An Act To Enact the Uniform Debt Management Services Act
Maine Legislature, Session 124, LD 1289
Committee: Insurance and Financial Services
Sponsors: GOODE, ALFOND, BRYANT, CLEARY, FLAHERTY, PRIEST, RUSSELL, PERRY

MAINE STATE LEGISLATURE 
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.124th MAINE LEGISLATURE 
Legislative Document 
No. 1289 
H.P.895 
House of Representatives, March 31, 2009 
An Act To Enact the Uniform Debt Management Services Act 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative GOODE of Bangor. 
Cosponsored by Senator ALFOND of Cumberland and 
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'frl.17!ILC~{ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BRYANT of Windham, CLEARY of Houlton, FLAHERTY of Scarborough, 
MITCHELL ofthe Penobscot Nation, PRIEST of Bnmswick, RUSSELL of Portland, Senator: 
PERRY of Penobscot. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 17 MRS A §701, sub-§2, ~, as enacted by PL 1999, c. 560, § 1, is 
amended to read: 
D. 
Any organization that is registered with the State as a debt management service 
provider under Title 32, chapter M--A 82. 
Sec. 2. 32 MRSA c. SO-A, as amended, is repealed. 
Prefatory Note 
Background 
The consumer-credit-counseling industry originated in the early twentieth century in 
the form of debt adjusters (also known as debt poolers, debt consolidators, debt managers, or 
debt pro-raters). This first generation of credit counselors consisted of profit-seeking 
enterprises that communicated with a consumer's creditors to persuade them to accept partial 
payment in full satisfaction of the consumer's obligations. If the creditors agreed, the debt 
adjuster would collect a monthly payment from the consumer and forward appropriate 
portions of it to each of the creditors. They often charged hefty fees, leaving little for 
distribution to the creditors. Instances of deceptive advertising and theft of clients' funds were 
numerous enough that, starting in the 1950s, legislatures in more than half the states outlawed 
the business (e.g., N.Y. Gen. Bus. Law" 455-457). Of the remaining states, approximately 
two thirds opted for a regulatory approach, requiring licenses, imposing requirements on how 
the businesses operate, and restricting troublesome practices (e.g., Mich. Compo Laws Ann. " 
451.451-.465 (repealed in 1976 and replaced by" 451.411-.437». 
Many states exempted not-for-profit organizations from these statutes, enabling non-
profits to render counseling services free of regulation. This led to the growth, starting in the 
1950s, of the second generation of credit counselors. The growth of these non-profits was 
fueled by the National Foundation for Consumer Credit (NFCC) (later renamed the National 
Foundation for Credit Counseling), which was created by retailers and banks that issued 
credit cards. These creditors supported the formation of credit-counseling agencies as a means 
of helping consumers in financial difficulty gain control of their finances and pay their credit-
card debts. The objectives were full repayment of debt and the avoidance of bankruptcy. 
The counseling agencies provided community education, met individually with 
consumers, helped them develop or improve budgeting skills, and, when appropriate, enrolled 
them in debt-management plans (DMP's). To establish a DMP, the agency negotiated with 
each of the consumer's unsecured creditors to obtain concessions from them, in the form of 
some combination of reduced interest rate, waiver of default or delinquency fees, and 
monthly payments in an amount less than the contractual minimum. Thereafter, the consumer 
made monthly payments to the agency and the agency disbursed a pro-rata amount to each of 
the participating creditors. The creditors supported the counseling agencies by returning to 
them a percentage - often 15% - of the payments they received. The NFCC called this 
contribution the creditor's "fair share." The agencies also sometimes received charitable 
contributions from other sources and imposed modest fees on the consumer. As of 2005, this 
second generation of counseling agencies continues to operate. 
Consumer advocates generally acknowledged the educational and budgeting benefits 
that the counseling agencies provided, but were critical- or at least skeptical- of their overall 
usefulness. They perceived the agencies as debt collectors for the credit-card industry and 
were critical of the limited range of advice the agencies provided. The last thing a card issuer 
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wanted to see was a consumer filing a petition in bankruptcy. Formed and supported 
primarily by the credit-card industry, most counseling agencies never recommended 
bankruptcy, and many never even mentioned it as a possibility. E.g., Gardner, Consumer 
Credit Counseling Services: The Need for Refonn and Some Proposals for Change, 13 
Advancing the Consumer Interest 30 (2001). 
The late 1980s and 1990s saw a dramatic increase in credit-card debt as consumers' 
income rose and card issuers relaxed their standards of creditworthiness. The increase in the 
amount of debt was accompanied by an increase in the amount of debt in default and an 
increased opportunity for credit-counseling agencies. Many new entities arose, unaffiliated 
with the NFCC. They fonned competing trade associations, e.g., the Association of 
Independent Consumer Credit Counseling Agencies (AICCCA) and the American 
Association of Debt Management Organizations (AADMO)). These new entities - the third 
generation - rely heavily on advertising and telemarketing, and many conduct their business 
with consumers entirely by telephone or over the Internet. Perhaps because of their aggressive 
marketing and innovative business methods, their share of the counseling market grew from 
approximately 20% in 1996 to approximately 80% in 2001. For the most part, their focus is 
on the creation of DMP's, not on counseling and education. Indeed, at many entities 
counseling and education have fallen entirely by the wayside. 
Since many states prohibit for-profit debt-management businesses, and since card 
issuers have limited their fair-share payments to nonprofit entities, members of this third 
generation of agencies are organized as nonprofit entities. Many of them, however, have not 
operated as charitable or educational institutions. Instead, they have uncritically enrolled all 
their customers in DMP's, and they have charged fees much higher than the fees charged by 
the agencies affiliated with the NFCC. At the traditional level of the creditors' fair share 
contribution, and with the educational function stripped away, many of these entities have 
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generated revenues much larger than needed to provide debt-management services. They 
have disbursed these excess revenues in the fonn of generous compensation to affiliated 
entities that provide back-office services. They also have paid salaries for the principal 
executives that are out of line with the salaries paid by other kinds of non-profit entities of 
comparable size. (For a description of three different models for channeling funds to related 
entities, see Staff Report, Profiteering in a Non-Profit IndustlY: Abusive Practices in Credit 
Counseling (Permanent Subcommittee on Investigations of the Senate Governmental Affairs 
Committee) (S. Rep. 109-55 April 2005), available at http://hsgac.senate.gov/index.cfm?). 
Meanwhile, in the 1990s credit card issuers saw that their fair-share payments to 
counseling agencies had increased to the extent that those payments approximated the 
amounts they were paying for all their other collection activities combined. In addition, they 
discerned that some of the counseling agencies were accumulating large surpluses and were 
enrolling in DMP's consumers whom the creditors believed could pay their debts without the 
concessions the creditors had been giving. They responded by reducing the concessions they 
were willing to make to consumers and by reducing the amounts they were willing to pay the 
counseling agencies. Some card issuers have stopped supporting the agencies altogether, and 
on average the amount returned to the agencies has dropped from more than 12% to less than 
8%. This decrease has adversely affected the ability of counseling agencies to provide 
individual counseling and community education. Some major card issuers have abandoned 
the fair-share approach altogether and have developed proprietary models for compensating 
counseling agencies depending on such factors as the profiles of the debtors being served by 
an agency, the agency's record with the creditor, and the agency's advertising and business 
practices. 
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An objective of credit-counseling agencies, whether or not they provide reasonable 
educational services, is to enable consumers to repay their debts in full. There is, however, 
another segment of the industry - the fourth generation - whose members do not have this 
objective at all. These entities are known as debt-settlement companies, and they formed trade 
associations of their own (merged in 2004 into the United States Organizations for 
Bankruptcy Alternatives (USOBA». Instead of helping the consumer pay his or her creditors 
in full, they attempt to persuade creditors to settle for less than the full amount of the 
consumer's debt, writing off the rest. Thus they represent a revival of the first generation of 
counseling agencies. Unlike their forebears, however, they do not negotiate with the creditors 
in advance of establishing a plan for dealing with the consumer's debts. Instead, they 
encourage the consumer to default on the debts and to make monthly payments to them or to 
a savings account of the consumer. When those payments reach a target percentage of the 
debt owed to one of the creditors, the agency subm its an offer to that creditor (on the 
consumer's behalf) to settle the debt for the amount in hand. During the period when the 
funds are accumulating, the creditors receive nothing. As a result the creditors impose 
additional finance charges and delinquency fees, and they may undertake collection activity, 
including litigation. 
Reports of abuses by credit-counseling agencies and debt-settlement companies and 
injury to consumers have appeared with increasing frequency in numerous media outlets. 
Reports of two prominent consumer organizations (Consumer Federation of America and the 
National Consumer Law Center) have documented the situation. (See CFA & NCLC, Credit 
Counseling in Crisis: The Impact on Consumers of Funding Cuts, Higher Fees and 
Aggressive New Market Entrants (2003); NCLC, Credit Counseling in Crisis Update: Poor 
Compliance and Weak Enforcement Undermine Laws Governing Credit Counseling 
Agencies (2004); NCLC, An Investigation of Debt Settlement Companies: An Unsettling 
Business for Consumers (2005), all available at http://www.nclc.org). The problems include: 
deception concerning the nature of, the need for, the benefits of, and the cost of 
debt-management plans to help consumers deal with their debt; 
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excessive cost to consumers; and 
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self-dealing and other conduct by agencies to evade limitations in the Internal 
Revenue Code. 
In January 2003 the Executive Committee of the Conference authorized the 
appointment of a drafting committee to develop a uniform law that would address the 
problems that have developed and enable the states to take a common approach to regulation 
of the counseling industry. A uniform approach is particularly important because the great 
majority of agencies operate in multiple states and would otherwise be subject to multiple and 
sometimes conflicting requirements. 
History of the Draft 
When it first authorized this project, the Executive Committee focused on the 
segment of the industry that counsels consumers and forms debt-management plans to assist 
them pay their debts in full. It did not contemplate entities engaged in debt settlement. At the 
2004 Annual Meeting, the Conference authorized the Drafting Committee to include debt-
settlement companies within the scope of the Act. It also directed the Drafting Committee to 
draft the Act in such a way that states could authorize for-profit entities to provide debt-
management services. 
The definition of "debt-management services" encompasses both credit counseling 
and debt settlement. With very few exceptions, the provisions of the Act apply equally to both 
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types of debt-management services and the entities that provide them. The Act is neutral on 
the question whether for-profit entities should be permitted to provide debt-management 
services. Each state must decide whether to permit for-profit entities to provide credit-
counseling services, debt-settlement services, or both. The state's decision is implemented by 
language in sections 4, 5, and 9. Each of these sections contains bracketed language and 
instructions on which language to adopt to implement the state's policy concerning for-profit 
entities. 
Bankruptcy Code Amendments 
Shortly before the last meeting of the Drafting Committee, Congress enacted 
revisions to the Bankruptcy Code. These revisions are likely to increase the demand for the 
services of entities that provide debt-management services. 
Section 109(h) of the Code requires a debtor who wishes to file under Chapter 7 to 
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provide certification that he or she has received from an approved nonprofit credit-counseiing 
agency assistance in preparing a budget analysis and information about credit counseling. In 
addition, section 727(a)(11) establishes the completion of an instructional course concerning 
personal financial management as a prerequisite to obtaining a discharge. These two new 
provisions are likely to increase the demand for services from entities regulated by this Act. 
The Bankruptcy Code's regulation of persons regulated by this Act is terse and consistent 
with it. Since the revised Bankruptcy Code will induce more consumers to seek the services 
of those who provide debt-management services, the revisions increase the urgency of the 
need for states to adopt a uniform law governing debt-management services. 
Description of the Act 
The purpose of the Act is to rein in the excesses while permitting credit-counseling 
agencies and debt-settlement companies to continue providing services that benefit 
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consumers. The Conference has benefited from the participation of credit-counseling agencies 
(and their trade associations), debt-settlement companies (and their trade association), 
representatives of consumer organizations, and attorneys general. The Act represents an 
accommodation of the conflicting views of these interested entities. As may be expected, it 
leaves all of them satisfied with some decisions and dissatisfied with others. 
The Act applies to "providers" of "debt-management services" that enter 
"agreements" with individuals for the purpose of creating "plans." The definitions of the 
quoted terms are critical and appear in section 2, along with the definitions of several other 
terms. The Act speaks of "individuals," as opposed to "consumers," so that it applies to 
farmers and other individuals who are dealing with personal debt incurred in connection with 
their businesses. 
To provide debt-management services to a resident of the enacting state, a provider 
must obtain a certificate of registration from the administrator of the Act. To obtain a 
certificate, a provider must supply information about itself, must meet specified requirements 
of competency, must obtain insurance against employee dishonesty, and must post a surety 
bond to ensure its compliance with the Act. The requirements concerning registration appear 
in sections 4-14 and 22. 
The Act establishes requirements for providers to meet in connection with their 
interaction with the individuals they serve. Section 17 prescribes steps to be taken before 
entering an agreement with an individual. Sections 19-24 and 28 govern the content of an 
agreement, including limitations on the fees that may be charged (§§ 23-24). Other provisions 
deal with the performance and termination of agreements (§§ 25, 26, 28) and miscellaneous 
other matters. 
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The Act provides for enforcement both by a public authority and by private 
individuals. Sections 32-34 provide for public enforcement, including a rule-making 
power on the part of the administrator. Section 35 provides for private enforcement, 
including recovery of minimum, actual, and, in appropriate cases, punitive damages. 
Sec. 3. 32 MRS A c. 82 is enacted to read: 
CHAPTER 82 
UNIFORM DEBT MANAGEMENT SERVICES ACT 
§6301. Short title 
This chapter may be cited as the Uniform Debt Management Services Act. 
UNIFORM COMMENT 
(This is Section 1 of the Uniform Debt Management Services Act.) 
As the title indicates, the Act regulates debt-management services and the persons 
that provide those services. The Act does not regulate creditors, either in their relationship 
with their debtors or in their relationship with the entities that provide debt-management 
services. 
§6302. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Administrator. "Administrator" means the Director of the Office of Consumer 
Credit Regulation within the Department of Professional and Financial Regulation. 
2. Affiliate. "Affiliate" means: 
A. With respect to an individual: 
(1) The spouse of the individual; 
(2) A sibling of the individual or the spouse of a sibling; 
(3) An individual or the spouse of an individual who is a lineal ancestor or lineal 
descendant of the individual or the individual's spouse; 
(4) 
An aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, 
grandniece or grandnephew, whether related by the whole or the half blood or 
adoption, or the spouse of any of them; or 
(5) Any other individual occupying the residence of the individual; and 
B. With respect to an entity: 
(I) A person that directly or indirectly controls, is controlled by or is under 
common control with the entity; 
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(2) An officer of, or an individual performing similar functions with respect to, 
the entity; 
(3) A director of, or an individual performing similar functions with respect to, 
the entity; 
(4) A person that receives or received more than $25,000 from the entity in 
either the current year or the preceding year or a person that owns more than 10% 
of, or an individual who is employed by or is a director of, a person that receives 
or received more than $25,000 from the entity in either the current year or the 
preceding year; 
(5) An officer or director of, or an individual performing similar functions with 
respect to. a person described in suboaragraph (1 ): 
(6) The spouse of, or an individual occupying the residence of, an individual 
described in subparagraphs 1 to 5; or 
(7) An individual who has a relationship specified in paragraph A, subparagraph 
(4) to an individual or the spouse of an individual described in subparagraphs 1 to 
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3. 
Agreement. 
"Agreement" means an agreement between a provider and an 
individual for the performance of debt management services. 
4. Bank. "Bank" means a financial institution, including a commercial bank, savings 
bank, savings and loan association, credit union and trust company, engaged in the 
business of banking, chartered under federal or state law and regulated by a federal or 
state banking regulatory authority. 
5. Business address. "Business address" means the physical location of a business, 
including the name and number of a street. 
6. Certified counselor. "Certified counselor" means an individual certified by a 
training program or certifying organization, approved by the administrator, that 
authenticates the competence of individuals providing education and assistance to other 
individuals in connection with debt management services in which an agreement 
contemplates that creditors will reduce finance charges or fees for late payment, default 
or delinquency. 
7. Certified debt specialist. "Certified debt specialist" means an individual certified 
by a training program or certifying organization, approved by the administrator, that 
authenticates the competence of individuals providing education and assistance to other 
individuals in connection with debt management services in which an agreement 
contemplates that creditors will settle debts for less than the full principal amount of debt 
owed. 
8. Concession. "Concession" means assent to repayment of a debt on terms more 
favorable to an individual than the terms of the contract between the individual and a 
creditor. 
9. Day. "Day" means a calendar day. 
10. Debt management services. "Debt management services" means services as an 
intermediary between an individual and one or more creditors of the individual for the 
purpose of obtaining concessions, but does not include: 
A. Legal services provided in an attorney-client relationship by an attorney licensed 
or otherwise authorized to practice law in this State; 
B. Accounting services provided in an accountant-client relationship by a certified 
public accountant licensed to provide accounting services in this State; or 
C. Financial planning services provided in a financial planner-client relationship by a 
member of a financial planning profession whose members the administrator, by rule, 
determines are: 
(1) Licensed by the State; 
(2) Subject to a disciplinary mechanism; 
(3) Subject to a code of professional responsibility; and 
(4) Subject to a continuing education requirement. 
11. Entity. "Entity" means a person other than an individual. 
12. 
Good faith. 
"Good faith" means honesty in fact and the observance of 
reasonable standards of fair dealing. 
13. Person. "Person" means an individual, corporation, business trust, estate, trust, 
partnership, limited liability company, association, joint venture or any other legal or 
commercial entity. The term does not include a public corporation, government or 
governmental subdivision, agency or instrumentality. 
14. Plan. "Plan" means a program or strategy in which a provider furnishes debt 
management services to an individual and that includes a schedule of payments to be 
made by or on behalf of the individual and used to pay debts owed by the individual. 
15. Principal amount of the debt. "Principal amount of the debt" means the 
amount of a debt at the time of an agreement. 
16. Provider. "Provider" means a person that provides, offers to provide or agrees 
to provide debt management services directly or through others. 
17. Record. "Record" means information that is inscribed on a tangible medium or 
that is stored in an electronic or other medium and is retrievable in perceivable form. 
18. Settlement fee. "Settlement fee" means a charge imposed on or paid by an 
individual in connection with a creditor's assent to accept in full satisfaction of a debt an 
amount less than the principal amount of the debt. 
19. Sign. "Sign" means, with present intent to authenticate or adopt a record: 
A. To execute or adopt a tangible symbol; or 
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B. To attach to or logically associate with the record an electronic sound, symbol or 
process. 
20. State. "State" means a state of the United States, the District of Columbia, 
Puerto Rico, the United States Virgin Islands or any territory or insular possession subject 
to the jurisdiction of the United States. 
21. Trust account. "Trust account" means an account held by a provider that is: 
A. Established in an insured bank; 
B. Separate from other accounts of the provider or its designee; 
C. 
Designated as a trust account or other account designated to indicate that the 
money in the account is not the money of the provider or its designee; and 
D. Used to hold money of one or more individuals for disbursement to creditors of 
the individuals. 
UNIFORM COMMENT 
(This is Section 2 of the Uniform Debt Management Services Act.) 
1. Paragraph (2) (affiliate): The term "affiliate" is used in six sections in the Act: 
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as a basis for exempting from the Act certain entities related to banks (section 
3(c)(3»; 
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as a disclosure item in the application for registration (section 6(16) and (18»; 
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as a tool to ensure the independence of a provider's board of directors (section 
9(d»; 
as a limit on solicitation of payment on behalf of an individual (section 24); 
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as a limit on a provider's ability to engage in self-dealing (section 28(e); and 
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as a ground for suspension or revocation of registration if a person related to a 
provider refuses to cooperate with the administrator's investigation of the 
provider (section 34(b)(4». 
The Act does not impose obligations on affiliates qua affiliates, nor does any provision 
impose liability on them. 
