HB 385 - Debtor or creditor; debt adjustment; amend provisions
(1) Ashe,Kathy 42nd Post 2 (2) Ehrhart,Earl 28th (3) Shaw,Jay 143rd
(4) Oliver,Mary 56th Post 2 (5) Jackson,Lester 124th Post 1 (6) Benfield,Stephani 56th Post 1
HC: Judy SC: S JUDY 05/30/03 - House Date Signed by Governor

First Reader Summary

A BILL to amend Chapter 5 of Title 18 of the Official Code of Georgia Annotated, relating to debt adjustment, so as to limit the maximum charge that may be imposed for the provision of debt adjustment services; to provide for exemptions from those provisions related to debt adjustment; to require persons engaged in the business of debt adjustment to obtain an annual audit of all accounts and to maintain a certain amount and type of insurance coverage; to provide for the disbursement of a debtor's funds within 30 days of receipt; and for other purposes.

Code Titles Referenced in this Legislation.

Title18 / Title7,

Electronically Recorded Votes
Date Time Vote No Yeas Nays NV Exc Description
3/26/03 11:24 AM House V0172 168 002 008 002 PASS
4/25/03 08:28 PM House V0519 166 000 012 002 Agree Sen Sub

Bill History
Date Action
02/14/03House First Readers
02/17/03House Second Readers
03/24/03House Committee Favorably Reported
03/26/03House Third Readers
03/26/03House Passed/Adopted
03/27/03Senate Read and Referred
04/10/03Senate Committee Favorably Reported
04/11/03Senate Read Second Time
04/22/03Senate Third Read
04/22/03Senate Tabled
04/25/03Senate Taken from Table
04/25/03Senate Passed/Adopted
04/25/03House Agree Senate Amend or Sub
05/12/03House Sent to Governor
05/30/03Act 103
05/30/03House Date Signed by Governor

Versions
HB 385/AP*
LC 30 0615/a
LC 29 0867S/hs
LC 29 0867S/hcs
Sen ctee sub LC 30 0

Footnotes

4/22/03 Tabled in Senate;
4/25/03 Taken from Table in Senate

FULL TEXT

HB385.html
03 HB 385/AP

House Bill 385 (AS PASSED HOUSE AND SENATE)
By: Representatives Ashe of the 42nd, Post 2, Ehrhart of the 28th, Shaw of the 143rd, Oliver of the 56th, Post 2, Jackson of the 124th, Post 1, and others



A BILL TO BE ENTITLED
AN ACT

To amend Chapter 5 of Title 18 of the Official Code of Georgia Annotated, relating to debt adjustment, so as to limit the maximum charge that may be imposed for the provision of debt adjustment services; to provide for definitions; to provide for exemptions from those provisions related to debt adjustment; to require persons engaged in debt adjusting to obtain an annual audit of all accounts and to maintain a certain amount and type of insurance coverage; to provide for the disbursement of a debtor´s funds within 30 days of receipt; to require persons engaged in debt adjusting to maintain trust accounts for debtors´ funds; to provide for civil and criminal violations and penalties; to provide for investigation and enforcement; to provide for related matters; to provide for an effective date; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.
Chapter 5 of Title 18 of the Official Code of Georgia Annotated, relating to debt adjustment,
is amended by striking Code Section 18-5-1, relating to definitions, and inserting in its place the following:
"18-5-1.
As used in this chapter, the term:
(1) 'Debt adjusting' means doing business in debt adjustments, budget counseling, debt management, or debt pooling service or holding oneself out, by words of similar import, as providing services to debtors in the management of their debts and contracting with a debtor for a fee to:
(A) Effect the adjustment, compromise, or discharge of any account, note, or other indebtedness of the debtor; or
(B) Receive from the debtor and disburse to his or her creditors any money or other thing of value.
(2) 'Person' means an individual, corporation, partnership, trust, association, or other legal entity.
(3) 'Resides' means to live in a particular place, whether on a temporary or permanent basis."

SECTION 2.
Said chapter is further amended by striking Code Section 18-5-2, relating to the prohibition of debt adjusting, and inserting in its place the following:
"18-5-2.
In the course of engaging in debt adjusting, it It shall be unlawful for any person to engage in the business of debt adjusting: accept from a debtor who resides in this state, either directly or indirectly, any charge, fee, contribution, or combination thereof in an amount in excess of 7.5 percent of the amount paid monthly by such debtor to such person for distribution to creditors of such debtor; provided, however, no provision of this chapter shall prohibit any person, in the course of engaging in debt adjusting, from imposing upon a debtor who resides in this state a reasonable and separate charge or fee for insufficient funds transactions."

