.42-1993, SEC.56.
IC 28-1-29-12
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 28-1-29-13
Enforcement by the department; civil penalties; department's
recovery of costs; factors for determining amount of civil penalty;
violation a Class A misdemeanor
Sec. 13. (a) The department may enforce this chapter and rules
adopted under this chapter by taking one (1) or more of the following
actions:
(1) Order a debt management company or a director, employee,
or other agent of a debt management company to cease and
desist from any violations.
(2) Order a debt management company or a person that has
caused a violation to correct the violation, including making
restitution of money or property to a person aggrieved by a
violation.
(3) Prosecute a civil action to:
(A) enforce an order;
(B) obtain restitution, an injunction, or other equitable relief;
or
(C) accomplish both clauses (A) and (B).
(b) Subject to subsection (c), if the department determines, after
notice and an opportunity to be heard, that a person has violated this
chapter, the department may, in addition to or instead of all other
remedies available under this section, impose upon the person a civil
penalty not greater than ten thousand dollars ($10,000) per violation.
(c) If a person violates or knowingly authorizes, directs, or aids in
the violation of a final order issued under subsection (a)(1) or (a)(2),
the department may impose a civil penalty of not more than twenty
thousand dollars ($20,000) for each violation.
(d) The department may maintain an action in any county to
enforce this chapter.
(e) The department may recover the reasonable costs of enforcing
this chapter under subsections (a) through (d), including attorney's
fees.
(f) In determining the amount of a civil penalty to impose under
subsection (b) or (c), the department shall consider:
(1) the seriousness of the violation;
(2) the good faith of the person who violated this chapter;
(3) any previous violations by the person who violated this
chapter;
(4) the deleterious effect of the violation on the public;
(5) the net worth of the person who violated this chapter; and
(6) any other factor the department considers relevant to the
determination of a civil penalty.
(g) In addition to the revocation provision of section 4 of this
chapter, a person who violates section 3, 5, 6, 8, 8.3, 9, or 9.5 of this
chapter commits a Class A misdemeanor, and the license of the
licensee shall be revoked on the date of the conviction of an offense.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1978, P.L.2, SEC.2815; P.L.42-1993, SEC.58;
P.L.35-2010, SEC.135; P.L.89-2011, SEC.44.
IC 28-1-29-14
Review of department decisions; applicability of laws governing
administrative orders and procedures; venue
Sec. 14. Any applicant for a license aggrieved by a decision of the
department pursuant to this chapter may file a petition for review as
prescribed in IC 4-21.5. Except as otherwise provided, IC 4-21.5
applies to and governs all agency action taken by the department
under this chapter. All proceedings for administrative review under
IC 4-21.5-3 or judicial review under IC 4-21.5-5 shall be held in
Marion County.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.7-1987, SEC.160; P.L.42-1993, SEC.59;
P.L.35-2010, SEC.136.
IC 28-1-29-15
Providing materials and agreements electronically; consumer's
consent required; disclosures through Internet web site; debtor's
right to request written copy
Sec. 15. (a) As used in this section, "consumer" means an
individual who seeks or obtains goods or services that are used
primarily for personal, family, or household purposes.
(b) As used in this section, "federal act" means the Electronic
Signatures in Global and National Commerce Act (15 U.S.C. 7001
et seq., as amended).
(c) A licensee may satisfy the requirements of section 7.7, 8, or 9
of this chapter by means of the Internet or other electronic means if
the licensee obtains a consumer's consent in the manner provided by
Section 101(c)(1) of the federal act.
(d) The disclosures and materials required by section 7.7, 8, or 9
of this chapter shall be presented in a form that is capable of being
accurately reproduced for later reference.
(e) With respect to disclosure by means of an Internet web site,
the disclosure of the information required by section 7.7 of this
chapter must appear on one (1) or more screens that:
(1) contain no other information; and
(2) the debtor must see before proceeding to assent to formation
of an agreement.
(f) At the time of providing the materials and agreement required
by sections 7.7, 8, and 9 of this chapter, a licensee shall inform the
debtor that upon electronic, telephonic, or written request, the
licensee shall:
(1) send the debtor a written copy of the materials; and
(2) comply with a request as provided in subsection (g).
(g) If a licensee is requested, after an agreement is completed or
terminated, to send a written copy of the materials required by
section 7.7, 8, or 9 of this chapter, the licensee shall send the
materials at no charge to the debtor not later than three (3) business
days after the request. However, the licensee is not required to
comply with a request more than once per calendar month or if the
licensee reasonably believes the request is made for purposes of
harassment.
(h) A licensee that maintains an Internet web site shall disclose on
the home page of the licensee's web site or on a page that is clearly
and conspicuously connected to the home page by a link that clearly
reveals the following:
(1) The licensee's name and all names under which the licensee
does business.
(2) The licensee's principal business address, telephone number,
and electronic mail address, if any.
(3) The names of the licensee's principal officers.
(i) A licensee may not terminate the licensee's agreement because
a consumer who has consented to electronic communication in the
manner provided by Section 101 of the federal act withdraws consent
as provided in the federal act.
As added by P.L.35-2010, SEC.137.
IC 28-1-29-16
Disclosures and documents to be in English; translation required
if another language used
Sec. 16. Unless the department provides otherwise in a rule, the
disclosures and documents required by this chapter must be in
English. If a licensee communicates with a debtor primarily in a
language other than English, the licensee shall furnish a translation
of the disclosures and documents required by this chapter from the
other language into English.
As added by P.L.35-2010, SEC.138.
IC 28-1-29-17
Soliciting or accepting contributions from debtors prohibited
Sec. 17. Unless a fee is specifically authorized under the chapter,
a licensee may not solicit or accept a voluntary contribution from a
contract debtor for any service provided to the contract debtor.
As added by P.L.35-2010, SEC.139.
IC 28-1-29-18
Delegation of licensee's duties or obligations; liability
Sec. 18. If a licensee delegates any of the licensee's duties or
obligations under an agreement or this chapter to another person,
including an independent contractor, the licensee is liable for
conduct of the person which, if done by the licensee, would violate
the agreement or this chapter.
As added by P.L.35-2010, SEC.140.