2. The definition in paragraph (2)(A)(iv) includes several specified relatives in the 
definition of "affiliate." It stops short of including persons in a step relationship, nor does it 
include cousins in a once-removed or more remote relationship. In states that recognize civil 
unions, the word "spouse" is to be interpreted to encompass persons in civil unions. 
The definition in paragraph (2)(B)(iv) includes a person that receives more than 
$25,000 from a provider. It also includes an owner, director, or employee of the recipient. 
Since the principal purposes of defining "affiliate" are to require independent boards of 
directors and prevent self-dealing, the level of ownership and benefit necessary to constitute 
"affiliate" is set at the relatively low figures of 10 percent and $25,000. With respect to the 
dollar-amount, a person is not an affiliate until it or the person of which it is an owner, 
employee, or director has received $25,001 in the relevant period. 
4. Paragraph (3) (agreement): This definition does not incorporate any requirement of 
"written" or "record." An oral agreement is within this definition. Requirements of form 
appear in section 19. 
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5. Paragraph (5) (business address): Sections 6, l7(d), 18(g), and 19(a) require 
providers to disclose their business addresses. The definition makes it clear that this means 
the place where the provider conducts business and not a post-office box or private-service 
mail drop. 
6. Paragraph (6) (certified counselor and certified debt specialist): "Debt specialist" 
includes a person who communicates with an individual about the features of a debt-
settlement program or who, on behalf of a provider, forms an agreement with an individual. 
Section 17 requires providers to perform certain functions, including education, 
through the services of a certified counselor or cel1ified debt specialist; section 16 requires 
providers to make certified counselors and certified debt specialists available for consultation. 
The definition requires that the organization that trains or certifies counselors be approved by 
the administrator. 
7. Paragraph (7) (concessions): The word "concessions" appears in sections 2(9), 
17(c), and 19(a). The "debt" referred to in the definition of "concessions" typically is a 
contractual obligation, but it may be ajudgment or other obligation of the individual. In those 
instances "terms of the contract" should by analogy be understood as "tenns of the judgment" 
or other obligation. The "more favorable" terms include such changes as a reduction in 
finance charges or interest; a reduction or waiver of charges for late payment, default, or 
delinquency; and a reduction in the principal amount of the debt. 
8. Paragraph (9) (debt-management services): The definition encompasses the 
activity of entities that act as an intermediary between an individual and the individual's 
creditors, for the purpose of changing the terms of the original contract between the 
individual and those creditors. There is no requirement that the individual's money flow 
through the provider. Hence, the definition includes the services of credit-counseling agencies 
and debt-settlement companies even if they do not have control over the individual's money, 
as when it is in an account managed by the individual or a third party. 
The definition encompasses the services of persons that provide one-time assistance 
to an individual who has accumulated money and wants help negotiating with one or more of 
his or her creditors. This assistance is within the definition, and if the person provides this 
assistance to an individual who it has reason to know resides in this state, the person must, 
unless exempt under section 3, register and comply with the Act. Note that the assistance 
need not entail use ofa "plan," as defined in paragraph (13). 
The definition includes the services of credit-counseling entities even if the 
concessions offered by creditors are not subject to negotiation. It does not include services 
that consist solely of counseling or education concerning the management of personal 
finance. Nor does it include the activity of a creditor that compromises a claim with its 
debtor, because the creditor is not operating as an intermediary. 
9. A creditor may have an agent or other intennediary. Examples include independent 
collection agencies and corporate subsidiaries whose mission is the collection of debts. For 
the purposes of the definition of debt-management services, a person in this category is a 
representative of the creditor. As such, a person who acts as an intermediary between an 
individual and a debt collector (or other representative of the creditor) for the purpose of 
obtaining concessions is providing debt-management services. Similarly, if a creditor 
transfers a debt to a debt-collection agency or other person, the transferee becomes a creditor, 
and a person acting as an intermediary between the individual and the transferee of the debt 
for the purpose of obtaining concessions is providing debt-management services. 
10. The definition excludes professional services provided by attorneys or certified 
public accountants, but only if the attorney is licensed or otherwise authorized to practice in 
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this state or the accountant is licensed by this state. The phrase "or otherwise authorized" is to 
recognize bar rules that contemplate interstate practice of law. 
The exclusion applies only if the services are rendered in an attorney-client, 
accountant-client, or financial planner-client relationship. Thus it does not suffice that the 
owner of a provider is an attorney, an accountant, or a financial planner. The attorney, 
accountant, or financial planner must be providing legal, accounting, or financial-planning 
services, respectively, to a client. Unless the services as an intermediary are provided in the 
course of providing legal, accounting, or financial-planning services, the exclusion does not 
apply, and the attorney, accountant, or financial planner is providing debt-management 
services and must comply with the Act. 
The exclusion of legal services and accounting services exists if the services are 
provided by a person licensed to provide those services. For the exclusion of financial-
planning services, however, there are additional requirements, enumerated in subparagraph 
(C)(ii)-(iv). There are several kinds of financial-planning services, including investment 
advice, estate planning, etc. Those services are excluded from the definition only if the 
administrator, by rule, determines that the suppliers of those services are subject to the 
requirements specified in subparagraph (C). Thus the administrator must determine that the 
financial-planning profession has in place a bona fide, reasonable system of professional 
responsibility, discipline, and continuing education. 
11. Paragraph (11) (good faith): The term appears in section 15, which imposes on 
providers the obligation to "act in good faith in all matters under this Act." The definition is 
relevant, then, under every section that governs the conduct of providers. In addition, the term 
is used in several provisions governing remedies (sections 33(e), 34(a), and 35(f)). 
12. Paragraph (12) (person): The definition encompasses for-profit, not-for-profit, 
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and tax-exempt entities. A "public corporation" is a corporation that is authorized to exercise 
governmental functions. It is not a "publicly traded" corporation. 
13. Paragraph (13) (plan): The definition of "plan" encompasses both what credit-
counseling agencies typically call "debt management plans" and what debt-settlement 
companies typically call "programs." The operative provisions of the Act thus use the term 
"plan" to apply to both types of providers. To be a plan, the program or strategy need not 
encompass all the debts of the individual. E.g., debt-management plans by traditional credit-
counseling agencies have not typically included secured debt or debts owed utilities. No 
provision of this Act requires that a provider deal with all the creditors of an individual to 
whom it provides debt-management services. 
The definition requires a schedule of payments. As used here, "payments" includes 
the deposit or transfer of money into an individual's checking or savings account, as well as a 
transfer to a provider (or the provider's designee) for deposit into a trust account. The 
definition requires that the payments be used to pay debts of the individual. This requirement 
is satisfied even if part of the payment is used to pay a monthly service fee to the provider. 
The requirement of payments of the individual's debts encompasses (a) full payment of some 
of the individual's debts; (b) full payment of all of the individual's debts; (c) partial payment 
of some of the individual's debts; and (d) partial payment of all of the individual's debts. 
Each of these arrangements suffices to bring the program or strategy within the definition of 
"plan." 
14. Paragraph (14) (principal amount of the debt): This term is used only in 
connection with debt settlement. Treatment of accruing charges, such as interest or default 
fees, may be different under various statutes, e.g., usury, Truth-in-Lending, etc. For purposes 
of this Act, the definition of principal is a snapshot of the debt at the time an individual 
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assents to an agreement for debt-management services. Finance charges and other fees that 
accrue after formation of the debt-management-services agreement retain their character as 
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finance charges, etc., even if the creditor adds them to the principal amount of debt and even 
if the creditor thereafter calculates finance charges and fees on the increased amount. 
15. Paragraph (15) (provider): This definition makes no reference to the location of 
the person that provides debt-management services. This means that the location of that 
person is irrelevant to the definition. Regardless ofa person's location, if the person provides 
debt-management services, it is a provider under this Act. Subject to section 3, which 
exempts from the Act providers that do not enter agreements with individuals who reside in 
this state, the intention is for the Act to have as expansive a reach as is constitutionally 
permissible. See, e.g., Cambridge Credit Counseling Corp. v. Foulston, 303 F. Supp. 2d 1188 
(D. Kan. 2003) (upholding the constitutionality of applying to a Massachusetts company the 
Kansas statute regulating credit counseling), appeal dismissed on motion of appellant and 
judgment vacated, No. 03-3317 (10th Cir. Oct. 19,2004). 
16. The definition includes persons that offer to provide debt-management services, 
as well as those that actually provide the services. Unless exempt under section 3, a person 
that offers to provide debt-management services must comply with all applicable provisions, 
e.g., section 28(a)(16) (prohibiting deceptive acts and practices). If a person forms an 
agreement with an individual and then transfers the account to another person, both those 
persons are within the definition of "provider." 
17. The definition of "debt-management services" speaks of "acting as an 
intermediary between an individual and one or more creditors." A creditor acting on its own 
behalf is not acting as an intermediary and therefore is not a "provider." The definition of 
"debt-management services" also speaks of acting as an intermediary "for the purpose of 
obtaining concessions." This excludes from the definition of "provider" an entity that collects 
debts owed to its affiliate if the purpose is collection of the debt and not obtaining 
concessions from the creditor on behalf of the individual. 
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18. The definition of "provider" encompasses those who, acting directly or through 
others, act as intermediaries between an individual and the individual's creditors. If a provider 
contracts with another person for that person to perform services other than acting as an 
intermediary, such as maintaining the trust account required by section 22 or sending out the 
notices required by section 25, the other person may not be a "provider." But the provider for 
which it is performing services is liable for any conduct of the other person that does not 
comply with the duties and obligations that this Act places on providers. See section 31. 
Conversely, the person whose conduct fails to conform to the Act is liable for causing the 
provider to violate the Act. See section 35(c). 
At several places the Act speaks of "provider or its designee," referring to the person 
holding money of an individual pursuant to a plan. This is intended to foreclose any attempt 
by a provider to evade its responsibilities under the Act by delegating to an independent 
contractor the tasks incident to receiving money of the individuals with whom it has 
agreements. 
19. Paragraph (17) ( settlement fee): Use of the expression "a charge imposed on or 
paid by" is designed to be expansive. It does not matter what the provider calls the charge. 
Nor does it matter whether payment of the charge is described as voluntary or whether the 
payment occurs by debit to a demand-deposit account of the individual, debit to a trust 
account held by an agent of the provider, or otherwise. The definition encompasses any 
transfer of money from or on behalf of the individual. 
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§6303. Exempt agreements and persons 
1. Application. This chapter does not apply to: 
A. An agreement with an individual who the provider has no reason to know resides 
in this State at the time of the agreement; 
B. A provider to the extent that the provider: 
(1) Provides or agrees to provide debt management, educational or counseling 
services to an individual who the provider has no reason to know resides in this 
State at the time the provider agrees to provide the services; or 
(2) Receives no compensation for debt management services from or on behalf 
of the individuals to whom it provides the services or from their creditors; and 
C. The following persons or their employees when the person or the employee is 
engaged in the regular course of the person's business or profession: 
(1) 
A judicial officer, a person acting under an order of a court or an 
administrative agency or an assignee for the benefit of creditors; 
(2) A bank; 
(3) An affiliate of a bank if the affiliate is regulated by a federal or state banking 
regulatory authority; and 
(4) A title insurer, escrow company or other person that provides bill-paying 
services if the provision of debt management services is incidental to the bill-
paying services. 
UNIFORM COMMENT 
(This is Section 3 of the Uniform Debt Management Services Act.) 
1. Under section 2(15) a person may be a provider even if the person has no physical 
presence in this state. If not exempted by this section, all persons within the definition of 
"provider" must comply with the Act. The objective of subsections (a) and (b)(1) is to limit 
applicability of the Act to providers that enter agreements with persons who they should 
reasonably know to reside in this state. Section 19(a)(3) requires the agreement between a 
provider and an individual to state the individual's address. If the individual supplies an 
address outside this state, the provider may have no reason to know that the individual is 
residing in this state at the time of the agreement. If a provider operates through an agent or 
independent contractor to solicit and enroll individuals in plans, the provider may have reason 
to know if the agent or independent contractor has reason to know. This is true even if the 
agent or independent contractor is itself within the definition of provider. In addition, the 
provider may be liable under section 31 for the conduct of the agent or independent 
contractor. 
2. The Act applies to an agreement with an individual who is residing in this state on 
a non-permanent basis, such as a member of the armed services, an individual occupying a 
vacation home in this state, a student, or an individual who has lost his or her home and 
temporarily resides with a relative in this state. 
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3. The Act does not apply to an agreement with an individual who resides in another 
state but comes to this state to meet with a provider. Nor does it apply to an agreement with 
an individual who moves to this state after formation of an agreement. If an agreement is 
formed with an individual who resides in another state, the continuation of services to that 
individual after he or she moves into this state is not an agreement within the meaning of the 
phrase in subsection (b)(l), "at the time the provider agrees to provide the services." Rather, 
it is the continuing performance of a commitment made by the provider at the outset of the 
relationship. 
4. Under subsection (b)(I) if the provider does not have reason to know that an 
individual to whom it agrees to provide services resides in this state, the provider is exempt 
from complying with this Act. The paragraph speaks of "debt-management, education, or 
counseling services" because section 23(d)(3) regulates the fees of a provider that furnishes 
an individual with education or counseling but not debt-management services. 
5. The definition of "provider" encompasses persons that provide, agree to provide, 
or offer to provide debt-management services. The exemption in this paragraph applies only 
to providers that provide or agree to provide the specified services. Thus a person that offers 
to provide debt-management services is not exempt under this paragraph, even if it does not 
enter agreements with, or provide debt-management services to, individuals who reside in this 
state. But a distinction exists between an offer and an advertisement. A provider whose ads 
reach, or whose website is accessible to, individuals who reside in this state but who does not 
enter agreements with or provide services to those individuals is not offering to provide debt-
management services to residents of this state. 
6. Subsection (b )(2) exempts those persons, e.g., social workers, who may provide 
debt-management services at no cost as part of their overall services to clients. It also 
exempts individuals who assist family members or friends if they do not receive 
compensation for helping their relatives or friends to manage their money. It does not, 
however, exempt a provider that recovers its operating expenses from creditors, even if the 
provider does not impose any cost on the individuals it serves. 
7. The definition of "bank" in section 2(4) incorporates a requirement that the entity 
be "regulated by a federal or state banking regulatory authority." This section exempts not 
only banks, but also subsidiaries of banks. As with banks, a subsidiary of a bank is exempt 
only if it is subject to regulation by a federal or state banking regulatory authority. The 
exemption exists if the subsidiary is subject to regulation, even if the banking authority has 
not exercised its power with respect to debt-management services. 
8. Subsection (c)( 4) exempts entities that provide bill-paying services if negotiation 
of the terms of payment is incidental to the services generally provided by the entity. 
Examples of entities that may be exempt under this paragraph include mortgage loan 
servicers, athletes' agents, artists' agents, financial planners, executors of estates, and 
personal representatives of decedents. 
The exemption for bill-paying services applies only if debt-management services are 
"incidental to" the regular course of the person's business of providing bill-paying services. If 
the person holds itself out as providing debt-management services, then debt-management 
services are not incidental. Beyond that, the test is flexible, looking to such matters as the 
amount and percentage of time devoted to providing debt-management services and the 
amount and percentage of revenues derived from debt-management services. The more 
isolated the provision of those services, the more likely it is that they are incidental. The more 
frequent the provision of those services, the more likely it is that they are not incidental and 
the person is not exempt. 
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§6304. Registration required 
1. Requirement. Except as otherwise provided in subsection 2, a provider may not 
provide debt management services to an individual who it reasonably should know 
resides in this State at the time it agrees to provide the services, unless the provider is 
registered under this chapter. 
2. Employee or agent. If a provider is registered under this chapter, subsection 1 
does not apply to an employee or agent of the provider. 
3. List of registered providers. The administrator shall maintain and publicize a 
I ist of the names of all registered providers. 
UNIFORM COMMENT 
(This is Section 4 of the Uniform Debt Management Services Act.) 
1. The Act uses the term "individual" rather than "consumer." The purpose of this 
usage is to enlarge the usual meaning of "consumer" (viz., one who acquires goods or 
services for personal, family, or household purposes) to encompass individuals who have 
incurred personal debt for business purposes or in connection with farming operations. 
2. Subsection (a) requires providers to register under this Act. This requirement 
applies to providers with no physical presence in this state, if they serve individuals who 
reside in this state. For elaboration on the "reasonably should know" standard, see the Official 
Comment to section 3. 
3. Under subsection (b) employees and agents of a registered provider need not 
register. The word "employees" encompasses the entity's officers. Except as it may be 
changed by this Act, the common law of master-servant or principal-agent continues to apply, 
and a provider is responsible for the acts of its employees and agents. 
Although employees and agents of a provider need not register, to the extent those 
persons are themselves within the definition of "provider," they must comply with all other 
requirements and prohibitions that apply to providers throughout the Act. In addition, they 
may be liable under sections 33(a)(2) and 35(c) if they have caused a provider to violate the 
Act. 
4. The objective of subsection (c) is to enable individuals and creditors to ascertain 
whether a given provider is registered. Posting on the Internet website of the administrator (or 
other appropriate official site) is the preferred method, because the information is 
instantaneously and continuously available. To "maintain" the list, the administrator must 
update it regularly. 
5. Subsection (d) requires [certain] providers to be organized and operating as a not-
for-profit and also be tax-exempt under federal law. The former is a prerequisite for the latter. 
The purpose of stating it here as a separate requirement is to authorize a review of the 
ongoing, actual operation of the entity, even though at its formation it may truly have been a 
not-for-profit. See Zimmerman v. Cambridge Credit Counseling, 409 F.3d 473 (1 st Cir. 
2005). If an entity is not properly operating as a not-for-profit entity under the law of its 
organization, it is not properly registered under this Act. 
§6305. Application for registration; form, fee and accompanying documents 
1. Form. An application for registration as a provider must be in a form prescribed 
by the administrator. 
2. 
Fee; accompanying documents. 
Subject to adjustment of dollar amounts 
pursuant to section 6332, subsection 6, an application for registration as a provider must 
be accompanied by: 
A. The fee established by the administrator; 
B. The bond required by section 6313; 
C. Identification of all trust accounts required by section 6322 and an irrevocable 
consent authorizing the administrator to review and examine the trust accounts; 
D. Evidence of insurance in the amount of $250,000: 
(1) Against the risks of dishonesty, fraud, theft and other misconduct on the part 
of the applicant or a director, employee or agent of the applicant; 
(2) Issued by an insurance company authorized to do business in this State and 
rated at least A or equivalent by a nationally recognized rating organization 
approved by the administrator; 
(3) With a deductible not exceeding $5,000; 
(4) Payable for the benefit of the applicant, th is State and individuals who are 
residents of this State, as their interests may appear; and 
(5) Not subject to cancellation by the applicant or the insurer until 60 days after 
written notice has been given to the administrator; 
E. Proof of compliance with any relevant requirements regarding business entities, 
including but not limited to requirements set forth in Title 13-B and Title 13-C; and 
F. If the applicant is organized as a not-for-profit entity or is exempt from taxation 
under 26 United States Code, Section 501, evidence of nonprofit status or tax-exempt 
status, or both, as applicable. 
UNIFORM COMMENT 
(This is Section 5 of the Uniform Debt Management Services Act.) 
1. In subsection (a) "form" encompasses format, and the administrator by rule may 
permit all or part of the application to be submitted electronically. 
2. Subsections (b)(2) and (3) refer to items "required by" other sections. If those other 
sections do not require the item as to a particular applicant, then the application may omit 
them. 
The bond requirement in paragraph (2) may be satisfied also in the manner provided 
in section 14. 
The consent required by paragraph (3) is for the purpose of satisfying the bank's 
requirements for disclosure of records to a person other than the account holder. The 
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administrator may adopt a rule prescribing the form and content of that consent. Section 
19(d)(2) requires a similar consent from the individuals whose money is in the trust account. 
3. Subsection (b)(4) requires insurance in the amount of $250,000 against the risk of 
employee misconduct, including theft of funds from the trust account. Misconduct may 
consist of conduct that is prohibited by this Act or by other law, or it may consist of a failure 
to act when the provider has a duty to act. As used in this Act, "employee" encompasses 
officers of a provider. 