SECTION 3.
Said chapter is further amended by striking Code Section 18-5-3, relating to exemption for incidental debt adjustment in the practice of law, and inserting in its place the following:
"18-5-3.
Nothing in this chapter shall apply to those situations involving debt adjusting incurred incidentally in the practice of law in this state. Nothing in this chapter shall apply to those persons or entities who incidentally engage in debt adjustment to adjust the indebtedness owed to said person or entity. Nothing in this chapter shall apply to the following entities or their subsidiaries: the Federal National Mortgage Association; the Federal Home Loan Mortgage Corporation; a bank, bank holding company, trust company, savings and loan association, credit union, credit card bank, or savings bank that is regulated and supervised by the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, or the Georgia Department of Banking and Finance; or persons as defined in Code Section 7-3-3 operating under Chapter 3 of Title 7, the 'Georgia Industrial Loan Act.'"

SECTION 4.
Said chapter is further amended by adding a new Code Section 18-5-3.1 to read as follows:
"18-5-3.1.
(a) Any person engaged in debt adjusting for debtors residing in this state shall meet the following annual requirements:
(1) Obtain from an independent third party certified public accountant an annual audit of all accounts of such person in which the funds of debtors are deposited and from which payments are made to creditors on behalf of debtors. A copy of the summary results of such annual audit shall be made available upon written request to any party so requesting a copy for a charge not to exceed the cost of the reproduction of the annual audit; and
(2) Obtain and maintain at all times insurance coverage for employee dishonesty, depositor´s forgery, and computer fraud in an amount not less than the greater of $100,000.00 or 10 percent of the monthly average for the immediately preceding six months of the aggregate amount of all deposits made with such person by all debtors. The deductible on such coverage shall not exceed 10 percent of the face amount of the policy coverage. Such policy shall be issued by a company rated at least 'A-' or its equivalent by a nationally recognized rating organization and such policy shall provide for 30 days´ advance written notice of termination of the policy to be provided to the Governor´s Office of Consumer Affairs.
(b) A copy of the annual audits and insurance policies required by this Code section shall be filed annually with the Governor´s Office of Consumer Affairs.
(c) The Governor´s Office of Consumer Affairs shall act as a repository for the audits, insurance, and termination notices furnished to such office pursuant to this Code section. No oversight responsibility shall be imposed upon such office by virtue of its receipt of such documents."

SECTION 5.
Said chapter is further amended by adding a new Code Section 18-5-3.2 to read as follows:
"18-5-3.2.
(a) Any person engaged in debt adjusting shall disburse to the appropriate creditors all funds received from a debtor, less any fees authorized by this chapter, within 30 days of receipt of such funds.
(b) Any person engaged in debt adjusting shall maintain a separate trust account for the receipt of any and all funds from debtors and the disbursement of such funds on behalf of debtors."

SECTION 6.
Said chapter is further amended by striking Code Section 18-5-4, relating to penalties for engaging in business of debt adjusting, and inserting in its place the following:
"18-5-4.
(a) Any person who engages in the business of debt adjusting in violation of this chapter shall be guilty of a misdemeanor.
(b) Without limiting the applicability of subsection (a) of this Code section:
(1) Any person who engages in debt adjusting in violation of the provisions of Code Section 18-5-3.1 or subsection (b) of Code Section 18-5-3.2 shall further be liable for a civil fine of not less than $50,000.00; and
(2) Any person who engages in debt adjusting in violation of the provisions of Code Section 18-5-2 or subsection (a) of Code Section 18-5-3.2 shall further be liable to the debtor in an amount equal to the total of all fees, charges, or contributions paid by the debtor plus $5,000.00. Such debtor shall have the right to bring a cause of action directly against such person for violation of the provisions of this chapter.
(c) The Attorney General and prosecuting attorneys shall have the authority to conduct the criminal prosecution of all cases arising under this chapter and to conduct civil prosecution of cases arising under this chapter.
(d) A violation of Code Section 18-5-2, 18-5-3.1, or 18-5-3.2 shall additionally be a violation of the 'Fair Business Practices Act of 1975.'"

SECTION 7.
This Act shall become effective July 1, 2003.

SECTION 8.
All laws and parts of laws in conflict with this Act are repealed.
Georgia General Assembly
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