CONFERENCE ON UNIFORM DEBT-MANAGEMENT SERVICES ACT SCHEDULED NOVEMBER 16-18

The Uniform Law Commissioners are planning a conference in Chicago to address inconsistencies in state regulation of debt counseling and management services. The conference is scheduled to be held November 16-18, 2007 in Chicago. To date, only a small number of states have enacted the Uniform Debt-Management Services Act (“UDMSA”), which the Uniform Law Commissioners promulgated in 2005. The UDMSA applies to both consumer debt counseling services and debt management services and, among other things:

  • Requires registration of debt-management service providers;
  • Requires disclosures of fees and services to be offered and the risks and benefits of entering into an agreement;
  • Requires providers to offer counseling services from a certified counselor and create a plan in consultation with the counselor
    for debt-management service to commence;
  • Sets the contents of agreements and fees that may be charged;
  • Provides debtors with a three-day right of rescission and the ability to cancel an agreement within 30 days;
  • Permits providers to terminate an agreement if required payments are delinquent for at least 60 days;
  • Requires providers to keep debtor payments in a trust account;
  • Prohibits providers from performing certain acts, including misappropriating funds in trust, settling for more than 50% of a
    debt without a debtor’s consent, offering gifts or premiums to enter into an agreement and representing that settlement has
    occurred without certification from a creditor; and
  • Establishes remedies for violations, which may include injunctive relief, civil penalties up to $10,000 and private rights of action for compensatory damages, triple damages, punitive damages and attorneys’ fees.