4. The insurance required by this section must be provided by an insurer whose 
reliability is beyond question. Paragraph (B) speaks of an A rating, such as under the system 
of A.M. Best Co., but a comparable rating by any other administrator-approved, nationally 
recognized rating organization satisfies the requirement, even if the organization's system 
uses numbers or other symbols instead of letters. The purpose of the requirement is to ensure 
that the insurance wiii be issued by a very highly reiiabie insurer, and the requirements of 
paragraph (B) should be interpreted accordingly. 
5. Ordinarily, the beneficiary of insurance of the type required by this section would 
be the provider, but this paragraph expands the beneficiaries to include the state and the 
customers of the provider and requires that the insurance not be subject to cancellation 
without notice to the administrator. The insurance required by this paragraph overlaps the 
bond required by section 13. 
6. Subsection (b)(5) facilitates subjecting a non-resident business to the jurisdiction 
of this state. If the applicant is a domestic entity, so that the statute referenced in this 
subsection does not apply to it, the applicant complies with this subsection by indicating that 
fact. If existing statutes leave doubt about the mechanism for serving process on the provider 
and the state has chosen not to enact the language suggested in the Legislative Note, the 
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administrator can promulgate a rule requiring the applicant to appoint a state official as the 
provider's agent for purposes of service of process. 
§6306. Application for registration required 
1. Required information. An application for registration must be signed under oath 
and include: 
A. The applicant's name, principal business address and telephone number, all other 
business addresses in this State, e-mail addresses and Internet addresses; 
B. All names under which the applicant conducts business; 
C. The address of each location in this State at which the applicant will provide debt 
management services or a statement that the applicant will have no such location; 
D. The name and home address of each officer and director of the applicant and each 
person that owns at least 10% of the applicant; 
E. 
Identification of every jurisdiction in which, during the 5 years immediately 
preceding the application: 
(1) 
The applicant or any of its officers or directors has been licensed or 
registered to provide debt management services; or 
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(2) Individuals have resided when they received debt management services from 
the applicant; 
F. 
A statement describing, to the extent it is known or should be known by the 
applicant, any material civil or criminal judgment or litigation and any material 
administrative or enforcement action by a governmental agency in any jurisdiction 
against the applicant, any of its officers, directors, owners or agents or any person 
who is authorized to have access to the trust account required by section 6322; 
G. The applicant's financial statements, audited by an accountant licensed to conduct 
audits, for each of the 2 years immediately preceding the application or, if it has not 
been in operation for the 2 years preceding the application, for the period of its 
existence; 
H. Evidence of accreditation by an independent accrediting organization approved 
by the administrator; 
I. Evidence that, within 12 months after initial employment, each of the applicant's 
counselors becomes certified as a certified counselor or certified debt specialist; 
J. 
A description of the 3 most commonly used educational programs that the 
applicant provides or intends to provide to individuals who reside in this State and a 
copy of any materials used or to be used in those programs; 
K. 
A description of the applicant's financial analysis and initial budget plan, 
including any form or electronic model, used to evaluate the financial condition of 
individuals; 
L. A copy of each form of agreement that the applicant will use with individuals who 
reside in this State; 
M. The schedule of fees and charges that the applicant will use with individuals who 
reside in this State; 
N. At the applicant's expense, the results of a criminal records check, including 
fingerprints, conducted within the immediately preceding 12 months, covering every 
officer of the applicant and every employee or agent of the applicant who is 
authorized to have access to the trust account required by section 6322; 
O. The names and addresses of all employers of each director during the 10 years 
immediately preceding the application; 
P. A description of any ownership interest of at least 10% by a director, owner or 
employee of the applicant in: 
(1) Any affiliate of the applicant; or 
(2) 
Any entity that provides products or services to the applicant or any 
individual relating to the applicant's debt management services; 
Q. A statement of the amount of compensation of the applicant's 5 most highly 
compensated employees for each of the 3 years immediately preceding the 
application or, if it has not been in operation for the 3 years preceding the application, 
for the period of its existence; 
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The identity of each director who is an affiliate, as defined in section 6302, 
subsection 2, paragraph A or section 6302, subsection 2, paragraph B, subparagraph 
(1), (2), (4), (5), (6) or (7), of the applicant; and 
S. Any other information that the administrator reasonably requires to perform the 
administrator's duties under section 6309. 
UNIFORM COMMENT 
(This is Section 6 of the Uniform Debt Management Services Act.) 
1. Paragraph (1) requires disclosure of the applicant's principal business address, in 
whatever jurisdiction it may be. It also requires disclosure of business addresses in this state, 
but not business addresses outside this state. 
2. Paragraph (3) contemplates disclosure of the address of all facilities, like call 
centers and back-office operations, that are part of the provider'S operations. It does not, 
however, require disclosure of the addresses of employees who work from home. If the 
applicant has no physical presence in this state, that must be disclosed. 
3. Paragraph (4) requires identification of any person that owns more than 10 percent 
of an applicant. This applies to for-profit applicants, if the state permits them, and to 
nonprofit applicants that are owned by others. Most nonprofit entities are not owned by 
anyone, and, if that is true of an applicant, the applicant need only disclose that fact. 
4. Paragraph (5) (identification of jurisdictions in which the applicant has done 
business or has been registered or licensed to provide debt-management services) requires 
information to enhance the administrator's ability to investigate the applicant and to 
coordinate enforcement efforts with administrators in other jurisdictions. Use of the word 
"jurisdiction" rather than "state" means that the applicant must disclose with respect to its 
activities in other countries, too. Unless required pursuant to paragraph (19), however, it does 
not mean that the applicant must break down its disclosures by county or other subdivision of 
a state or country. 
5. Paragraph (6) requires disclosure of material judicial and administrative 
proceedings in any jurisdiction against the officers, directors, and owners (whether or not they 
are authorized to access the trust account containing customers' funds), as well as material 
judicial and administrative proceedings against any other persons who may be authorized to 
access the trust account. Proceedings dealing with matters of importance to the administrator 
in determining whether to approve an application for registration, such as alleged deception 
or financial irregularities, are material. See section 9(b)(4). The administrator by rule can 
elaborate on what proceedings are material. This paragraph does not impose any disclosure 
requirement with respect to proceedings of which the applicant reasonably is unaware, but the 
concept "should be known" encompasses facts that a reasonable investigation would have 
revealed. "Authorized to have access to the trust account" refers to persons who may initiate 
transactions in the account, not persons who merely are empowered to view the account. 
6. Paragraph (7) requires financial statements by an accountant licensed to conduct 
audits. The accountant need not be licensed by this state. 
7. Independent, nationally recognized accrediting organizations have been accrediting 
credit-counseling agencies for many years, though not all agencies have sought to be 
accredited. Paragraph (8) establishes accreditation as prerequisite to registration under this 
Act. The accreditation requirement, which applies to both credit-counseling entities and debt-
settlement entities, reinforces regulation by the administrator and subjects providers to 
periodic review to ensure that they continue to meet the standards of the accrediting agency. 
The administrator must approve the organizations that accredit providers. 
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8. Paragraph (9) requires a provider to ensure that its counselors and debt specialists 
are certified no later than 12 months after their initial employment. This requirement applies 
only with respect to employees who act as counselors, debt specialists, and educators. It does 
not apply to such other employees as customer service representatives. Section 17 prohibits 
an agreement unless a certified counselor or certified debt specialist has done specified 
things. With respect to the obligations imposed by section 17(b), this [Act] draws no 
distinctions between credit-counseling entities and debt-settlement entities. Each must 
comply with the same obligations through the services of either certified counselors or 
certified debt specialists. Evidence that a provider has in place a system for certification of its 
counselors and debt specialists provides some assurance to the administrator that the provider 
will be able to comply with section 17. 
9. As used in paragraph (10), "programs" encompasses both a course of instruction 
and computer software. Unless the administrator adopts a rule to the contrary, a course of 
instruction may be entirely oral. 
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10. An applicant, whether located in this state or elsewhere, need supply only those 
documents specified in paragraph (12) that it will use with residents of this state. If it will use 
more than one form, it must supply all of them. Section 32(b) empowers the administrator to 
investigate the activities in another jurisdiction of a provider that is doing business in this 
state. Under that section the administrator may obtain documents used in other jurisdictions. 
11. As with the preceding paragraph, paragraph (13) only requires an applicant, 
regardless of its location, to supply the schedules of fees and charges for residents of this 
state, but if it uses more than one schedule, it must supply all of them. For purposes of this 
paragraph, "fees and charges" includes all costs, however denominated (e.g., "charitable 
subsidy"), to be paid by customers of the applicant. This information will enable the 
administrator to monitor the industry's practices in the state and may assist the administrator 
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in determining whether an individual provider is gouging individuals or whether the 
legislature should be encouraged to raise the fee cap because the passage of time or changed 
circumstances make it too low. Section 23 imposes limitations on the amount of fees, and 
Section 24 prohibits the solicitation of voluntary contributions. 
12. Paragraphs (12) and (13) require information that is CUITent as of the time of the 
application. Unless the administrator adopts a rule to the contrary, an applicant is free to 
modify its forms or fees without prior approval, but section 7 requires the provider to notify 
the administrator promptly of any such modification. 
13. Paragraph (14) requires the results of a criminal-records check on every officer of 
the applicant. In addition, it requires the results of a criminal-records check covering every 
employee or agent who is authorized to initiate transactions in the applicant's trust account. If 
the applicant is a natural person, the criminal-records check must cover the applicant, too. 
This paragraph requires "the results of a criminal-records check, including 
fingerprints." In some jurisdictions the mechanics and procedures for obtaining fingerprints 
are quite burdensome. This paragraph attempts to reduce that burden. It does not require that 
an applicant obtain a criminal-records check specifically for the application for registration in 
this state. If an applicant has obtained a criminal-records check in connection with obtaining 
permission to do business in another state and that criminal-records check meets the standards 
of this paragraph, the applicant may submit the results of it in its application to this state. The 
12-month limitation applies to the criminal-records check, not the time of submission to the 
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other state. The criminal-records check must include a check of fingerprints, but the 
fingerprints need not have been obtained during the 12-month period. 
14. Paragraphs (15)-(18) contain disclosures designed to enable the administrator to 
enforce the requirement of an independent board of directors and the restrictions on self-
dealing. It requires these disclosures of all applicants, even for-profit entities, if they are 
permitted to provide debt-management services, because the restrictions on self-dealing 
(section 28(e)) apply to all providers. The disclosures also help the administrator monitor 
whether the fee limits are set at an appropriate level. Paragraph (16) requires the disclosure 
with respect to officers, since officers are included the category, "employees." In paragraph 
(17) "compensation" includes cash and all other items that ordinarily are considered part of 
compensation. 
15. Paragraph (19) authorizes the administrator to require additional information 
either by ruiemaking procedure appiicabie to aii appiicants or by specific request in response 
to a specific application. Section 9 specifies the grounds for denying registration (including a 
finding that the general fitness of the applicant is not such as to warrant belief that the 
applicant will comply with the Act). This paragraph authorizes the administrator to seek 
additional information relevant to the application of that standard. 
§6307. Application for registration; obligation to update information 
An applicant or registered provider shall notify the administrator within 10 days after 
a change in the information specified in section 6305, subsection 2, paragraph D or F or 
section 6306, subsection 1, paragraph A, C, F, L or M. 
UNIFORM COMMENT 
(This is Section 7 of the Uniform Debt Management Services Act.) 
The cross-referenced sections require evidence of insurance against misconduct; 
evidence of not-for-profit and tax-exempt status; and disclosure of the name of the applicant, 
the addresses at which it operates, enforcement actions against the applicant in another state, 
and the applicant's standard forms and fee schedules. This section requires prompt 
notification of any change in this information, and since it applies to the "applicant or 
registered provider," the requirement of notification applies both before and after the 
administrator has issued a certificate of registration. Notification of change in other required 
information is governed by section 11(b)(4) (Renewal of Registration), which requires 
notification at the time of renewal of registration. Notification of a change, of course, means 
that the applicant or registered provider must communicate the new information, not merely 
that the original information is no longer accurate. 
§6308. Application for registration; public information 
Except for the information required by section 6306, subsection 1, paragraphs G, N 
and Q and the addresses required by section 6306, subsection 1, paragraph D, the 
administrator shall make the information in an application for registration as a provider 
available to the public. 
UNIFORM COMMENT 
(This is Section 8 of the Uniform Debt Management Services Act.) 
This section preserves the confidentiality of home addresses, financial statements, 
salaries of the highest-paid employees, and the report on the criminal-records check. While 
this section prohibits the administrator from disclosing the specified information, it has no 
effect on the use of judicial process in connection with litigation to enforce the Act. Nor does 
it limit access to information that is available to the public under other law, such as the law 
governing tax-exempt entities. 
§6309. Certificate of registration; issuance or denial 
1. Issuance. Except as otherwise provided in subsections 3 and 4, the administrator 
shall issue a certificate of registration as a provider to a person that complies with 
sections 6305 and 6306. 
2. Temporary certificate. If an applicant has otherwise complied with sections 6305 
and 6306, including a timely effort to obtain the information required by section 6306, 
subsection 1, paragraph N but the information has not been received, the administrator 
may issue a temporary certificate of registration. The temporary certificate expires no 
later than 180 days after issuance. 
3. Denial. The administrator may deny registration if: 
A. The application contains information that is materially erroneous or incomplete; 
B. An officer, director or owner of the applicant has been convicted of a crime, or 
suffered a civil judgment, involving dishonesty or the violation of state or federal 
securities laws; 
C. 
The applicant or any of its officers, directors or owners has defaulted in the 
payment of money collected for others; or 
D. The administrator finds that the financial responsibility, experience, character or 
general fitness of the applicant or its owners, directors, employees or agents does not 
warrant belief that the business will be operated in compliance with this chapter. 
4. Denial based on absence of independence of board. The administrator shall 
deny registration if, with respect to an applicant that is organized as a not-for-profit entity 
or has obtained tax-exempt status under 26 United States Code, Section 501, the 
applicant's board of directors is not independent of the applicant's employees and agents. 
5. Board not considered independent. Subject to adjustment of the dollar amount 
pursuant to section 6332, subsection 6, a board of directors is not independent for 
purposes of subsection 4 if more than 1/4 of its members: 
A. Are affiliates of the applicant, as defined in section 6302, subsection 2, paragraph 
A or section 6302, subsection 2, paragraph B, subparagraph (1), (2), (4), (5), (6) or 
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B. After the date 10 years before first becoming a director of the applicant, were 
employed by or directors of a person that received from the applicant more than 
$25,000 in either the current year or the preceding year. 
UNIFORM COMMENT 
(This is Section 9 of the Uniform Debt Management Services Act.) 
1. Section 6(14) requires an applicant to provide the results of a criminal-records 
check, including fingerprints. This information is provided by third parties, and the applicant 
has no control over the timeliness of any response. Subsection (b) therefore gives the 
administrator discretion to issue a temporary certificate of registration. 
2. Some conduct may justify a lifetime ban from the debt-management-services 
industry. Exampies include some of the conduct described in subsection (b)(2) and (3). Other 
conduct can be readily corrected, e.g., subsection (b)(1). The introductory language of the 
subsection ("administrator may deny") gives the administrator discretion to consider the 
importance of various items of adverse information about an applicant, such as the precise 
nature and timing of past criminal conduct. The language of limitation at the end of 
subsection (b)(2) ("involving dishonesty or the violation of state or federal securities laws") 
applies to both criminal convictions and civil judgments. Subsection (b)(4) gives the 
administrator discretion to consider other relevant information, such as the fact of and reasons 
for any suspension or revocation of the applicant's right to provide debt-management services 
in another state. 
3. Paragraphs (2) and (3) do not express any temporal limits and therefore require 
disclosure of the specified information regardless of when the conviction, judgment, or 
default occurred. 
4. Because providers may have hundreds of employees, most of whom are not in 
control of the provider, subsection (b) does not include employees in the list of persons in 
paragraphs (2) and (3) whose conduct justifies the denial of registration. Conversely, 
paragraph (4) does include employees. It does not explicitly name officers, because officers 
are included in the category, "employee." The past misconduct of employees is a basis for 
action under paragraph (4), because the adm in istrator has the discretion to deny registration 
if, e.g., a pattern of hiring raises doubts about the likelihood that the applicant will operate the 
business in compliance with the Act. Unless the administrator by rule requires otherwise, 
however, paragraph (4) does not require an applicant to disclose the convictions or adverse 
judgments of its employees. These disclosures are required by section 6(6), but only with 
respect to the applicant's officers, directors, owners, and those employees who are authorized 
to access the trust account. 
5. Subsection (c) states circumstances in which denial of registration is mandatory. 
Paragraph (2) requires that the board of directors of a nonprofit entity be independent of the 
management of the entity and independent of the creditors for whom the entity is, in a sense, 
acting as debt collector. If the board of directors is not independent, the administrator must 
deny registration. Similar to subsection (b)(4), this paragraph does not explicitly mention 
"officers" because officers are included in the term, "employee." 
6. Since the definition of "affiliate" includes directors (section 2(2)(B)(iii», 
subsection (d)(1) omits this subparagraph of the definition of affiliates for purposes of 
determining the independence of the board. 
7. Subsection (d)(2) specifies a period beginning 10 years before a person first 
becomes a director. It specifies a starting point for the period but no ending point. This means 
that if a person meets the employee/director test of paragraph (2) while the person is on the 
applicant's board of directors, the person is not independent, even if more than 10 years have 
elapsed since the person first became a member of the applicant's board. 
§6310. Certificate of registration; timing 
1. Timing. The administrator shall approve or deny an initial registration as a 
provider within 120 days after an application is filed. In connection with a request 
pursuant to section 6306, subsection 1, paragraph S for additional information, the 
administrator may extend the 120-day period for not more than 60 days. Within 7 days 
after denying an application, the administrator, in a record, shall inform the applicant of 
the reasons for the denial. 
2. Appeal. If the administrator denies an application for registration as a provider or 
does not act on an application within the time prescribed in subsection 1, the applicant 
may appeal and request a hearing. 
3. Duration. Subject to section 6311, subsection 4 and section 6334, a registration 
as a provider is valid for one year. 
UNIFORM COMMENT 
(This is Section 10 of the Uniform Debt Management Services Act.) 
The administrator must act on an application in an expeditious manner. If the 
administrator needs additional information, the administrator may extend the period, but only 
for a limited time. If the administrator fails to act on an application within the specified time, 
the application is not automatically granted, because although that would encourage the 
administrator to act in a timely manner, granting the application of an unqualified provider 
would be to the detriment of the public. If the administrator fails to act as prescribed, the 
applicant may appeal to the courts. 
§6311. Renewal of registration 
1. Renewal. A provider must obtain a renewal of its registration annually. 
2. Form. An application for renewal of registration as a provider must be in a form 
prescribed by the administrator, signed under oath and: 
A. Be filed no fewer than 30 and no more than 60 days before the registration 
expires; 
B. Be accompanied by the fee established by the administrator and the bond required 
by section 6313; 
C. Contain the matter required for initial registration as a provider by section 6306, 
subsection 1, paragraphs H and I and a financial statement, audited by an accountant 
licensed to conduct audits, for the applicant's fiscal year immediately preceding the 
application; 
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D. Disclose any changes in the information contained in the applicant's application 
for registration or its immediately previous application for renewal, as applicable. If 
an application is otherwise complete and the applicant has made a timely effort to 
obtain the information required by section 6306, subsection 1, paragraph N but the 
information has not been received, the administrator may issue a temporary renewal 
of registration. The temporary renewal expires no later than 180 days after issuance; 
E. Supply evidence of insurance in an amount equal to the larger of $250,000 or the 
highest daily balance in the trust account required by section 6322 during the 6-
month period immediately preceding the application: 
(1) Against risks of dishonesty, fraud, theft and other misconduct on the part of 
the applicant or a director, employee or agent of the applicant; 
(2) Issued by an insurance company authorized to do business in this State and 
rated at least A or equivalent by a nationally recognized rating organization 
approved by the administrator; 
(3) With a deductible not exceeding $5,000; 
(4) Payable for the benefit of the applicant, this State and individuals who are 
residents of this State, as their interests may appear; and 
(5) Not subject to cancellation by the applicant or the insurer until 60 days after 
written notice has been given to the administrator; 
F. Disclose the total amount of money received by the applicant pursuant to plans 
during the preceding 12 months from or on behalf of individuals who reside in this 
State and the total amount of money distributed to creditors of those individuals 
during that period; 
G. Disclose, to the best of the applicant's knowledge, the gross amount of money 
accumulated during the preceding 12 months pursuant to plans by or on behalf of 
individuals who reside in this State and with whom the applicant has agreements; and 
H. 
