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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, and other entities,
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 contracting with
the debtor for a fee to receive from the debtor and disburse
money or anything of value. The term includes the following:
(A) An entity that simply holds any 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".
(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
contract 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.
(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.
IC 28-1-29-3
License required; persons operating in Indiana; evidence of
compliance; criminal background checks; fees; violations
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.
(iv) Radio.
(v) Television.
(vi) The Internet or other electronic communications.
(vii) Any other means of communication.
(b) The director may request evidence of compliance with this
section at:
(1) the time of application;
(2) the time of renewal of a license; or
(3) any other time considered necessary by the director.
(c) For purposes of subsection (b), evidence of compliance with
this section may include:
(1) criminal background checks, including a national criminal
history background check (as defined in IC 10-13-3-12) by the
Federal Bureau of Investigation for any individual described in
section 5(b)(2) or 5(b)(3) of this chapter;
(2) credit histories; and
(3) other background checks considered necessary by the
director.
If the director requests a national criminal history background check
under subdivision (1) for an individual described in that subdivision,
the director shall require the individual to submit fingerprints to the
department or to the state police department, as appropriate, at the
time evidence of compliance is requested under subsection (b). The
individual to whom the request is made shall pay any fees or costs
associated with the fingerprints and the national criminal history
background check. The national criminal history background check
may be used by the director to determine the individual's compliance
with this section. The director or the department may not release the
results of the national criminal history background check to any
private entity.
(d) The fee for a license or renewal shall be fixed by the
department under IC 28-11-3-5 and shall be nonrefundable. The
department may impose a fee under IC 28-11-3-5 for each day that
a renewal fee due and payable under this subsection is delinquent.
(e) If a person knowingly acts as a debt management company in
violation of this chapter, any agreement the person has made under
this chapter is void and the debtor under the agreement is not
obligated to pay any fees. If the debtor has paid any amounts to the
person, the debtor, or the department on behalf of the debtor, may
recover the payment from the person that violated this section.
(f) A license issued under this section is not assignable or
transferable.
(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.
IC 28-1-29-4
Denial, suspension, or revocation of license; grounds; procedure
Sec. 4. (a) The department may revoke or suspend any license
issued under this chapter for the following causes:
(1) Indictment for, conviction of, or a plea of guilty or nolo
contendere to a felony involving fraud, deceit, or
misrepresentation under the laws of Indiana or any other
jurisdiction.
(2) Violation of any of the provisions of this chapter.
(3) Fraud or deceit in procuring the issuance of a license or
renewal under this chapter.
(4) Indulging in a continuous course of unfair conduct.
(5) Insolvency, bankruptcy, receivership, or assignment for the
benefit of creditors by a licensee.
(6) Licensee lending money to any debtor that has subscribed
to the licensee's services.
(7) Except as provided in subsection (c), offering to pay or give
any cash, fee, gift, bonus, premiums, reward, or other
compensation to any person for referring any prospective
customer to the licensee.
(8) Except as provided in subsection (d), receiving any cash,
fee, gift, bonus, premium, reward, or other compensation from
any person other than the contract debtor in connection with his
activities as a licensee.
(9) Licensee requiring a debtor to purchase or agree to purchase
a policy of insurance from which licensee receives a fee or
other remuneration.
(10) If the licensee violates any reasonable rule or regulation
made by the department under and within the authority of this
chapter.
(11) Misleading advertising or representing that the licensee can
provide protection from legal recourse or suits of creditors.
(b) Except as provided in section 4.1 of this chapter, the denial,
revocation, or suspension shall be made only after specific charges
have been filed in writing, under oath, with the department or by the
department, whereupon a hearing shall be had as to the reasons for
such denial, revocation, or suspension and a certified copy of the
charges shall be served on the licensee or the applicant for license
not less than ten (10) days prior to the hearing.
(c) Notwithstanding subsection (a)(7), a licensee may reduce the
fees of a contract debtor who is a client of the licensee if the contract
debtor refers a prospective customer to the licensee.
(d) Notwithstanding subsection (a)(8), a licensee may receive a
fair share creditor fee, based on disbursements made to the creditor,
from a debtor's creditors. If any creditor refuses to pay the fair share
creditor fee, the creditor must still be included in the contract
debtor's payment plan.
(e) If the director of the department:
(1) has just cause to believe an emergency exists from which it
is necessary to protect the interests of the public; or
(2) determines that the license was obtained for the benefit of,
or on behalf of, a person who does not qualify for a license;
the director may proceed with the revocation of the license under
IC 4-21.5-3-6.
(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.
IC 28-1-29-4.1
Failure to file renewal form or pay renewal fee
Sec. 4.1. (a) A license issued by the department under this chapter
shall be revoked by the department if the person fails to:
(1) file any renewal form required by the department; or
(2) pay any license renewal fee described under section 3 of this
chapter;
for a period of at least two (2) years.