Provide any other information that the administrator reasonably requires to 
perform the administrator's duties under this section. 
3. Information. Except for the information required by section 6306, subsection 1, 
paragraphs G, Nand Q and the addresses required by section 6306, subsection 1, 
paragraph D, the administrator shall make the information in an application for renewal 
of registration as a provider available to the public. 
4. 
Effective until denial. 
If a registered provider files a timely and complete 
application for renewal of registration, the registration remains effective until the 
administrator, in a record, notifies the applicant of a denial and states the reasons for the 
denial. 
5. Appeal. If the administrator denies an application for renewal of registration as a 
provider, the applicant, within 30 days after receiving notice of the denial, may appeal 
and request a hearing. Subject to section 6334, while the appeal is pending the applicant 
shall continue to provide debt management services to individuals with whom it has 
agreements. If the denial is affirmed, subject to the administrator's order and section 
6334, the applicant shall continue to provide debt management services to individuals 
with whom it has agreements until, with the approval of the administrator, it transfers the 
agreements to another registered provider or returns to the individuals all unexpended 
money that is under the applicant's control. 
UNIFORM COMMENT 
(This is Section 11 of the Uniform Debt Management Services Act.) 
1. A registration must be renewed every year. The administrator may adopt a rule 
specifying the timing of renewals, so that renewals of registration of all providers occur on 
the same date, occur on a rolling basis, or otherwise. 
2. Subsection (b) states the prerequisites for renewal of registration. The bond 
requirement in paragraph (2) may be satisfied also in the manner provided in section 14. 
3. Paragraph (4) requires a provider to update any required information that has 
changed. This includes background checks on anyone who, since the last renewal, has 
become an officer of the applicant or has been given power to initiate transactions in the trust 
account required by Section 22. Since acquisition of this information is not entirely within the 
control of the provider, this paragraph grants the administrator the discretion to issue a 
temporary renewal of registration. 
4. Paragraph (5) contains the same requirements that section 5(b)(4) does for initial 
registration, except that upon renewal the provider must obtain insurance in an amount equal 
to the highest balance in the trust account during the six months preceding the application for 
renewal. 
5. Paragraph (6) requires disclosure of two items. The first is the total amount 
received from its customers by a provider (or its designee). This requirement does not apply 
to a provider that directs its customers to accumulate money on their own. The second item is 
the total amount distributed to creditors, and this requirement applies to all providers, whether 
or not they (or their designees) take possession of their customers' funds. 
6. Paragraph (7) supplements paragraph (6) by requiring a provider that does not take 
possession of its customers' funds to disclose the gross amount its customers have 
accumulated. "Gross amount" means the total amount accumulated without adjustment for 
any debits, withdrawals, or payments for fees or for satisfaction of creditors' claims. A 
provider that does not take possession of its customers' money may monitor the customers' 
accounts, either by direct access to the accounts or by requiring the customers to provide 
periodic copies of bank statements. If the provider does not do either of these, and therefore 
has no knowledge of the amounts accumulated, it need make no disclosure under paragraph 
(7). 
7. Paragraph (8) authorizes the administrator to require additional information from 
an applicant. This refers both to information required by rule and information requested in 
response to the information in an application. For example, the administrator may exercise the 
rulemaking authority to require applicants to disclose indicia of success, such as the 
percentage of individuals who complete plans or the amounts a provider has received from 
cred itors (or others). 
8. The home addresses, financial statements, salaries of the highest-paid employees, 
and results of the criminal-records check, as disclosed in an application for renewal, remain 
exempt from public disclosure. 
9. The grounds for denial of an application to renew registration appear in section 34. 
If a provider files a timely and complete application, subsection (d) provides that the 
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registration remains effective until the administrator denies it. The denial of an application for 
renewal triggers a right of appeal under subsection (e). Pending completion of the appeals 
process, a provider is required to continue providing debt-management services, even though 
the administrator has determined that it should not be permitted to continue its business in this 
state. For this reason, subsection (e) limits to 30 days the time for initiating the appeals 
process. If the appeals process concludes with a determination upholding the administrator's 
decision, section 4(a) prohibits the provider from providing debt-management services. An 
abrupt end to the provider's activity, however, may adversely affect its customers who are in 
the middle of a plan. Consequently, this subsection qualifies section 4(a) and compels the 
provider to continue providing services to existing customers until the administrator 
authorizes it to cease. 
§6312. Registration in another state 
Ifa provider holds a license or certificate of registration in another state authorizing it 
to provide debt management services, the provider may submit a copy of that license or 
certificate and the application for it instead of an application in the form prescribed by 
section 6305, subsection 1, section 6306 or section 6311, subsection 2. The administrator 
shall accept the application and the license or certificate from the other state as an 
application for registration as a provider or for renewal of registration as a provider, as 
appropriate, in this State if: 
1. Substantially similar. The application in the other state contains information 
substantially similar to or more comprehensive than that required in an application 
submitted in this State; 
2. Provision of information. The applicant provides the information required by 
section 6306, subsection 2, paragraphs A, C, J, Land M; and 
3. Certify information. The applicant, under oath, certifies that the information 
contained in the application is current or, to the extent it is not current, supplements the 
application to make the information current. 
UNIFORM COMMENT 
(This is Section 12 of the Uniform Debt Management Services Act.) 
This section provides for reciprocal use of applications in states that have adopted 
this Act. It simplifies registration in states that have substantially similar laws, thereby easing 
the burden placed on providers that operate in multiple states. This benefit is available, 
however, only if the law of the other state is substantially similar to this Act. It may be that, 
as a practical matter, a provider can comfortably rely on this section only if the other state has 
also adopted this Act. The administrator by rule may designate other states whose application 
requirements meet the standard "substantially similar to or more comprehensive than" the 
requirements of this Act. Some states may use a system of licensure rather than registration. 
This section permits use of a license and application for license. 
§6313. Bond required 
1. Filing by provider. Except as otherwise provided in section 6314, a provider that 
is required to be registered under this chapter shall file a surety bond with the 
administrator, which must: 
A. Be in effect during the period of registration and for 2 years after the provider 
ceases providing debt management services to individuals in this State; and 
B. Run to this State for the benefit of this State and of individuals who reside in this 
State when they agree to receive debt management services from the provider, as 
their interests may appear. 
2. Bond requirements. SUbject to adjustment of the dollar amount pursuant to 
section 6332, subsection 6, a surety bond filed pursuant to subsection 1 must: 
A. 
Be in the amount of $50,000 or other larger or smaller amount that the 
administrator determines is warranted by the financial condition and business 
experience of the provider, the history of the provider in performing debt 
management services, the risk to individuals and any other factor the administrator 
considers appropriate; 
B. Be issued by a bonding, surety or insurance company authorized to do business in 
this State and rated at least A or equivalent by a nationally recognized rating 
organization; and 
C. Have payment conditioned upon noncompliance of the provider or its agent with 
this chapter. 
3. Reduction of principal amount. If the principal amount of a surety bond is 
reduced by payment of a claim or a judgment, the provider shall immediately notify the 
administrator and, within 30 days after notice by the administrator, file a new or 
additional surety bond in an amount set by the administrator. The amount of the new or 
additional bond must be at least the amount of the bond immediately before payment of 
the claim or judgment. If for any reason a surety terminates a bond, the provider shall 
immediately file a new surety bond in the amount of $50,000 or other amount determined 
pursuant to subsection 2. 
4. Satisfaction. The administrator or an individual may obtain satisfaction out of the 
surety bond procured pursuant to this section if: 
A. The administrator assesses expenses under section 6332, subsection 2, paragraph 
A, issues a final order under section 6333, subsection 1, paragraph B or recovers a 
final judgment under section 6333, subsection 1, paragraph D or E or section 6333, 
subsection 4; or 
B. An individual recovers a final judgment pursuant to section 6335, subsection 1 or 
2, or section 6335, subsection 3, paragraph A, B or D. 
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5. Distribute proceeds. If claims against a surety bond exceed or are reasonably 
expected to exceed the amount of the bond, the administrator, on the initiative of the 
administrator or on petition of the surety, shall, unless the proceeds are adequate to pay 
all costs, judgments and claims, distribute the proceeds in the following order: 
A. To satisfaction of a final order or judgment under section 6333, subsection 1, 
paragraph B, D or E or section 6333, subsection 4; 
B. To final judgments recovered by individuals pursuant to section 6335, subsection 
or 2 or section 6335, subsection 3, paragraph A, B or D, pro rata; 
C. To claims of individuals established to the satisfaction of the administrator, pro 
rata; and 
D. If a final order or judgment is issued under section 6333, subsection 1, to the 
expenses charged pursuant to section 6332, subsection 2, paragraph A. 
UNIFORM COMMENT 
(This is Section 13 of the Uniform Debt Management Services Act.) 
1. Subsection (a) imposes the bond requirement on all providers that section 4 
requires to be registered, including those that are not required to establish trust accounts. A 
provider's employee who serves as an intermediary between an individual and the 
individual's creditors, and therefore is a "provider," need not provide a bond, however, 
because section 4(b) exempts the employee from the registration requirement. 
2. The bond is a source of payment of damages for a provider's failure to comply 
with this Act. It is conceivable that the administrator or an individual would not commence 
litigation until after a provider ceases providing services in this state. Therefore, paragraph (1) 
seeks to preserve the availability of the bond for two years after the year in which the 
provider's registration ends. 
3. Paragraph (2) requires the bond to run in favor of the state for the benefit of the 
state and for the benefit of the customers of the provider. Thus, it is available to compensate 
the administrator for the administrator's enforcement costs. The bond also runs directly in 
favor of customers who have a cause of action for a provider's noncompliance with the Act. 
4. Subsection (b)(I) sets the amount of the bond at $50,000, but gives the 
administrator the power to adjust the amount, either higher or lower than $50,000, for a 
particular provider. A provider operating on a national basis must comply with the bond 
requirement of each state in which it operates. This may be burdensome, but it does not by 
itself justify a reduction in the amount of the bond required under this Act. Rather, the 
primary criterion should be the level of risk of injury associated with the provider. If the 
provider's history of operations leads the administrator to conclude that the risk of injury is 
sufficiently low, a reduction from $50,000 would be appropriate. By the same token, a 
provider's history of operations may lead the administrator to conclude that an increase is 
appropriate. 
5. Subsection (b)(3) requires that payment of the bond be conditioned upon 
noncompliance with the Act. Bonds often are written in the form of penal bonds: the surety 
agrees to pay unless the principal obligor performs its obligations, performs a contract, enters 
a contract, etc. A bond in this form satisfies the requirement of this section because, although 
the formal condition may be compliance with the Act, in fact the sum is paid only if the 
provider fails to comply. 
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Nothing is payable until the administrator or an individual obtains a judicial 
determination that the provider has failed to comply (or the administrator assesses costs under 
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section 32(b)(1). In a typical case the suretywould be joined as a party defendant. 
6. Section 32(b)(1) empowers the administrator to charge a provider for the costs of 
an investigation of the provider. Section 33 empowers the administrator to seek restitution for 
injured individuals and recover its costs of an enforcement action. Under subsection (d) the 
bond or other security required by this section is a source for payment of this restitution. 
Section 35 authorizes private rights of action. The bond or other security is a source of 
payment of actual damages, damages for overcharges, the $5,000 minimum damages, and 
costs and attorney's fees. It is not available to satisfy civil penalties under section 33 or 
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punitive damages under section 35. 
7. Section 35(g) requires the administrator to assist an individual in enforcing a 
judgment against the bond. Subsection (e) of this section sets out the priority of claims 
against the bond, but it does not necessarily set out a temporal order of payment. Hence, if it 
is clear that the bond is sufficient in amount to satisfy the claims in paragraphs (I) and (2), the 
administrator should distribute bond proceeds to individuals with final judgments even 
though the claim of the administrator under paragraph (1) is not yet final. To facilitate 
administration of this claims process, the administrator may set a deadline for individuals to 
submit the claims described in paragraph (3). 
8. Subsection (e) creates an administrative procedure for the payment of claims, but it 
does not require use of that procedure. A surety may file an interpleader action for 
distribution of the proceeds. This subsection suggests the order in which a court should 
distribute the proceeds of the bond or other security. 
§6314. Bond required; substitute 
) 
1. Substitute. Instead of the surety bond required by section 6313, a provider may 
deliver to the administrator, in the amount required by section 6313, subsection 2, and, 
except as otherwise provided in paragraph B, subparagraph (1), payable or available to 
this State and to individuals who reside in this State when they agree to receive debt 
management services from the provider, as their interests may appear, if the provider or 
its agent does not comply with this chapter: 
A. A certificate of insurance: 
(1) Issued by an insurance company authorized to do business in this State and 
rated at least A or equivalent by a nationally recognized rating organization 
approved by the administrator; and 
(2) With no deductible, or if the provider supplies a bond in the amount of 
$5,000, a deductible not exceeding $5,000; or 
B. With the approval of the administrator: 
(1) An irrevocable letter of credit, issued or confinned by a bank approved by 
the administrator, payable upon presentation of a certificate by the administrator 
stating that the provider or its agent has not complied with this chapter; or 
(2) Bonds or other obligations of the United States or guaranteed by the United 
States or bonds or other obligations of this State or a political subdivision of this 
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State, to be deposited and maintained with a bank approved by the administrator 
for this purpose. 
2. Requirements applicable to substitute. If a provider furnishes a substitute 
pursuant to subsection 1, the provisions of section 6313, subsections 1,2,3 and 4 apply to 
the substitute. 
UNIFORM COMMENT 
(This is Section 14 of the Uniform Debt Management Services Act.) 
1. This section provides three alternatives to posting a bond. It authorizes the provider 
to procure insurance or, with the administrator's approval, a letter of credit or debt 
instruments. With respect to debt instruments, the requirement of approval by the 
administrator extends to both the instruments deposited and the terms of the account into 
which they are deposited, to ensure that they are available to pay claims of injured 
individuals. The administrator by rule can develop the mechanics for liquidating the 
instruments and paying the proceeds to injured individuals. 
2. With respect to letters of credit, the requirement of approval by the administrator 
extends to the identity of the bank and to the form of the letter of credit. If a letter of credit 
requires personal presentation of a certificate, presentation to a distant bank may entail 
inconvenience or expense. When this is the case, the administrator may confine approval to 
banks located in a specified geographic area. 
3. Subsection (a)(2)(A) requires that a letter of credit be payable upon presentation of 
a certificate by the administrator, and the administrator may determine the nature of that 
certificate. For example, the administrator may require that a letter of credit provide that the 
issuer will pay the amount stipulated in the certificate as costs assessed under section 32(b)(I) 
or the amount stipulated in the certificate as the amount of a judgment obtained by an 
individual. Similarly, the administrator may require that a letter of credit provide for 
presentation of the certificate by mail or other specified means. 
4. Subsection (b) refers to several provisions of section 13, which applies to surety 
bonds. In stating that those provisions apply to the substitute security furnished under this 
section, subsection (b) requires the substitute security to be available for two years after a 
provider ceases providing services, available for the benefit of the state and residents of the 
state at the time of an agreement, replenished if depleted, available for payment of the claims 
specified in section 13(d), and distributed in the order specified in section I3(e). 
5. Section 35(g) requires the administrator to assist an individual enforce ajudgment 
against the security posted by the provider. 
§6315. Requirement of good faith 
A provider shall act in good faith in all matters under this chapter. 
UNIFORM COMMENT 
(This is Section 15 of the Uniform Debt Management Services Act.) 
The obligation to act in good faith relates to "all matters under this Act." If a person 
fails to act in good faith, this means that the person has failed to act as required in connection 
with some matter under this Act. Consequently, the person has violated the section dealing 
with that matter, and, depending on the sections on remedies (sections 33, 35), may be liable 
for violation of the section dealing with the underlying matter. But there is no independent 
cause of action for failure to act in good faith. The failure to act in good faith also may make 
unavailable a right or power that otherwise would have been available to the provider. See 
Commentary No.1 0, section 1-203, Permanent Editorial Board for the Uniform Commercial 
Code (Feb. 10, 1994). Good faith is defined in section 2( 11). 
§6316. Customer service 
A provider that is required to be registered under this chapter shall maintain a toll-
free communication system, staffed at a level that reasonably permits an individual to 
speak to a certified counselor, certified debt specialist or customer service representative, 
as appropriate, during ordinary business hours. 
UNIFORM COMMENT 
(This is Section 16 of the Uniform Debt Management Services Act.) 
1. The purpose of this section is to ensure adequate service to individual who have 
entered agreements with a provider. The staffing required by this section therefore is in 
addition to whatever staffing the provider might have for soliciting or responding to potential 
customers. 
2. Some inquiries require counseling services or assistance in dealing with creditors; 
others concern administrative matters such as confirmation of receipt of a payment, 
communication that a payment for a particular month will be late or in a different amount 
than scheduled, etc. The provider must provide sufficient staffing to meet the reasonably 
expectable demand for both kinds of requests. 
3. Section 18 permits a provider to comply with sections 17, 19, and 27 by means of 
electronic communication. This section makes no exception for this provider. Even if a 
provider desires to operate exclusively via electronic communication, it must comply with 
this section. If a provider forms plans by electronic means, it must, consistent with the 
obligation of good faith under section 15, respond to electronically commun icated requests 
for assistance within a reasonable time during ordinary business hours. This assistance must 
be individualized, not merely "frequently asked questions" or other standardized presentation 
of information. This section requires the provider also to maintain a system that enables 
individuals to speak with an appropriate representative of the provider. 
§6317. Prerequisites for providing debt management services 
1. Itemized list; charges. Before providing debt management services, a registered 
provider shall give the individual an itemized list of goods and services and the charges 
for each. The list must be clear and conspicuous, be in a record the individual may keep 
whether or not the individual assents to an agreement and describe the goods and services 
the provider offers: 
A. Free of additional charge if the individual enters into an agreement; 
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B. For a charge if the individual does not enter into an agreement; and 
C. 
For a charge if the individual enters into an agreement, using the following 
terminology, as applicable, and format: 
Set-up fee .............................. (dollar amount of fee) 
Monthly service fee .............................. (dollar amount of fee or method of 
determining amount) 
Settlement fee .............................. (dollar amount of fee or method of determining 
amount) 
Goods and services in addition to those provided in connection with a plan: 
{:TQ~\ 
.............................. ~ 
determining amount) 
.............................. (item) 
determining amount) 
{doilar amount or method of 
{dollar amount or method of 
2. Provision of services. A provider may not furnish debt management services 
unless the provider, through the services of a certified counselor or certified debt 
specialist: 
A. 
Provides the individual with reasonable education about the management of 
personal finance; 
B. Has prepared a financial analysis; and 
C. If the individual is to make regular, periodic payments: 
(1) Has prepared a plan for the individual; 
(2) 
Has made a determination, based on the provider's analysis of the 
information provided by the individual and otherwise available to it, that the plan 
is suitable for the individual and the individual will be able to meet the payment 
obligations under the plan; and 
(3) Believes that each creditor of the individual listed as a participating creditor 
in the plan will accept payment of the individual's debts as provided in the plan. 
3. Information to consumer. Before an individual assents to an agreement to 
engage in a plan, a provider shall: 
A. Provide the individual with a copy of the analysis and plan required by subsection 
in a record that identifies the provider and that the individual may keep whether or 
not the individual assents to the agreement; 
B. Inform the individual of the availability, at the individual's option, of assistance 
by a toll-free communication system or in person to discuss the financial analysis and 
plan required by subsection 2; and 
C. With respect to all creditors identified by the individual or otherwise known by 
the provider to be creditors of the individual, provide the individual with a list of: 
(1) 
Creditors that the provider expects to participate in the plan and grant 
concessions; 
(2) Creditors that the provider expects to participate in the plan but not grant 
concessions; 
(3) Creditors that the provider expects not to participate in the plan; and 
(4) All other creditors. 
4. Separate record of information. Before an individual assents to an agreement 
the provider shall inform the individual in a record that contains nothing else, that is 
given separately, and that the individual may keep whether or not the individual assents 
to the agreement: 
II 
A. Of the name and business address of the provider; 
B. That plans are not suitable for all individuals and the individual may ask the 
provider about other ways, including bankruptcy, to deal with indebtedness; 
C. That establishment of a plan may adversely affect the individual's credit rating or 
credit scores; 
D. That nonpayment of debt may lead creditors to increase finance and other charges 
or undertake collection activity, including litigation; 
E. 
Unless it is not tme, that the provider may receive compensation from the 
creditors of the individual; and 
F. That, unless the individual is insolvent, if a creditor settles for less than the full 
amount of the debt, the plan may result in the creation of taxable income to the 
individual, even though the individual does not receive any money. 
5. Form; provider receiving payments from creditors. If a provider may receive 
payments from an individual's creditors and the plan contemplates that the individual's 
creditors will reduce finance charges or fees for late payment, default or delinquency, the 
provider may comply with subsection 4 by providing the following disclosure, 
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) Using a debt management plan may make it harder for you to obtain credit. 
(3) We may receive compensation for our services from your creditors. 
.............................................................. (Name and business address of provider) 
6. Form; provider not receiving payments from creditors. If a provider will not 
receive payments from an individual's creditors and the plan contemplates that the 
individual's creditors will reduce finance charges or fees for late payment, default or 
delinquency, a provider may comply with subsection 4 by providing the following 
disclosure, surrounded by black lines: 
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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) Using a debt management plan may make it harder for you to obtain credit. 
.............................................................. (Name and business address of provider) 
7. 
Form; settle debts for less than full amount owed. 
If an agreement 
contemplates that creditors will settle debts for less than the full principal amount of debt 
owed, a provider may comply with subsection 4 by providing the following disclosure, 
surrounded by black lines: 
IlViPORTANT IN"FORMA nON FOR YOU TO CONSIDER 
(1) Our program is not right for all individuals, and you may ask us to provide 
information about other ways, including bankruptcy, to deal with your debts. 
(2) Nonpayment of your debts under our program may: 
(a) Hurt your credit rating or credit scores; 
(b) Lead your creditors to increase finance and other charges; and 
(c) Lead your creditors to undertake activity, including lawsuits, to collect the 
debts. 
(3) Reduction of debt under our program may result in taxable income to you, even 
though you will not actually receive any money. 
.............................................................. (Name and business address of provider) 
UNIFORM COMMENT 
(This is Section 17 of the Uniform Debt Management Services Act.) 
1. Subsection (a) requires a standardized disclosure and specifies the terminology and 
format to be used. The disclosure of charges must contain the dollar amounts or the method of 
determining the dollar amounts, e.g., "$5 per month for each creditor in the plan at the time 
the monthly charge is assessed, but not more than $25 in any month," or "five percent of the 
amount of debt that a creditor writes off." The subsection requires disclosure "as applicable." 
Therefore, if a provider does not impose one or more of the specified fees, it need not make 
any disclosure with respect to the omitted fee(s). 
Paragraph (3) requires disclosure of "goods and services in addition to those provided 
in connection with a plan." This must be read in conjunction with section 23(c), which 
sharply circumscribes the extent to which a provider is permitted to impose charges for 
education or counseling. Paragraph (3) requires disclosure of charges permitted by that 
section, but it does not enlarge the amount or kind of services for which a provider may 
charge. 
2. Subsection (b) mandates that all providers, including debt-settlement companies, 
provide reasonable education through the services of a certified counselor. Section 6(9)-(10) 
requires the provider to supply the administrator with evidence that its counselors are 
certified, along with a description of its educational program and a copy of any materials used 
in that program. The education may consist of an individual session with a counselor (which 
may also include the analysis required by paragraph (2)), a group class, or an electronic 
educational program. The education must be substantially more than an explanation of the 
benefits of a plan. It must begin but need not be completed before commencement of a plan, 
since a course of education may take months to complete. Paragraph (1) of subsection (b) 
states a general standard for the quality of the education, viz., reasonableness. Education for 
financial literacy is receiving increased attention, and several entities are attempting to define 
standards for effectiveness. As these attempts come to fruition, the administrator may 
exercise rulemaking power under section 32(c) to establish more precise minimum standards 
for the education. 
3. Paragraph (2) requires preparation of a financial analysis. Although the education 
required by paragraph (1) may be standardized or provided on a group basis, the financial 
analysis required by paragraph (2) must be prepared specifically for the individual and based 
on the specific circumstances of the individual. It must encompass the individual's assets, 
income, and expenses for the purpose of enabling the provider to make the suitability and 
feasibility determinations required by paragraph (3)(B). 
4. Paragraph (3) requires preparation of a plan, but only if the individual is to make 
regular, periodic payments. Thus the requirement does not apply when an individual has 
accumulated money and seeks the assistance of a debt-settlement entity in negotiating a 
settlement with one or more of his or her creditors. Subparagraph (B) requires that the 
provider believe that the plan is suitable for the individual. For providers that assist an 
individual to repay in full, this requires a determination that the individual has sufficient 
income to permit payment to creditors after payment of living expenses, but not enough 
income to repay them in full without some concessions. For providers that assist an individual 
to settle debts for less than full payment, the suitability requirement means at a minimum that 
the individual does not have the ability to satisfy creditors out of current income within a 
reasonable time even if the creditors were to reduce finance charges and fees for late 
payment, default, and delinquency. Section 15, which requires providers to act in good faith, 
is especially important in connection with this paragraph. The administrator may adopt rules 
articulating specific standards for suitability. 
5. Subparagraph (C) permits a provider to secure an individual's assent to a plan only 
if the provider believes that each creditor listed in the plan actually will participate in it. This 
limitation, too, must be read in conjunction with section 15, which requires the provider to act 
in good faith, defined as honesty and the observance of reasonable standards of fair dealing. If 
a provider knows or suspects that a particular creditor will not participate, the provider cannot 
in good faith believe that the creditor will participate, and therefore cannot satisfy this 
paragraph if that creditor is included as a participating creditor in the plan. 
The requirement that the provider believe that the creditors will accept the plan does 
not mandate communication with the creditors before an agreement is formed. The provider'S 
past experiences with the creditors may be a sufficient basis for the provider's good faith 
belief. 
6. Subsection (c)(2) requires a provider to inform the individual of the availability of 
assistance by telephone (or in person). It applies to all providers, but has special significance 
for providers that use electronic means to communicate with their customers. See section 16 
and Official Comment 3. This requirement does not mean that the provider must maintain an 
office in this state. It does, however, require that the provider maintain an office somewhere 
with counselors available for in-person consultation, presumably at its principal business 
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address. The obligation of good faith is relevant here, and locating the counselors in a state 
whose residents the provider does not serve would violate this subsection. 
7. Since secured creditors are creditors, subsection (c)(3) requires the provider to 
include secured creditors in the various lists, as appropriate. Subparagraph (D) requires a 
listing of creditors as to whom the provider is ignorant with respect to their participation in 
the plan. Taken together, the lists must include all the creditors whose existence the provider 
knows. 
8. Subsection (d) requires providers to give a warning to individuals before they 
commit to an agreement, and it requires the warning to be given separately. This prohibits a 
provider from handing the warning over along with other documents or materials. The 
intention of the subsection is to require delivery in a form and context in which the individual 
will actually notice and read the warning. 
9. Subsections (e) through (g) provide safe-harbor language for the provider to use. 
Subsection (e) is designed for credit-counseling entities that receive payments from the 
creditors of its customers. Subsection (f) is designed for credit-counseling entities that do not 
receive payments from their customers' creditors. Subsection (g) is designed for debt-
settlement entities. Use of the exact language in these subsections, contained in a box 
consisting of black lines, constitutes compliance with subsection (d). This is true even though 
the language in subsections (e)(2) and (f)(2) differs significantly from the language in 
subsection (d)(3). If the provider uses language other than that prescribed in subsections (e)-
(g), the disclosure is subject to review to determine if it adequately discloses the information 
required by subsection (d). If the provider furnishes both credit-counseling and debt-
settlement services, it may combine the disclosures into one form, but this section does not 
provide any safe harbor. 
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§6318. Communication by electronic or other means 
1. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. "Consumer" means an individual who seeks or obtains goods or services that are 
used primarily for personal, family or household purposes. 
B. 
"Federal act" means the federal Electronic Signatures in Global and National 
Commerce Act, Public Law 106-229 (2000). 
2. Satisfy requirements. A provider may satisfy the requirements of section 6317, 
6319 or 6327 by means of the Internet or other electronic means if the provider obtains a 
consumer's consent in the manner provided by Section 101(c) of the federal act. 
3. Disclosures. The disclosures and materials required by section 6317, 6319 or 
6327 must be presented in a fonn that is capable of being accurately reproduced for later 
reference. 
4. Disclosures by means of website. With respect to disclosure by means of a 
website, the disclosure of the information required by section 6317 must appear on one or 
more screens that: 
A. Contain no other information; and 
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B. The individual must see before proceeding to assent to formation of an agreement. 
5. Copy of materials. At the time of providing the materials and agreement required 
by section 6317, subsections 3 and 4, sections 6319 and 6327, a provider shall inform the 
individual that upon electronic, telephonic or written request, it will send the individual a 
written copy of the materials and shall comply with a request as provided in subsection 6. 
6. No charge. If a provider is requested, before the expiration of 90 days after an 
agreement is completed or terminated, to send a written copy of the materials required by 
section 6317, subsections 3 and 4, sections 6319 and 6327, the provider shall send the 
materials at no charge within 3 business days after the request is received, but the 
provider need not comply with a request more than once per calendar month or if it 
reasonably believes the request is made for purposes of harassment. If a request is made 
more than 90 days after an agreement is completed or terminated, the provider shall send 
within a reasonable time a written copy of the materials requested. 
7. Information on website. A provider that maintains a website shall disclose on 
the home page of its a website or on a page that is clearly and conspicuously connected to 
the home page by a link that clearly reveals its contents: 
A. Its name and all names under which it does business; 
B. Its principal business address, telephone number and e-mail address, if any; and 
C. The names of its principal officers. 
8. Withdraw consent. Subject to subsection 9, if a consumer who has consented to 
electronic communication in the manner provided by Section 10 l(c) of the federal act 
withdraws consent as provided in the federal act, a provider may terminate its agreement 
with the consumer. 
9. Notification of termination. If a provider wishes to terminate an agreement with 
a consumer pursuant to subsection 8, it shall notify the consumer that it will terminate the 
agreement unless the consumer, within 30 days after receiving the notification, consents 
to electronic communication in the manner provided in Section 101(c) of the federal act. 
If the consumer consents, the provider may terminate the agreement only as permitted by 
section 6319, subsection 1, paragraph F, subparagraph (7). 
UNIFORM COMMENT 
(This is Section 18 of the Uniform Debt Management Services Act.) 
1. Subsection (b) permits electronic delivery of the information required by sections 
and 27, and it permits electronic formation of agreements. It is designed to coordinate with 
the federal E-Sign Act, which establishes certain prerequisites before written documents or 
disclosures required by state law may be delivered via electronic media. These prerequisites 
exist, however, only for transactions with consumers. States may not extend those 
prerequisites to non-consumers, so unlike the rest of this Act, some of this section applies 
only to interactions with consumers, a class that does not include all individuals. 
If a merchant wants to provide required information by means of electronic 
communication, the federal statute requires it to obtain the consumer's affirmative consent to 
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the use of electronic media and inform the consumer of any right to have the information or 
documents provided in written form and the right to withdraw at any time his or her consent 
to disclosure by electronic medium. Subsection (b) makes compliance with the federal statute 
a prerequisite also to complying with this Act through the use of electronic communication. If 
a provider fails to comply with this subsection, then the permission granted by this section 
does not apply, and the provider must deliver the required documents and disclosures in 
writing. 
2. The language of subsection (c) is drawn from E-Sign § 7001(d)(1)(B), and in the 
context of this Act, the obligation of good faith requires that the provider present the material 
in a printable format. The requirement of the subsection, however, is not limited to 
consumers. It applies with respect to all individuals. 
3. To meet the objectives of the separate delivery contemplated by section 17, 
electronic delivery must satisfy certain requirements of form, such as appearing on a screen 
that contains no other infonnation. The subsection uses the term "screen," which is 
synonymous with "window," "web page," "tab within a browser display," and perhaps other 
terms. The critical factor is that the record may not contain other information; but it does not 
violate subsection (d) if the record is an electronic page on a website and the record reveals 
how the individual may exit the page. 
4. Subsections (e) and (f) are not limited to providers that communicate electronically 
and are not limited to consumers. They confer on all individuals the right, throughout the 
course of a plan and for 90 days thereafter, to receive a written version of all materials 
required by this Act within three days of requesting them. As to all individuals, this right 
must be disclosed in order for a provider to comply with this section, and if a provider wishes 
to comply with this section electronically, it must be disclosed to a consumer in order for the 
c) 
provider to comply with E-Sign (section 101(c)(1)(B)(iv), 15 U.S.C. § 700 1 (c)(I)(B)(iv)). 
See Official Comment 1. 
5. A provider may not limit the medium by which the individual requests a copy. 
Subsection (f) protects the provider against harassment. An example of harassment might be a 
request for a copy of a periodic report three years after the period covered by the report. The 
subsection does not establish a bright-line rule, however, and in a particular case the 
individual might indeed have a legitimate need for an old report. 
Since the periodic reports must be made monthly and this section gives the individual 
a right to receive a written copy of the report, a request every month for a written version of 
that month's report cannot, within the meaning of this section, be made for purposes of 
harassment. If requested each month, the provider must comply each month. Similarly, if 
requested in advance to send written versions of the monthly reports, subsections (e) and (f) 
require the provider to comply with the request because the request is made before the 
expiration of 90 days after a plan is completed or terminated. If the request relates to 
historical materials, the provider may send a consolidated statement, rather than a copy of 
each periodic statement, so long as it clearly reveals the information required to be on each 
periodic report. 
Section 27(c) requires a provider to retain records on an individual for five years. 
That sets the outer limit on the time within which an individual may make a request under this 
section. 
6. A provider might do business under numerous names. Subsection (g) applies to all 
providers, even if they make disclosures and form agreements using a paper medium. It 
requires disclosure of all the provider's business names, along with the provider's principal 
location and officers, but it permits the provider to disclose this information via a link to 
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another page of the website. The link must reveal its contents, e.g., "For the address and other 
information about [name of provider], click here." 
7. Subsections (h) and (i) are designed to implement E-Sign section 101(c)(I)(B), 
which authorizes a consumer to withdraw consent to electronic communication, in which 
event the merchant may terminate the relationship. Subsection (h) gives a provider the right to 
terminate an agreement with a consumer, and subsection (i) gives the consumer a right to 
reinstate the agreement. 
§6319. Form and contents of agreement 
1. Form; contents. An agreement must: 
A. Be in a record; 
B. Be dated and signed by the provider and the individual; 
C. Include the name of the individual and the address where the individual resides; 
D. Include the name, business address and telephone number of the provider; 
E. Be delivered to the individual immediately upon formation of the agreement; and 
F. Disclose: 
(1) The services to be provided; 
(2) The amount, or method of determining the amount, of all fees, individually 
itemized, to be paid by the individual; 
(3) The schedule of payments to be made by or on behalf of the individual, 
including the amount of each payment, the date on which each payment is due 
and an estimate of the date of the final payment; 
(4) Ifa plan provides for regular periodic payments to creditors: 
(a) Each creditor of the individual to which payment will be made, the 
amount owed to each creditor and any concessions the provider reasonably 
believes each creditor will offer; and 
(b) 
The schedule of expected payments to each creditor, including the 
amount of each payment and the date on which it will be made; 
(5) Each creditor that the provider believes will not participate in the plan and to 
which the provider will not direct payment; 
(6) How the provider will comply with its obligations under section 6327, 
subsection 1; 
(7) That the provider may terminate the agreement for good cause, upon return 
of unexpended money of the individual; 
(8) That the individual may cancel the agreement as provided in section 6320; 
(9) That the individual may contact the administrator with any questions or 
complaints regarding the provider; and 
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(10) 
The address, telephone number and e-mail address or website of the 
administrator. 
2. Delivery. For purposes of subsection 1, paragraph E, delivery of an electronic 
record occurs when it is made available in a format in which the individual may retrieve, 
save and print and the individual is notified that it is available. 
3. Compliance. If the administrator supplies the provider with any information 
required under subsection 1, paragraph F, subparagraph (0), the provider may comply 
with that requirement only by disclosing the information supplied by the administrator. 
4. Required provisions in agreement. An agreement must provide that: 
A. The individual has a right to terminate the agreement at any time, without penalty 
or obligation, by giving the provider written or electronic notice, in which event: 
cn The provider will refund all unexpended money that the provider or its agent 
has received from or on behalf of the individual for the reduction or satisfaction 
of the individual's debt; 
(2) With respect to an agreement that contemplates that creditors will settle debts 
for less than the principal amount of debt, the provider will refund 65% of any 
portion of the set-up fee that has not been credited against the settlement fee; and 
(3) All powers of attorney granted by the individual to the provider are revoked 
and ineffective; 
B. 
The individual authorizes any bank in which the provider or its agent has 
established a trust account to disclose to the administrator any financial records 
relating to the trust account; and 
C. The provider will notify the individual within 5 days after learning of a creditor's 
final decision to reject or withdraw from a plan and that this notice wilI include: 
(1) The identity of the creditor; and 
(2) The right of the individual to modify or terminate the agreement. 
5. Power of attorney. An agreement may confer on a provider a power of attorney 
to settle the individual's debt for no more than 50% of the principal amount of the debt. 
An agreement may not confer a power of attorney to settle a debt for more than 50% of 
that amount, but may confer a power of attorney to negotiate with creditors of the 
individual on behalf of the individual. An agreement must provide that the provider will 
obtain the assent of the individual after a creditor has assented to a settlement for more 
than 50% of the principal amount of the debt. 
6. Prohibition. An agreement may not: 
A. Provide for application of the law of any jurisdiction other than the United States 
and this State; 
B. Except as permitted by 9 United States Code, Section 2, contain a provision that 
modifies or limits otherwise available forums or procedural rights, including the right 
to trial by jury, that are generally available to the individual under law other than this 
chapter; 
C. Contain a provision that restricts the individual's remedies under this chapter or 
law other than this chapter; or 
D. Contain a provision that: 
(1) 
Limits or releases the liability of any person for not performing the 
agreement or for violating this chapter; or 
(2) Indemnifies any person for liability arising under the agreement or this 
chapter. 
7. Rights and obligations exist. All rights and obligations specified in subsection 4 
and section 6320 exist even ifnot provided in the agreement. A provision in an agreement 
that violates subsection 4, 5 or 6 is void. 
UNIFORM COMMENT 
(This is Section 19 of the Uniform Debt Management Services Act.) 
l. In this section "provider" refers to the provider that is a party to the agreement. It 
does not contemplate an employee or other agent that forms an agreement on behalf of the 
provider, even if the employee or agent serves as an intennediary between an individual and 
the individual's creditors. 
2. Subsection (a)(5) requires immediate delivery of the record to the individual. 
Subsection (b) clarifies that if the record is electronic, delivery occurs when the provider 
makes it available in retrievable and printable form and notifies the individual that it is 
available. 
3. In subsection (a), subparagraphs (6)(A) and (8) carry into the agreement the matter 
that section l7(a) requires to be disclosed before an agreement is formed. See Official 
Comment 1 to that section. 