(b) A person whose license is revoked under this section may:
(1) pay all delinquent fees and apply for a new license; or
(2) appeal the revocation to the department for an
administrative review under IC 4-21.5-3. Pending the decision
resulting from the hearing under IC 4-21.5-3 concerning the
license revocation, the license remains in force.
As added by P.L.176-1996, SEC.16.
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 department; felonies involving
fraud, deceit, or misrepresentation; persons not qualifying for
license; 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 article. 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 involving fraud, deceit, or misrepresentation under the
laws of Indiana or any other jurisdiction; or
(2) have been convicted of or pleaded guilty or nolo contendere
to a felony involving fraud, deceit, or misrepresentation 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.
IC 28-1-29-6
Bond
Sec. 6. Each application for a license shall be accompanied by a
bond to the state of Indiana in the sum of twenty-five thousand
dollars ($25,000) with surety to the satisfaction of the department
and be approved as to form by the state's attorney general,
conditioned upon the faithful performance of the rules and
regulations of the department and in compliance with the laws of the
state of Indiana. 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.
IC 28-1-29-7
Display of license
Sec. 7. When a license has been issued such license shall be
prominently displayed by the licensee in his place of business.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
IC 28-1-29-7.5
Felonies involving fraud, deceit, or misrepresentation; notice to
department
Sec. 7.5. (a) This section applies if, after a person has been issued
a license or renewal license under this chapter, any of the following
apply:
(1) Any individuals described in section 5(b)(2) or 5(b)(3) of
this chapter are under indictment for a felony involving fraud,
deceit, or misrepresentation under the laws of Indiana or any
other jurisdiction.
(2) Any individuals described in section 5(b)(2) or 5(b)(3) of
this chapter have been convicted of or pleaded guilty or nolo
contendere to a felony involving fraud, deceit, or
misrepresentation under the laws of Indiana or any other
jurisdiction.
(b) If this section applies, the licensee shall provide to the
department the information required under section 5(c) of this
chapter:
(1) not later than thirty (30) days after any person described in
subsection (a):
(A) has been put on notice of the indictment; or
(B) has been convicted of or pleaded guilty or nolo
contendere to the felony;
whichever applies; or
(2) if the licensee's next license renewal fee under section 3(c)
of this chapter is due before the date described in subdivision
(1), along with the licensee's next license renewal fee under
section 3(d) of this chapter.
As added by P.L.213-2007, SEC.47; P.L.217-2007, SEC.45.
Amended by P.L.90-2008, SEC.30.
IC 28-1-29-8 Version a
Licensees; requirements and restrictions; contracts with contract
debtors; fees; operation of other businesses and sale of other
products and services; out-of-state licensees
Note: This version of section amended by P.L.3-2008, SEC.220.
See also following version of this section amended by P.L.90-2008,
SEC.31.
Sec. 8. (a) A licensee shall deliver to every contract debtor, at the
time the contract is made, a copy of the contract, showing the:
(1) date executed;
(2) rate of charge the licensee will impose;
(3) initial set up fee;
(4) cancellation fee;
(5) amount of debts claimed by the contract debtor to be due the
contract debtor's creditors;
(6) total amount of fee to be assessed by the licensee, including
the initial set up fee, but excluding the cancellation fee; and
(7) total amount of debt to be repaid under the contract;
and shall immediately notify all creditors of the licensee's and
debtor's relationship. The contract shall specify the schedule of
payments from the debtor under the debt program.
(b) A licensee may take no fee unless a debt program or a finance
program, or both, agreed upon by the licensee and the contract
debtor, has been arranged. All creditors must be notified of the
debtor's and licensee's relationship. Acceptance of a program
payment constitutes agreement by the creditor to the program.
(c) A licensee shall give to the contract debtor a dated receipt for
each payment, at the time of the payment, unless the payment is
made by check, money order, or direct deposit.
(d) A licensee shall, upon cancellation by a contract debtor of the
contract, notify immediately in writing all creditors of contract
debtor.
(e) A licensee shall maintain in the licensee's business such books,
accounts, and records as will enable the department or the attorney
general to determine whether the licensee is complying with this
chapter. Such books, accounts, and records shall be preserved for at
least three (3) years after making the final entry of any contract
recorded therein.
(f) A licensee may not, except as provided in subsection (g)
receive a fee from the contract debtor for services in excess of fifteen
percent (15%) of the amount the debtor agrees to pay through the
licensee, divided into equal monthly payments over the term of the
contract. The total monthly amount of fees paid by the contract
debtor to the licensee plus the fair share fees paid by the contract
debtor's creditors to the licensee shall not exceed twenty percent
(20%) of the monthly amount the debtor agrees to pay through the
licensee. The accrual method of accounting shall apply to the
creditor's fair share fees received by the licensee. The program fee
may be charged for any one (1) month or part of a month. As a
portion of the total fees and charges stated in the contract, the
licensee may require the debtor to pay a maximum initial payment of
fifty dollars ($50). The initial payment must be deducted from the
total contract fees and charges to determine the monthly amortizable
amount for subsequent fees. Unless approved by the department, the
licensee may not retain in the debtor's trust account, for charges, an
amount greater than one (1) month's fee plus the close-out fee. Any
fee charged by the licensee to the debtor under this section for
services rendered by the licensee, other than the amount pursuant to
subsection (g), is not considered a debt owed by the debtor to the
licensee.