4. In subsection (a)(6)(C), as in section 2(13) (defining "plan"), the word "payments" 
includes deposits, that is, transfers to a bank account of the individual. The date of the last 
payment depends on the creditors' concessions and the amount of the monthly payment by 
the individual, each of which may change during the course of the plan. It also depends on the 
timeliness of payment by the individual. None of this can be known in advance. Therefore, 
paragraph (6)(C) requires a good faith estimate of the date of the final payment. 
5. Paragraph (6)(D) applies primarily to credit-counseling entities. At the very outset 
of the agreement, the provider may not have communicated with an individual's creditors to 
ascertain their willingness to participate and the concessions that they will make. This 
paragraph requires the provider to use its best jUdgment, based on its past experience with 
each creditor, to disclose the likely payment amounts and concessions. 
6. As with section 17(c)(3) (pre-agreement disclosure of creditor participation), 
identification in paragraph (6)(E) of nonparticipating creditors includes secured creditors but 
refers only to creditors that the individual has disclosed to the provider or that the provider 
otherwise actually knows to be a creditor of the individual. Subparagraph (E) does not require 
the provider to make any disclosures with respect to creditors of which it is unaware. 
7. Section 27 requires a provider to make periodic reports to an individual, 
accounting for payments, charges, and disbursements. Paragraph (6)(F) of this section 
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requires disclosure of the timing of those reports (monthly or more frequently) and the 
individual's right to receive an accounting upon request and upon termination of the 
agreement. 
8. The good cause for termination by a provider pursuant to this paragraph (6)(G) 
does not encompass a desire to escape the fee structure to which the provider may have 
committed. For example, when a plan nears completion, the monthly revenue, which is 
capped by reference to the number of creditors still in the plan, may not generate the revenue 
desired or needed by the provider. This does not amount to good cause for terminating an 
agreement. Rather, "good cause" contemplates such things as the individual's failure to make 
monthly payments or to cooperate with the provider. The standard of good cause may vary 
depending on whether the provider is a credit-counseling entity or a debt-settlement entity, 
because the adverse consequences to the individual in the event of termination may be 
different. 
9. Section 20 gives an individual a three-day right of cancellation and the return of all 
money paid to or at the direction of the provider. It extends the three-day period to 30 days if 
the provider fails to comply with this section or section 20(b) or 28. Paragraph (6)(H) requires 
disclosure of this right, in addition to the separate notice required by section 20. 
10. The administrator may have multiple phone numbers, e-mail addresses, etc. If the 
administrator informs the provider of the details by which individuals may make complaints 
or inquiries relating to this Act, subsection (c) requires the provider to disclose those details 
in the agreement. Compliance with this requirement will mean that a provider that serves 
individuals in multiple states may have to have a different form for each state. 
Computerization of the standard document may minimize the difficulty of complying with 
this disclosure requirement. 
11. The historic practice by many credit-counseling agencies has been to permit 
termination at any time; they do not even purport to bind the individual to a contract. 
Subsection (d) mandates this right of termination as against all providers. If the individual has 
an unlimited right of termination, it is questionable whether there is a contract at all. The 
requirement of notice may supply sufficient obligation to support a contract, but even if it 
does not, there is no reason why the industry, and regulation of the industry, cannot operate 
on the basis of agreements that are not enforceable under the common law of contracts. This 
Act provides the authorization for the industry, as well as the regulation of it. 
For all providers, if an individual terminates an agreement, paragraph (l)(A) requires 
return of any unexpended money intended for payment to creditors. For credit-counseling 
entities, no refund of set-up or monthly fees is required. For debt-settlement entities, however, 
paragraph (1 )(B) requires the agreement to provide for refund of a portion of the set-up fee. 
Section 23(f) requires the provider to credit any set-up fee against a settlement fee. It also 
requires the provider to credit the monthly service fees against the settlement fee. To 
maximize the refund under this section, as contemplated here, the monthly service fees should 
credited first. To determine the refund due under paragraph (1 )(B), the provider must deduct 
from the total amount of any settlement fees the total amount of monthly fees paid up to the 
time of termination. If the result is less than 0 (or ifthere have been no settlement fees), then 
no part of the set-up fee has yet been credited against the settlement fee, and the refund is 
65% of the set-up fee. If the result is greater than 0, subtract that result from the set-up fee. 
The refund is 65% ofthe difference. 
12. Paragraph (l)(C) requires the agreement to provide that in the event of 
termination, all powers of attorney terminate. Section 28(a)(4) complements this provision by 
making it unlawful for a provider to attempt to exercise a power of attorney after the 
individual has terminated the agreement. 
13. Paragraph (2), in conjunction with section 5(b)(3), is designed to satisfy privacy 
laws in such a way that the administrator has access to information about a provider's trust 
account. 
14. Subsection (e) permits an agreement to confer on the provider a power of attorney 
to settle debts for 50 cents on the dollar. Because "principal amount of the debt" is a defined 
term (see section 2(14)), the percentage is calculated with respect to the amount of debt at the 
inception of the plan, not the amount of debt at the time of settlement. For settlements less 
favorable than that, the provider must secure the assent of the individual and must do so after 
the creditor has assented to a settlement. This affords the individual an opportunity to review 
the terms of a settlement before it becomes final. 
15. Subsection (f) seeks to preserve the individual's common law and statutory rights 
against the unilateral decision of a provider to remove or restrict them. Thus a provider may 
not evade this Act by adopting the law of another jurisdiction. Nor maya provider contract 
for a distant forum or the surrender of rights or remedies under other law, including the right 
to proceed by way of a class action when appropriate. 
16. The failure of a provider to include in an agreement the provisions required by 
this section is a violation of the Act and justifies administrative enforcement under sections 
32-33 and private enforcement under section 35. Even if omitted, however, subsection (g) 
makes the required provisions part of the agreement. Conversely, a provision that violates 
subsections (d)-(f) is void, but this does not render the entire agreement void. 
§6320. Cancellation of agreement; waiver 
1. Cancellation. An individual may cancel an agreement before midnight of the 3rd 
business day after the individual assents to it, unless the agreement does not comply with 
subsection 2 or section 6319 or 6328, in which event the individual may cancel the 
agreement within 30 days after the individual assents to it. To exercise the right to cancel, 
the individual must give notice in a record to the provider. Notice by mail is given when 
mailed. 
2. Form. An agreement must be accompanied by a form that contains in boldface 
type, sun'ounded 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 e-mail to .............................. (E-
mail address of provider) or mail or deliver a signed, dated copy of this notice, or any 
other written notice, to .............................. (Name of provider) at ............................ .. 
(Address of provider) before midnight on .............................. (Date). If you cancel 
this agreement within the 3-day period, we will refund all money you already have 
paid us. 
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You also may terminate this agreement at any later time, but we may not be required 
to refund fees you have paid to us. 
I cancel this agreement, 
............................................................ (Print your name) 
............................................................ (Signature) 
............................................................ (Date) 
3. Waiver of right to cancel. If a personal financial emergency necessitates the 
disbursement of an individual's money to one or more of the individual's creditors before 
the expiration on days after an agreement is signed, an individual may waive the right to 
c~ncel. To waive the right, the individual must send or deliver a signed, dated statement 
in the individual'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. 
UNIFORM COMMENT 
(This is Section 20 of the Uniform Debt Management Services Act.) 
1. This section derives from section 125 of the Truth-in-Lending Act, 15 U.S.c. § 
1635. Subsection (a) confers a right of cancellation for three days after an agreement that 
complies with sections 19 and 28. Section 19 specifies the form and contents of the 
agreement, and section 28 lists prohibited conduct. If the agreement calls for the performance 
of conduct prohibited by section 28, or if the agreement does not comply with subsection (b) 
or section 19, the individual has 30 days in which to cancel. Failure to comply with 
subsection (b) includes putting the incorrect date in the notice required by that subsection. If 
the individual cancels within the three-day period, subsection (b) calls for a return of all 
amounts paid, even those amounts already paid over to creditors. If the agreement does not 
comply with section 19 or 28 and the provider fails to honor the individual's attempt to cancel 
during the 30-day period, the remedy is found in section 35(e) (recovery of all amounts paid 
or deposited by the individual (including all set-up and service fees), less amounts transmitted 
to creditors, plus damages under section 35(c)). If the right to cancel has expired, the 
individual still has the right to terminate under section 19(d)(1). 
2. The individual may waive the right to cancel in the event of an emergency. The 
individual must honestly believe that it is necessary for the provider to disburse his or her 
money before expiration of the three days. The waiver must disclose the reasons for such 
haste, and the use of a standard-form record - be it written or electronic - is ineffective. 
§6321. Required language 
Unless the administrator, by rule, provides otherwise, the disclosures and documents 
required by this chapter must be in English. If a provider communicates with an 
individual primarily in a language other than English, the provider must furnish a 
translation into the other language of the disclosures and documents required by this 
chapter. 
UNIFORM COMMENT 
(This is Section 21 of the Uniform Debt Management Services Act.) 
1. Disclosures and documents required by this Act must be in English. The 
administrator may by rule permit providers to satisfy their obligations under the Act by giving 
disclosures and using documents in specified languages other than English if the provider 
communicates with an individual primarily in the other language. The promulgation of such a 
rule is discretionary with the administrator, since it may be unduly burdensome for the 
administrator to enforce the Act with respect to documents in the other language. 
2. If a provider communicates primarily in a foreign language, it must provide a 
translation of documents and disclosures in that language. If the provider is not willing to do 
this, then it must communicate primarily in English. This places the burden on the individual 
to bring a translator along 01' assume the risk of not understanding any disclosures 01' 
documents that are beyond the individual's English-language reading skills. 
§6322. Trust account 
1. Deposit. All money paid to a provider by or on behalf of an individual for 
distribution to creditors pursuant to a plan is held in trust. Within 2 business days after 
receipt, the provider shall deposit the money in a trust account established for the benefit 
of individuals to whom the provider is furnishing debt management services. 
2. Availability of funds. Money held in trust by a provider is not property of the 
provider or its designee. The money is not available to creditors of the provider or 
designee, except an individual from whom or on whose behalf the provider received 
money, to the extent that the money has not been disbursed to creditors of the individual. 
3. Requirements; provider. A provider shall: 
A. Maintain separate records of account for each individual to whom the provider is 
furnishing debt management services; 
B. 
Disburse money paid by or on behalf of the individual to creditors of the 
individual as disclosed in the agreement, except that: 
(1) 
The provider may delay payment to the extent that a payment by the 
individual is not final; and 
(2) 
If a plan provides for regular periodic payments to creditors, the 
disbursement must comply with the due dates established by each creditor; and 
C. Promptly correct any payments that are not made or that are misdirected as a 
result of an error by the provider 01' other person in control of the trust account and 
reimburse the individual for any costs 01' fees imposed by a creditor as a result of the 
failure to payor misdirection. 
4. 
Commingling. 
A provider may not commingle money in a trust account 
established for the benefit of individuals to whom the provider is furnishing debt 
management services with money of other persons. 
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5. Cash balance. A trust account must at all times have a cash balance equal to the 
sum of the balances of each individual's account. 
6. 
Reconciliation. 
If a provider has established a trust account pursuant to 
subsection 1, the provider shall reconcile the trust account at least once a month. The 
reconciliation must compare the cash balance in the trust account with the sum of the 
balances in each individual's account. If the provider or its designee has more than one 
trust account, each trust account must be individually reconciled. 
7. Unlawful appropriation. If a provider discovers, or has a reasonable suspicion 
of, embezzlement or other unlawful appropriation of money held in trust, the provider 
immediately shall notify the administrator by a method approved by the administrator. 
Unless the administrator by rule provides otherwise, within 5 days thereafter, the provider 
shall give notice to the administrator describing the remedial action taken or to be taken. 
8. 
Termination by individual. 
If an individual terminates an agreement or it 
becomes reasonably apparent to a provider that a plan has failed, the provider shall 
promptly refund to the individual all money paid by or on behalf of the individual that has 
not been paid to creditors, less fees that are payable to the provider under section 6323. 
9. Relocation of trust account. Before relocating a trust account from one bank to 
another, a provider shall inform the administrator of the name, business address and 
telephone number of the new bank. As soon as practicable, the provider shall inform the 
administrator of the account number of the trust account at the new bank. 
UNIFORM COMMENT 
(This is Section 22 of the Uniform Debt Management Services Act.) 
1. This section requires that persons that receive money for disbursement to creditors 
establish trust accounts. Providers may operate under any of several business models. Some 
providers receive the individual's money directly. Others use third parties for the purpose of 
receiving the funds and managing the accounts. Under any such model, the provider is a 
fiduciary and must establish a trust account. This is true even if the third party is an 
independent contractor. A provider may delegate its duties under this section, but it remains 
responsible for complying with the section. For purposes of this Act, money transmitted to, or 
received by, a designee of a provider is to be treated as money transmitted to, or received by, 
the provider itself. 
If the provider (or its designee) does not receive money for distribution to creditors, 
but instead leaves the individual in control of that money, this section does not require a trust 
account. If the individual's account is accessible to the provider, for example, by means of the 
power to initiate an electronic transfer, section 28(a)(5) limits the purposes for which a 
provider may initiate a transfer. 
2. For providers at brick and mortar locations in this state, it would be feasible to 
require the trust account to be located in this state. For providers that operate (via the Internet 
or telephone) out of an office not located in this state, it may be unduly burdensome to require 
a trust account in this state and, by extension, each state in which the provider operates. By 
not prohibiting it, subsection (a) implicitly permits a provider, wherever located, to deposit 
money of residents of this state into a trust account located in another state and containing the 
money of individuals who reside in other states. 
3. Money in the trust account must not be subject to the claims of the provider's 
creditors. As a person with a claim against a provider, the individual is a creditor of the 
provider. Nevertheless, subsection (b) permits that individual to have access to the trust 
account, but only to the extent the provider has received money from or on behalf of the 
individual and has not distributed it to creditors. Without this limitation, the individual's 
compensation out of the trust account would come at the expense of other individuals whose 
money comprises the trust account. Compensation of the individual for other loss or damage 
must come from assets of the provider or the bond required by section 13. Since money in the 
trust account is not the property of the provider, any interest on the money of the individuals 
in the account must be credited to those individuals. 
4. Subsection (b) does not address the question of the process by which an individual 
may access the trust account. This Act leaves that question to other law, but as a creditor of 
the provider, the individual has whatever rights creditors generally have. In addition, the 
individual may be the beneficiary of action by the administrator under sections 32-33. 
5. Subsection (c) imposes obligations on the provider. If the provider uses a third 
party to administer the trust account, the provider may delegate these obligations to the third 
party. The provider, however, is responsible for performance of the obligations and is liable if 
they are not performed. See section 31 . 
6. The subsection contemplates that the agreement may establish a date by which the 
individual must remit to the provider and a date by which the provider must remit to the 
creditors. Paragraph (2)(A) accommodates the use of payment systems other than checks. 
Paragraph (2)(B) applies primarily to credit-counseling entities and requires that the 
agreement - and the provider's performance - must conform to the due dates established by 
the creditors. The obligation to act in good faith (section 15) means that, if necessary or 
desirable, the provider must attempt to secure the creditors' assent to modify the original due 
dates to maximize the feasibility of the plan. 
7. Subsection (d) prohibits a person in control of a trust account from commingling 
money held in the trust with money of the provider or any other person other than the 
individuals with whom the provider has agreements. In speaking of a "provider," the 
prohibition encompasses a person to whom the provider has delegated any of its obligations 
under this section. See section 31. The delegee also may be liable. Section 35( c). 
8. Section 34(c), which provides that failure to maintain the proper balance is cause 
for summary suspension of registration, supplements subsections ( e) and (t). 
9. Subsection (g) specifies the circumstances under which a provider must notify the 
administrator that something may be amiss with respect to money held in trust. As used here, 
"appropriation" includes all kinds of taking, including theft of cash, electronic debiting of an 
account, etc. The administrator may authorize notice by courier, facsimile, electronic mail, 
telephone, etc. 
10. Subsection (h) requires a provider to refund an individual's money if the 
individual terminates the agreement or if it becomes clear that a plan will not work. Examples 
of the latter might include a total cessation of payments or sporadic payments by the 
individual with no indication that the payments will become regular. The test under this 
subsection is the vague standard, "reasonably apparent," which must be applied in 
conjunction with the good faith requirement of section 15. The subsection supplements the 
individual's right under section 19(d)(I) to terminate the agreement, in which event this 
subsection and section 19(d)(l)(A) require the provider to refund all unexpended funds. 
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Presumably, the money is in a trust account, but the obligation applies regardless of where the 
money is, unless it already is under the individual's control. 
§6323. Fees and other charges 
1. Imposition of fee or charge. A provider may not impose directly or indirectly a 
fee or other charge on an individual or receive money from or on behalf of an individual 
for debt management services except as permitted by this section. 
2. Agreement required. A provider may not impose charges or receive payment for 
debt management services until the provider and the individual have signed an agreement 
that complies with sections 6319 and 6328. 
3. 
Fee for educational or counseling services. If an individual assents to an 
agreement, a provider may not impose a fee or other charge for educational or counseling 
services, or the like, except as otherwise provided in this subsection and section 6328, 
subsection 4. The administrator may authorize a provider to charge a fee based on the 
nature and extent of the educational or counseling services furnished by the provider. 
4. 
Fees. 
Subject to adjustment of dollar amounts pursuant to section 6332, 
subsection 6, the following rules apply. 
A. If an individual assents to a plan that contemplates that creditors will reduce 
finance charges or fees for late payment, default or delinquency, the provider may 
charge: 
(1) A fee not exceeding $50 for consultation, obtaining a credit report, setting up 
an account and the like; and 
(2) A monthly service fee, not to exceed $10 multiplied by the number of 
creditors remaining in a plan at the time the fee is assessed, but not more than 
$50 in any month. 
B. If an individual assents to an agreement that contemplates that creditors will settle 
debts for less than the principal amount of the debt, a provider may charge: 
(1) Subject to section 6319, subsection 4, a fee for consultation, obtaining a 
credit report, setting up an account and the like, in an amount not exceeding the 
lesser of$400 and 4% of the debt in the plan at the inception of the plan; and 
(2) 
A monthly service fee, not to exceed $10 multiplied by the number of 
creditors remaining in a plan at the time the fee is assessed, but not more than 
$50 in any month. 
C. A provider may not impose or receive fees under both paragraphs A and B. 
D. Except as otherwise provided in section 6328, subsection 4, if an individual does 
not assent to an agreement, a provider may receive for educational and counseling 
services it provides to the individual a fee not exceeding $100 or, with the approval 
of the administrator, a larger fee. The administrator may approve a fee larger than 
$100 if the nature and extent of the educational and counseling services warrant the 
larger fee. 
5. Refund. If, before the expiration of 90 days after the completion or termination of 
educational or counseling services, an individual assents to an agreement, the provider 
shall refund to the individual any fee paid pursuant to subsection 4, paragraph D. 
6. 
Compensation. Except as otherwise provided in subsections 3 and 4, if an 
agreement contemplates that creditors will settle an individual's debts for less than the 
principal amount of the debt, compensation for services in connection with settling a debt 
may not exceed, with respect to each debt: 
A. Thirty percent of the excess of the principal amount of the debt over the amount 
paid the creditor pursuant to the agreement, less, to the extent it has not been credited 
against an earlier settlement fee: 
(1) The fee charged pursuant to subsection 4, paragraph B, subparagraph (1); and 
(2) 
The aggregate of fees charged pursuant to subsection 4, paragraph B, 
subparagraph (2). 
7. Reasonable charges. Subject to adjustment of the dollar amount pursuant to 
section 6332, subsection 6, if a payment to a provider by an individual under this chapter 
is dishonored, a provider may impose a reasonable charge on the individual, not to exceed 
the lesser of $25 and the amount permitted by law other than under this chapter. 
~ORMCOMMffiNT 
(This is Section 23 of the Uniform Debt Management Services Act.) 
1. Subsection (a) is comprehensive: unless authorized by this section, a provider may 
not receive a payment for debt-management services. Since this section does not authorize 
fees for such matters as preparing a financial analysis, preparing a budget, or terminating an 
agreement, the prohibition in this subsection means that providers may not impose a charge 
for them. This would be indirectly charging for debt-management services. 
Courts and the administrator should be vigilant to attempts to evade this limitation. A 
provider might attempt to divide the cost to an individual into separate components and argue 
that only some are properly viewed as charges for debt-management services. Or a provider 
might require the individual to pay some components of the cost to the provider and some to 
others, arguing that only the amounts that the provider itself receives are subject to this 
section. For example, a provider might use the services of a third person to solicit individuals, 
determine whether they are qualified for debt-management services, and refer them to the 
provider. This person might be paid by the provider or by the individual. If paid by the 
individual, this tactic shifts some of the provider's costs of doing business to the individual 
and amounts to an attempt to evade the limits of this section. Amounts paid to a third person 
for determining that an individual qualifies for debt-management services or for referring an 
individual to a provider, even if paid by the individual, should be viewed as part of the charge 
by the provider that this section limits. Hence, subsection (a) prohibits imposition of fees 
directly or indirectly except as permitted by this section. 
2. In addition to specifying some of the contents of an agreement, section 19(a)(5) 
requires immediate delivery of a record containing the agreement. If the record is a writing, 
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subsection (b) of this section prohibits a provider from collecting any money before the 
individual receives it. If the record is electronic, the provider may impose a fee if otherwise 
permitted by this section, as soon as it delivers the record, which occurs (as provided in 
section 19(b)) when it makes the record available in retrievable and printable form and 
notifies the individual that it is available. 
3. Section 17(b)( 1) requires a provider to provide reasonable education about the 
management of personal finance as a prerequisite to performing debt-management services. 
Subsection (c) of this section requires that the basic education and counseling be provided at 
no charge. This prohibition against charges encompasses charges for tangible materials, e.g., 
books, used in connection with the education. The education must meet the minimum 
standard of "reasonable," as determined by the administrator or the courts. To avoid creating 
a disincentive to exceed the minimum requirement, subsection (c) authorizes the 
administrator to approve a fee for education if the administrator determines that a provider's 
education or counseling services exceed the minimum standards for the basic service. The 
approval must specity the fee and must relate to the specific course of instruction or 
counseling performed by the provider. 
4. The administrator should be vigilant to attempts by a provider to evade the 
prohibition against charges for the basic education and counseling. Two factors are especially 
important: the voluntariness of the purchase by the individual and the substance of the 
education. Since the basic education must be provided at no charge, the individual must be 
permitted to form an agreement without having to purchase additional education. 
Voluntariness may be negated by the sales practices of the provider, including such things as 
the sales pitch and the manner in which the decision to acquire additional education is 
presented. If the provider routinely includes the cost of additional education in the proposed 
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agreement that it presents to the individuals it solicits, the purchase of additional education is 
not truly voluntary. This may be true even if the provider obtains a separate manifestation of 
the individual's assent to the additional charge. E.g., see In re USLIFE Credit Corp., 91 
F.T.C. 1017, modified 92 F.T.C. 353, rev'd sub nom. USLIFE Credit Corp. v. FTC, 599 F.2d 
1387 (5th Cir. 1979). For purposes of this Act, the opinion of the Federal Trade Commission, 
not the Fifth Circuit, takes the correct approach. Tactics such as these violate section 
28(a)(16) (prohibiting unfair, unconscionable, or deceptive acts or practices). 
The other factor is the substance of the education. To justity a charge, the education 
must go beyond the education that the provider must supply at no charge as a prerequisite to 
providing debt-management services and being compensated for providing those services. 
The education must consist of more than providing a book or other materials for the 
individual to read on his or her own. To prevent evasion of the prohibition of this subsection, 
the administrator must evaluate the program of instruction, including any materials to be 
used, in order to determine that it goes beyond the education that must be provided at no 
charge and to determine the amount of any additional charge that is appropriate. 
5. Section 28(d) permits a provider to charge amounts permitted by government-
sponsored programs that require persons such as first-time home buyers to receive education 
or counseling services as a condition of eligibility for the program. Subsection (c) does not 
limit the charges authorized by those programs. 
6. Paragraphs (1) and (2) of subsection (d) permit a provider to charge a set-up fee 
and a monthly service fee. For all providers, paragraph (2) permits a monthly fee of $10 per 
creditor, except that the monthly fee may not exceed $50. Since some creditors may be paid 
off before others, the per-creditor branch of the limit is to be determined with respect to the 
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number of creditors remaining in the plan at the time the fee is assessed. Therefore, if there 
are only two creditors remaining in a plan, the maximum monthly charge is $20. 
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Under no circumstances may the monthly fee exceed $50. Courts and the 
administrator should be vigilant to attempts to evade the per-creditor limitation of these 
paragraphs. For example, if a provider includes in a plan a creditor who the provider knows 
will make no concessions and imposes a $10 per month fee for that creditor, the provider may 
violate this subsection or section 28(a)(16) (prohibiting unfair, unconscionable, or deceptive 
acts or practices). 
7. If the provider is a credit-counseling entity, paragraph (1) permits a set-up fee not 
exceeding $50. If the provider is a debt-settlement company, paragraph (2) permits a set-up 
fee not to exceed four percent of the principal amount of the debt in the plan, but in no event 
more than $400. Anytime the aggregate debt in a plan exceeds $10,000, the maximum set-up 
fee is $400. The cross reference in paragraph (2)(A) is to the section that requires refund of 
percent of the set-up fee if the individual terminates the agreement. 
8. A provider may engage in both credit counseling and debt settlement. If so, it must 
comply with the provisions in the Act applicable to each. Paragraph (3), however, prohibits 
the provider from being compensated separately for each role. To determine the monthly 
service fee, the provider must aggregate the number creditors in the plan - whether they are to 
receive regular payments or a one-time payment in settlement of the debt - and impose any 
per-creditor charge on that aggregate number (not to exceed a total of $50 in any month). 
Similarly, a provider may not receive both a $50 set-up fee under paragraph (l)(A) and a 
4%/$400 set-up fee under paragraph (2)(A). The applicable limit on the set-up fee should be 
determined by examining whether the plan is predominantly for full payment of the 
individual's debts (with reduction in finance charges or other fees) or predominantly for the 
settlement of those debts for an amount less than the full principal amount of debt owed. 
9. Paragraph (4) permits a provider to impose a charge for education or counseling if 
an individual does not enter an agreement. The maximum fee for this education or counseling 
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is specified in the statute, but this paragraph permits the administrator to authorize a larger 
fee. The approval may, but need not, refer to a specific provider or a specified program of 
study, such as a course of instruction developed by a third party for use by others. The nature 
and extent of the educational services may warrant approval of a larger fee if they exceed the 
minimum standard contemplated by section 17(b)( 1). 
10. For an elaboration on the cross reference to section 28( d), see Official Comment 
above. 
11. All dollar amounts in subsection (d) are subject to the adjustment by the 
administrator required by section 32(f). 
12. Subsection (c) prohibits a provider from charging for education or counseling if 
an individual enters an agreement. To evade this limitation, a provider might attempt to 
divide the enrollment process into two stages: a period of education or counseling, for which 
it imposes a fee, as permitted by subsection (d)(4), followed by a plan or an agreement, in 
connection with which it would obey the prohibition in subsection (c) against a fee for 
education or counseling. Subsection (e) addresses subterfuges like this by requiring a refund 
of the fee for education or counseling if the individual assents to an agreement before the 
expiration of90 days after the completion or termination of the education or counseling. This 
bright-line test is the minimum restriction on evasion of the limit on charges. Courts and the 
administrator can and should deal with attempts to evade the prohibition of subsection (c). 
Moreover, the obligation to act in good faith and the prohibition against unfair, 
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unconscionable, or deceptive acts or practices also constrain attempts to evade the restrictions 
of this section. 
13. Subsection (f) authorizes a debt-settlement entity to charge a settlement fee, but 
requires it to credit against the settlement fee all set-up and monthly fees. The underlying idea 
is that the settlement fee represents the real compensation of the provider, and the other fees 
provide cash flow pending receipt of the settlement fee. Hence, they are advances against 
settlement fees and are to be credited against the settlement fee. This approach accommodates 
the provider's need for cash flow pending the first settlement and provides a simple way to 
effectuate the credit mechanism. 
§6324. Voluntary contributions 
A provider may not solicit a voluntary contribution from an individual or an affiliate 
of the individual for any service provided to the individual. A provider may accept 
voluntary contributions from an individual but, until 30 days after completion or 
termination of a plan, the aggregate amount of money received £i'om or on behalf of the 
individual may not exceed the total amount the provider may charge the individual under 
section 6323. 
UNIFORM COMMENT 
(This is Section 24 of the Uniform Debt Management Services Act.) 
1. A common abuse by nominally nonprofit credit-counseling agencies has been 
deceiving or coercing consumers into making allegedly voluntary contributions to the agency. 
This section seeks to end this practice. It prohibits the solicitation of contributions as well as 
the requiring of contributions, and it applies to all providers. Section 23(a) precludes a 
provider from receiving a "voluntary" payment in addition to or in excess of the amounts 
stipulated in that section. The separate prohibition in this section is included in order to leave 
no doubt that the practice is unlawful. 
2. Neither section 23 nor this section prohibits the solicitation or receipt of charitable 
contributions by social service agencies or other entities that provide services in addition to 
debt-management services. Section 23 puts the prohibition in terms of "receiv[ing] money ... 
for debt-management services," and this section puts the prohibition in terms of "solicit[ing] a 
voluntary contribution ... for any service provided to the individual." The administrator and 
the courts should be vigilant to prevent evasion of this subsection. 
§6325. Voidable agreements 
1. Unauthorized charges. If a provider imposes a fee or other charge or receives 
money or other payments not authorized by section 6323 or 6324, the individual may 
void the agreement and recover as provided in section 6335. 
2. Unregistered provider. If a provider is not registered as required by this chapter 
when an individual assents to an agreement, the agreement is voidable by the individual. 
3. No claim for breach of contract. If an individual voids an agreement under 
subsection 2, the provider does not have a claim against the individual for breach of 
contract or for restitution. 
UNIFORM COMMENT 
(This is Section 25 of the Uniform Debt Management Services Act.) 
1. If a provider overcharges, subsection (a) gives the individual the option of voiding 
the agreement. The individual's right to void the agreement is subject to the provider'S 
defense under section 35(f) for an overcharge that results from a good-faith error 
notwithstanding the maintenance of procedures reasonably adapted to avoid the error. 
2. If a provider is not properly registered under section 4, subsection (b) empowers 
the individual to void the agreement. If a provider uses an independent contractor that itself is 
within the definition of "provider" to secure the individual's assent, the agreement is voidable 
if either the provider or the independent contractor is not registered. The remedy appears in 
section 35(a) (in part, the provider must return to the individual all money paid or deposited 
by the individual which it has not already distributed to creditors). 
3. If an individual voids an agreement, the provider has no claim whatsoever against 
the individual. The individual's right to terminate the agreement would foreclose a claim for 
future loss, and subsection (c) is intended to make it clear that the provider has no claims with 
respect to any benefits conferred on the individual in the past. 
§6326. Termination of agreement 
1. Failure to pay. If an individual who has entered into an agreement fails for 60 
days to make payments required by the agreement, a provider may terminate the 
agreement. 
2. Return to individual. If a provider or an individual terminates an agreement, the 
provider shall immediately return to the individual: 
A. Any money of the individual held in trust for the benefit of the individual; and 
B. Sixty-five percent of any portion of the set-up fee received pursuant to section 
6323, subsection 4, paragraph B that has not been credited against settlement fees. 
UNIFORM COMMENT 
(This is Section 26 of the Uniform Debt Management Services Act.) 
1. Section 19(a)(6)(G) requires a provider to include in an agreement a provision 
disclosing that the provider may terminate the agreement for good cause. Subsection (a) gives 
an example of what constitutes good cause. There may be others. 
2. Upon termination, whether by the provider or the individual, the provider must 
immediately return the individual's money. In the context of credit-counseling entities, if the 
provider is acting in conformity with the Act, there will be no money in the trust account. 
Subsection (b)( 1) addresses the provider that has not yet distributed the money to creditors as 
required by section 22(c)(2). It also requires a debt-settlement entity in possession of an 
individual's money to return it to the individual. Paragraph (1) does not require refund of 
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money properly held as payment of fees. Paragraph (2), on the other hand, requires a debt 
settlement entity to refund 65 percent of any portion of the set-up fee that has not already, in 
effect, been refunded as a credit against settlement fees for debts already settled. To 
determine the amount of the refund, the provider must calculate how much of the set-up fee 
has been credited against the settlement fee. The provider must pay the individual 65% of the 
remainder. For commentary on how to make this calculation, see Comment 11 to section 19. 
§6327. Periodic reports and retention of records 
1. Timing. A provider shall provide the accounting required by subsection 2: 
A. Upon cancellation or tennination of an agreement; and 
B. Before cancellation or termination of any agreement: 
(1) At least once each month; and 
(2) Within 5 business days after a request by an individual, but the provider need 
not comply with more than one request in any calendar month. 
2. Contents. A provider, in a record, shall provide each individual for whom it has 
established a plan an accounting of the following information: 
A. The amount of money received from the individual since the last report; 
B. The amounts and dates of disbursement made on the individual's behalf, or by the 
individual upon the direction of the provider, since the last report to each creditor 
listed in the plan; 
C. The amounts deducted from the amount received from the individual; 
D. The amount held in reserve; and 
E. 
If, since the last report, a creditor has agreed to accept as payment in full an 
amount less than the principal amount of the debt owed by the individual: 
(1) The total amount and terms of the settlement; 
(2) The amount of the debt when the individual assented to the plan; 
(3) The amount of the debt when the creditor agreed to the settlement; and 
(4) The calculation of a settlement fee. 
3. Maintain records. A provider shall maintain records for each individual for 
whom it provides debt management services for 5 years after the final payment made by 
the individual and produce a copy of them to the individual within a reasonable time after 
a request for them. The provider may use electronic or other means of storage of the 
records. 
UNIFORM COMMENT 
(This is Section 27 of the UnifOlm Debt Management Services Act.) 
I. An individual must receive regular communication of the status of his or her 
account. Subsection (a) requires providers to give accountings monthly or upon request. A 
provider is free to provide the accounting more frequently than monthly. 
2. If any of the amounts required by a paragraph in subsection (b) is zero, the 
provider need not include any disclosure with respect to that paragraph. If a provider requires 
the individual to establish an account with a bank or other third party from which the 
individual is to disburse money to creditors and the provider does not know the date on which 
the individual made a payment, the provider complies by stating the date on which it directed 
the individual to make payment. 
3. If a plan contemplates concessions consisting of reduction in finance charges or 
late payment, default, or delinquency fees, section 22(c)(2) requires distribution of all the 
money each month. With respect to individuals in these plans, notwithstanding paragraph (4), 
accumulating reserves is not permitted. For plans that contemplate settlement for less than the 
principal amount of a debt owed a creditor, the provider may accumulate money from month 
to month. 
4. Paragraph (5) applies primarily to debt-settlement entities. Ifno creditor has agreed 
to settlement terms during a reporting period, the subsection does not require the provider to 
make any disclosure. Hence, the subsection ordinarily would not apply to plans operated by 
credit-counseling entities, because creditors receive the full principal amount of the debt 
owed them and do not "agree" to accept any particular amount as payment in full. As to debt-
settlement entities, the paragraph requires disclosure of the terms of a settlement, including 
the dollar amount paid and the percentage of the principal amount of the debt (see section 
2(14)) that that represents. Subparagraph (D) requires disclosure of the calculation of a 
settlement fee. The provider must disclose the amount and the method of arriving at the 
amount of the fee, e.g., "$100, which represents 20% of the difference between the amount of 
the debt when you entered the plan and the amount paid pursuant to the settlement." 
5. The period of retention required by subsection (c) is tied to the statute of 
limitations in section 37. For private actions, the statute of limitations is two years. For public 
enforcement, it is four years. To afford a reasonable time for the discovery process to unfold, 
subsection (c) requires retention of records for five years. 
6. The Electronic Signatures in Global and national Commerce Act, 15 U.S.C. § 
7001 (d)(1) provides that a provider may comply with record-retention requirements under 
other law by "retaining an electronic record ... that (A) accurately reflects the information 
... and (B) remains accessible to all persons who are entitled to access by statute, regulation, 
or rule of law, for the period required by such statute, regulation, or rule of law, in a form that 
is capable of being accurately reproduced for later reference, whether by transmission, 
printing, or otherwise." Subsection (c) requires the provider to produce a copy of the 
electronic record. 
§6328. Prohibited acts and practices 
1. Prohibited acts. A provider may not, directly or indirectly: 
A. Misappropriate or misapply money held in trust; 
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B. Settle a debt on behalf of an individual for more than 50% of the principal amount 
of the debt owed a creditor, unless the individual assents to the settlement after the 
creditor has assented; 
C. Take a power of attorney that authorizes it to settle a debt, unless the power of 
attorney expressly limits the provider's authority to settle debts for not more than 50% 
of the principal amount of the debt owed a creditor; 
D. 
Exercise or attempt to exercise a power of attorney after an individual has 
terminated an agreement; 
E. Initiate a transfer from an individual's account at a bank or with another person 
unless the transfer is: 
(1) A return of money to the individual; or 
(2) Before termination of an agreement, properly authorized by the agreement 
and this chapter, and for: 
(a) Payment to one or more creditors pursuant to an agreement; or 
(b) Payment ofa fee; 
F. Offer a gift or bonus, premium, reward or other compensation to an individual for 
executing an agreement; 
G. Offer, payor give a gift or bonus, premium, reward or 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, unless neither the provider nor the person making the referral 
communicates to the prospective customer the identity of the source of the referral; 
H. Receive a bonus, commission or other benefit for referring an individual to a 
person; 
I. Structure a plan in a manner that would result in a negative amortization of any of 
an individual'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; 
1. Compensate its employees on the basis of a formula that incorporates the number 
of individuals the employee jnduces to enter into agreements; 
K. Settle a debt or lead an individual to believe that a payment to a creditor is in 
settlement of a debt to the creditor unless, at the time of settlement, the individual 
receives a certification by the creditor that the payment is in full settlement of the 
debt; 
L. Make a representation that: 
(1) The provider will furnish money to pay bills or prevent attachments; 
(2) Payment of a certain amount will permit satisfaction of a certain amount or 
range of indebtedness; or 
(3) 
Participation in a plan will or may prevent litigation, garnishment, 
attachment, repossession, foreclosure, eviction or loss of employment; 
M. Misrepresent that it is authorized or competent to furnish legal advice or perform 
legal services; 
N. Represent in its agreements, disclosures required by this chapter, advertisements 
or website that it is: 
(]) A not-for-profit entity unless it is organized and properly operating as a not-
for-profit entity under the law of the state in which it was formed; or 
(2) A tax-exempt entity unless it has received certification of tax-exempt status 
from the Internal Revenue Service and is properly operating as a not-for-profit 
entity under the law of the state in which it was formed; 
O. Take a confession of judgment or power of attorney to confess judgment against 
an individual; or 
P. 
Employ an unfair, unconscionable or deceptive act or practice, including the 
knowing omission of any material information. 
2. Debt management services; provider prohibitions. If a provider furnishes debt 
management services to an individual, the provider may not, directly or indirectly: 
A. Purchase a debt or obligation of the individual; 
B. Receive from or on behalf of the individual: 
0) A promissory note or other negotiable instrument other than a check or a 
demand draft; or 
(2) A postdated check or demand draft; 
C. 
Lend money or provide credit to the individual, except as a deferral of a 
settlement fee at no additional expense to the individual; 
D. Obtain a mortgage or other security interest from any person in connection with 
the services provided to the individual; 
E. 
Except as permitted by federal law, disclose the identity or identifying 
information of the individual or the identity of the individual's creditors, except to: 
(1) The administrator, upon proper demand; 
(2) A creditor of the individual, to the extent necessary to secure the cooperation 
of the creditor in a plan; or 
(3) The extent necessary to administer the plan; 
F. Except as otherwise provided in section 6323, subsection 6, provide the individual 
less than the full benefit of a compromise of a debt arranged by the provider; 
G. Charge the individual 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; or 
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H. Furnish legal advice or perform legal services, unless the person furnishing that 
advice to or performing those services for the individual is licensed to practice law. 