(g) Upon:
(1) cancellation of the contract by a contract debtor; or
(2) termination of payments by a contract debtor;
a licensee may not withhold for the licensee's own benefit, in
addition to the amounts specified in subsection (f), more than one
hundred dollars ($100), which may be accrued as a close-out fee. The
licensee may not charge the contract debtor more than one (1) set up
fee or cancellation fee, or both, unless the contract debtor leaves the
services of the licensee for more than six (6) months.
(h) A licensee may not enter into a contract with a debtor unless
a thorough, written budget analysis of the debtor indicates that the
debtor can reasonably meet the payments required under a proposed
debt program or finance program.
(i) A licensee may not enter into a contract with a contract debtor
for a period longer than twenty-four (24) months.
(j) A licensee may provide services under this chapter in the same
place of business in which another business is operating, or from
which other products or services are sold, if the director issues a
written determination that:
(1) the operation of the other business; or
(2) the sale of other products and services;
from the location in question is not contrary to the best interests of
the licensee's contract debtors.
(k) A licensee without a physical location in Indiana may:
(1) solicit sales of; and
(2) sell;
additional products and services to Indiana residents if the director
issues a written determination that the proposed solicitation or sale
is not contrary to the best interests of contract debtors.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1981, P.L.256, SEC.4; P.L.42-1993, SEC.54;
P.L.196-1996, SEC.3; P.L.63-2001, SEC.13 and P.L.134-2001,
SEC.14; P.L.213-2007, SEC.48; P.L.217-2007, SEC.46; P.L.3-2008,
SEC.220.
licensee may require the debtor to pay a maximum initial payment of
fifty dollars ($50). The initial payment must be deducted from the
total contract fees and charges to determine the monthly amortizable
amount for subsequent fees. Unless approved by the department, the
licensee may not retain in the debtor's trust account, for charges, an
amount greater than one (1) month's fee plus the close-out fee. Any
fee charged by the licensee to the debtor under this section for
services rendered by the licensee, other than the amount pursuant to
subsection (g), is not considered a debt owed by the debtor to the
licensee.
(g) Upon:
(1) cancellation of the contract by a contract debtor; or
(2) termination of payments by a contract debtor;
a licensee may not withhold for the licensee's own benefit, in
addition to the amounts specified in subsection (f), more than one
hundred dollars ($100), which may be accrued as a close-out fee. The
licensee may not charge the contract debtor more than one (1) set up
fee or cancellation fee, or both, unless the contract debtor leaves the
services of the licensee for more than six (6) months.
(h) A licensee may not enter into a contract with a debtor unless
a thorough, written budget analysis of the debtor indicates that the
debtor can reasonably meet the payments required under a proposed
debt program or finance program.
(i) A licensee may not enter into a contract with a contract debtor
for a period longer than twenty-four (24) months.
(j) A licensee may provide services under this chapter in the same
place of business in which another business is operating, or from
which other products or services are sold, if the director issues a
written determination that:
(1) the operation of the other business; or
(2) the sale of other products and services;
from the location in question is not contrary to the best interests of
the licensee's contract debtors.
(k) A licensee without a physical location in Indiana may:
(1) solicit sales of; and
(2) sell;
additional products and services to Indiana residents if the director
issues a written determination that the proposed solicitation or sale
is not contrary to the best interests of contract debtors.
(l) A licensee may assess a charge not to exceed 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.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1981, P.L.256, SEC.4; P.L.42-1993, SEC.54;
P.L.196-1996, SEC.3; P.L.63-2001, SEC.13 and P.L.134-2001,
SEC.14; P.L.213-2007, SEC.48; P.L.217-2007, SEC.46;
P.L.90-2008, SEC.31.
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
Exemptions from chapter
Sec. 12. This chapter does not apply to any attorney at law
authorized to practice in this state, or to any individual, partnership,
association, limited liability company, or corporation doing business
or operating in this state as a trust company or building and loan
association, licensed lending institution, court appointed receivers,
trustees in bankruptcy, or any not-for-profit corporation providing
the services of a debt management company which does not charge
the debtor any fee for such services, other than fees that are:
(1) incurred and documented by the person in the course of
providing the services, such as fees for postage or fees paid to
a third party; and
(2) bona fide and reasonable, as may be defined by a policy or
rule of the department.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1981, P.L.256, SEC.5; P.L.42-1993, SEC.57;
P.L.213-2007, SEC.50; P.L.217-2007, SEC.48; P.L.90-2008,
SEC.33.
IC 28-1-29-14
Review of department decisions
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.
(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.