3. Practice of law not authorized. This chapter does not authorize any person to 
engage in the practice of law. 
4. Gifts. A provider may not receive a gift or bonus, premium, reward or other 
compensation, directly or indirectly, for advising, arranging or assisting an individual in 
connection with obtaining an extension of credit or other service from a lender or service 
provider, except for educational or counseling services required in connection with a 
government-sponsored program. 
5. Purchase by provider. Unless a person supplies goods, services or facilities 
generally and supplies them to the provider at a cost no greater than the cost the person 
generally charges to others, a provider may not purchase goods, services or facilities from 
the person if an employee or a person that the provider should reasonably know is an 
affiliate of the provider and: 
A. Owns more than 10% of the person; or 
B. Is an employee or affiliate of the person. 
UNIFORM COMMENT 
(This is Section 28 of the Uniform Debt Management Services Act.) 
1. Paragraphs (2) and (3) of subsection (a) limit the extent to which a debt-settlement 
entity may settle a debt without the individual's contemporaneous assent. Paragraph (2) 
prohibits a provider from settling a debt, through the use of a power of attorney or otherwise, 
to authorize the provider to settle debts on whatever terms the provider deems desirable, or an 
any terms other than those specified here. Under paragraph (3) a power of attorney may 
authorize the provider to settle debts for 50 percent or less of the amount of the debt at the 
time the individual assented to the plan. See section 2(14) for the definition of "principal 
amount of the debt." For settlements less favorable to the individual than that, a power of 
attorney is prohibited and ineffectual. These paragraphs supplement section 19( e), which 
imposes similar limits on the terms that a provider may include in an agreement, and they 
negate the permissibility of using a separate document to obtain greater authorization than 
section 19 permits. 
2. Paragraph (4) makes it a violation of the Act for a provider to attempt to exercise a 
power of attorney after an individual has terminated an agreement. It supplements section 
19(d)(I)(C), which requires the agreement to provide that a power of attorney is 
automatically revoked if the individual terminates the agreement. 
3. A credit-counseling entity may have access to its customers' checking accounts, 
for the purpose of withdrawing money to pay the customers' creditors and to pay the entity its 
monthly fee. Similarly, a debt-settlement entity may have its customers establish accounts 
with banks or other persons for the purpose of accumulating money until it is paid to 
creditors, and the entity may initiate transfers out of these accounts to pay monthly service 
fees and settlement fees, as well as perhaps to pay creditors. Paragraph (5) prohibits a 
provider from initiating transfers to itself or to creditors after the individual has terminated an 
agreement. It also prohibits a provider from initiating transfers that are not properly 
authorized by the agreement and the Act. Section 23 limits the amount of the fees. 
4. Paragraph (6) prohibits compensation to an individual, but it does not prohibit a 
provider from reducing its normal fees for individuals who cannot afford them, so long as the 
reduction is in good faith and pursuant to the provider's established practices. It does prohibit 
such come-ons as "reduced price good for today only." 
The Bankruptcy Code, 11 U.S.C. § 111(c)(2)(B), requires credit-counseling entities 
within its purview to "provide services without regard to ability to pay the fee." The Internal 
Revenue Code extends this requirement to all entities exempt from taxation under section 
501(c)(3). This Act does not require providers to reduce or waive fees for those who cannot 
afford them, but neither does it interfere with a provider's compliance with any federal or 
other state law that requires a reduction or waiver of fees. 
5. Paragraph (7) prohibits certain referral fees. Payment of referral fees may be an 
efficient way to attract business and achieve economies of scale, but it creates a risk of 
deception. If a creditor, for example, suggests that an individual consult a particular provider, 
the individual is likely to perceive this as an endorsement by a creditor that is seeking to help 
the individual. The same is true if the creditor supplies the individual's name to a provider 
and the provider contacts the individual, telling the individual that the creditor suggested the 
communication. In fact, the referral may be driven by identification of which provider is 
willing to pay the highest price for the referrals. 
The prohibition against paying referral fees does not preclude payment for sales leads 
or lists of prospective customers, if the person making the referral has no stake in the outcome 
of a plan or if the provider does not reveal the identity of the person that supplied the I ist. A 
creditor is one example of a person that has a financial interest in the outcome of debt-
management services. Another is a person whose compensation varies depending on whether 
the individual it refers completes a plan or reaches some other milestone. 
The vice here is misleading the individual into believing that an entity with which the 
individual has a relationship (e.g., one of the individual's creditors) is disinterestedly 
recommending that the individual seek the services of the provider. Hence, neither the 
provider nor the creditor (or other person supplying the individual's name to the provider) 
may reveal to the individual that the person making the referral is in any way connected to the 
reason the provider is communicating with the individual. If the source of the list is identified 
to the individual by either the provider or the source, paragraph (7) prohibits the provider 
from paying for it. 
6. Paragraph (8) is the converse of paragraph (7). Its purpose is to eliminate the 
economic incentive for a provider to refer individuals to persons who provide loans, goods, 
services, facilities, or other products of any kind. The protection of financially stressed, 
vulnerable individuals justifies discouraging a provider, motivated by self-interest, from 
recommending products provided by others. The prohibition in paragraph (8) precludes a 
provider from including on its website a link to the website of an entity providing other 
services or products and receiving payment from that entity, whether a flat fee or a fee based 
on the number of times individuals hit that link. Although this appears to be a form of 
advertising, for the purposes of this Act it is indistinguishable from payment for referrals. 
Placing a link on the provider's website amounts to an endorsement of or referral to the 
owner of the linked website. It should not matter whether the referral is by electronic link or 
verbal recommendation. The provider is free, of course, to place the link on its website, just 
as it is free to make an oral referral, so long as it does not directly or indirectly receive 
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compensation or other benefit from the person to whom the individual is referred. This 
distinguishes disinterested advice from referrals motivated by the provider's self-interest. 
For restrictions on the manner in which a provider may make a permissible referral, 
see subsection (b)(5) and Official Comment 16. 
7. The practice of many providers has been to compensate their employees on the 
basis of how many individuals they can enroll in plans. This provides an incentive to the 
employees to engage in deceptive and coercive sales pitches. Paragraph (10) seeks to curb the 
deception and coercion by barring this method of compensating employees. The Bankruptcy 
Code, 11 U.S.C. § 111 (c)(2)(F), contains a similar prohibition for the credit-counseling 
entities within its purview. Courts and the administrator should be vigilant to attempts to 
evade the prohibition of this paragraph. Nevertheless, it is permissible for providers to create 
incentives for their employees to identify individuals who will be able to perform an 
agreement compieteiy. Thus it is not a violation of this subsection for a provider to use the 
number of successfully completed agreements as a criterion for compensation of its 
employees. 
8. If an agreement contemplates settlement of a debt for less than the full principal 
amount of the debt, paragraph (11) prohibits a provider from paying, or directing an 
individual to pay, a creditor unless the individual receives formal acknowledgment from the 
creditor that the debt is satisfied. This acknowledgment may come in at least two forms. The 
creditor may assent to a settlement in a communication offering to settle the debt in exchange 
for specified performance by the individual, typically payment of a specified amount by a 
specified date. This communication often is called a settlement offer and may be sent to the 
individual or the provider. After the individual renders the specified performance, the creditor 
may send a communication stating that the debt is satisfied. This communication often is 
called a satisfaction letter. This paragraph requires transmission of the settlement offer to the 
individual in all cases. If the creditor sends a satisfaction letter to the provider, the obligation 
of good faith requires the provider to forward that to the individual as well. In the case of 
either a settlement offer or a satisfaction letter, the creditor's certification may be passed on 
by the provider or come directly from the creditor. 
9. Paragraph (11) also prohibits a provider from misleading an individual into 
believing that a payment will settle a debt. To violate the paragraph, a misrepresentation does 
not have to be express. If a settlement contemplates that a creditor will be accepting 
installment payments, the provider must make it clear to the individual that the initial 
installment does not settle the debt. 
10. Paragraph (12) applies not only to statements made specifically to an individual; 
it also applies to advertising. Subparagraphs (8) and (C) prohibit certain representations that 
sometimes are used to entice individuals to sign up for plans. They are prohibited here even 
when they are true because they too often are untrue. 
11. Paragraph (14) applies to advertisements and other communications that a 
provider intends to reach potential customers. Not-for-profit status is a status under state law. 
An entity may qualify for that status without also being tax-exempt under federal law. For a 
provider to represent that it is a nonprofit or not-for-profit entity, it is not enough that the 
provider was organized under a statute authorizing not-for-profits. Paragraph (14) requires 
that the provider also must be properly operating as a not-for-profit. Nor does it suffice that 
the provider has been granted tax-exempt status under the Internal Revenue Code. If it is not 
operating in a manner consistent with the law under which it was formed, a representation 
that it is a nonprofit or tax-exempt entity violates this section. A provider that is unsure 
whether it is properly operating as a not-for-profit entity may avoid liability under this 
paragraph by not representing that it has tax-exempt or not-for-profit status in any of its 
communications that are designed to reach the individuals it seeks to serve. 
12. Paragraph (15) prohibits the use of cognovit clauses or other procedural devices 
by which a provider is authorized to confess judgment against an individual. 
13. Paragraph (16) prohibits false or misleading representations whether or not the 
provider knows of the deception. In accord with existing statutes prohibiting unfair or 
deceptive acts or practices, the risk of falsity or deception is on the person that makes an 
express statement. On the other hand, the paragraph prohibits omissions only if the omitted 
facts are known to the provider and are material. The prohibition applies to all stages of a 
transaction between a provider and an individual, including, at the back end, a provider's 
attempt to collect a debt owed to it or to another person. At the front end, it applies to a 
provider's attempt to divert the individual's attention away from, or minimize the importance 
of, the disclosures required by sections 17 and 19 or to secure the individual's assent to the 
purchase of the education services permitted by section 23(c) and (d). The standards of 
unfairness, unconscionability, and deception should be the same under this Act as they are 
under the state's other statutes protecting consumers. 
14. Paragraph (3) of subsection (b) prohibits a provider from extending credit to an 
individual to whom it provides debt-management services. Often, however, an individual has 
enough money to effect a settlement with a creditor but not enough to pay the fee associated 
with that settlement. This paragraph does not prohibit a provider from deferring collection of 
that fee, so long as there is no charge for the deferral in addition to the agreed-upon set-up, 
monthly service, and settlement fees authorized by section 23. 
15. Paragraph (4) bans security interests altogether, in the property of any person. A 
provider may not take a security interest in property of an individual to whom it furnishes 
debt-management services or in the property of a family member or other person. The 
prohibition must be read in the context of the language introducing the subsection ("if a 
provider furnishes debt-management services to an individual") so that the phrase, "in 
connection with the services provided to the individual" means "in connection with the debt-
management services provided to the individual." Hence this paragraph does not prohibit an 
entity from taking a security interest in connection with extending credit or providing other 
kinds of services to persons to whom it does not provide debt-management services. 
16. Paragraph (5) preserves the privacy of information about an individual with 
whom a provider has an agreement. It is intended to complement federal and other state law 
restrictions on the dissemination of personal information. So long as the provider strips out 
the individual's identifying information, however, it is free under this Act to disclose 
information for purposes of academic research or construction of a scoring system. If the 
identifying information is present, this paragraph prohibits disclosure of any of the 
information, except as permitted by the three specified exceptions. To the extent that other 
law restricts the disclosure of information about an individual, the provider may be able to 
comply with that law by obtaining the individual's consent to the disclosure. But this 
paragraph makes no provision for authorizing the provider to release information with the 
individual's consent. 
The only permissible purpose for a disclosure to a creditor of the individual is to 
secure its cooperation. Disclosure to other persons (other than the administrator) is permitted 
only if disclosure is necessary for the administration of a plan. For example, a provider may 
delegate to a third party its duty to administer a trust account or its duty to provide periodic 
reports. To the extent necessary to enable the third party to perform the tasks that have been 
delegated to it, the provider may disclose information concerning its customers. 
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On the other hand, if a provider wants to refer an individual to another person for 
other goods or services (which subsection (a)(8) penn its, so long as the provider receives no 
compensation for the referral), it must do so by providing the individual with the identity of 
the third person. This paragraph prohibits the provider from disclosing the identity of the 
individual to the third person for the third person to contact. 
17. The cross-referenced section paragraph (6) permits debt-settlement companies to 
receive a portion of the forgiven debt. Other entities are not permitted to receive any portion 
of any forgiven debt, but this paragraph should not be interpreted to prohibit the receipt of 
any fees permitted by this Act. 
18. Paragraph (7) is intended to prohibit the sale to individuals of insurance and other 
products that in other contexts have been a means of evading statutory regulation. The catch-
all at the end of the paragraph is intended to thwart the exercise of ingenuity in generating 
new ideas to evade the iimits imposed by the Act. It shouid be interpreied accordingly. The 
administrator may adopt rules specifying items that fall into the catch-all. 
19. Subsection (a)(l3) prohibits misrepresentations that a provider is authorized or 
competent to provide legal services. Paragraph (8) of su bsection (b) prohibits the perfonnance 
of those services, unless the person is a licensed attorney. A provider does not violate this 
subsection if the person providing legal services is licensed in a state, even if not this state. It 
may, however, violate other law that prohibits the unauthorized practice of law in this state. 
20. Section 17(d) requires providers to answer questions about how to deal with 
indebtedness, and the Act generally contemplates that providers act as intennediaries between 
individuals and their creditors. Subsection (c) of this section makes it clear that the Act does 
not authorize providers or their employees to practice law. The Act does not, however, 
attempt to draw the line between the practice of law and the services required or pennitted by 
the Act. Rather, it contemplates that the courts will continue to develop and apply the rules 
concerning the unauthorized practice of law. 
21. Subsection (d) prohibits a provider from receiving compensation for performing 
specified services for a third party, a technique used in other contexts to evade regulation. The 
prohibition supplements subsection (a)(8) (prohibiting referral fees). It is broader, in that it 
attempts to prevent evasions of subsection (a)(8) through the ruse of performing services for 
the lender or service provider. 
The purpose of the exception is to accommodate programs of governmental agencies 
that require counseling in connection with reverse mortgages, first-time homebuyers 
programs, or other financial services products. 
22. Subsection (e) prohibits insider transactions unless the transactions are bona fide 
market transactions. The purpose of the subsection is to prohibit the use of a provider to 
channel money to related entities. Not-for-profit or tax-exempt providers may do this in an 
attempt to evade restrictions on entities with that status. For-profit providers may do this in an 
attempt to establish a high cost of doing business, which they then might use to persuade the 
legislature to increase the permissible fees and charges. Ordinarily a provider will know 
whether a person with whom it deals is its affiliate. The "should reasonably know" language 
is to protect a provider when its ignorance of that relationship is reasonable. 
The subsection sets a minimum standard, but it does not displace other law governing 
not-for-profit entities. That other law may impose more stringent standards on engaging in 
transactions that benefit persons related to the not-for-profit entity. 
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§6329. Notice of litigation 
No later than 30 days after a provider has been served with notice of a civil action for 
violation of this chapter by or on behalf of an individual who resides in this State at either 
the time of an agreement or the time the notice is served, the provider shall notify the 
administrator in a record that it has been sued. 
UNIFORM COMMENT 
(This is Section 29 of the Uniform Debt Management Services Act.) 
The purpose of this section is to alert the administrator to the possibility of the need 
for action. 
§6330. Advertising 
1. 
Disclosure regarding obtaining credit. 
If the agreements of a provider 
contemplate that creditors will reduce finance charges or fees for late payment, default or 
delinquency and the provider advertises debt management services, it shall disclose, in an 
easily comprehensible manner, that using a debt management plan may make it harder for 
the individual to obtain credit. 
2. Disclosure regarding credit scoring; finance charges. If the agreements of a 
provider contemplate that creditors will settle for less than the full principal amount of 
debt and the provider advertises debt management services, it shall disclose, in an easily 
comprehensible manner, the information specified in section 6317, subsection 4, 
paragraphs C and D. 
UNIFORM COMMENT 
(This is Section 30 of the Uniform Debt Management Services Act.) 
1. This section applies to advertising in any medium, be it print, broadcast, telecast, 
electronic, or other. But a mere listing in a directory, such as the Yellow Pages, is not an 
advertisement if the entry consists solely of the name, address, and phone number of a 
provider. If it goes beyond this, however, the entry is an advertisement and must comply with 
this section. 
2. To counteract the deception and pressure often exercised by providers that engage 
in extensive advertising, this section requires disclosure of the likely impact on credit rating 
and the likelihood of collection efforts. To prevent the disclosures from becoming 
incomprehensible on TV and radio, it requires that the information be disclosed "in an easily 
comprehensible manner." To be easily comprehensible, the type in a print ad must be large 
enough to be legible to an individual of average eyesight; and the type in a video ad must be 
large enough and must appear on the screen long enough to be legible to an individual of 
average eyesight. The audio portion of an ad must be spoken slowly enough to be understood 
by an individual of average hearing and comprehension. 
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3. If a provider advertises its debt-management services, it must comply with this 
section. If a third party advertises the debt-management services of a provider, the third party 
should be viewed as an agent of the provider, and the provider is liable under the law of 
agency if the advertisement fails to comply with this section. See also section 3l. 
§6331. Liability for the conduct of other persons 
If a provider delegates any of its duties or obligations under an agreement or this 
chapter to another person, including an independent contractor, the provider is liable for 
conduct of the person that, if done by the provider, would violate the agreement or this 
chapter. 
UNIFORM COMMENT 
(This is Section 31 of the Uniform Debt Management Services Act.) 
The agreement between a provider and an individual imposes duties and obligations 
on the provider. The provisions of this Act also impose duties and obligations, some 
affirmative (e.g., requirement that provider supply education) and some negative (e.g., 
prohibition against deception). A provider may not escape its obligations and duties under the 
agreement and this Act by contracting with others for the others to perform them. The delegee 
whose conduct fails to conform to the agreement or the Act may be liable as a provider if the 
delegee meets the definition of "provider" in section 2(15) or may be liable under section 35 
as a person that caused a provider to violate the Act. Regardless, the provider that delegated 
the fulfillment of its duties or the performance of its obligations also is liable. This section 
imposes liability on the provider for the failure of the delegee to conform its conduct to both 
the affirmative and the negative duties and obligations. 
To illustrate, if a provider uses the services of another person to solicit individuals 
and secure their assent to agreements, which agreements then are to be performed by the 
provider, the provider necessarily has delegated its obligations under sections 17 (requiring 
pre-agreement analyses and disclosures) and 19 (prescribing the terms of an agreement). If 
the person fails to perform the duties imposed on providers by those sections, this section 
imposes liability on the provider. If the person's role stops short of securing the assent of the 
individual, so that section 19 is not implicated, the provider must comply with section 17. If 
the other person has not performed the obligations of section 17, the provider must. 
Similarly, if a provider uses the services of an independent contractor to receive and 
disburse the individuals' money to their creditors, or to provide the periodic reports required 
by section 27, the provider necessarily has delegated some of its obligations under this Act. If 
the conduct of the independent contractor fails to conform to the obligations placed on 
providers, the provider is liable under this section. 
§6332. Powers of administrator 
1. Actions by administrator. The administrator may act on its own initiative or in 
response to complaints and may receive complaints, take action to obtain voluntary 
compliance with this chapter, refer cases to the Attorney General and seek or provide 
remedies as provided in this chapter. 
2. Investigation. The administrator may investigate and examine, in this State or 
elsewhere, by subpoena or otherwise, the activities, books, accounts and records of a 
person that provides or offers to provide debt management services or a person to which a 
provider has delegated its obligations under an agreement or this chapter, to determine 
compliance with this chapter. Information that identifies individuals who have 
agreements with the provider may not be disclosed to the public. In connection with the 
investigation, the administrator may: 
A. Charge the person the reasonable expenses necessarily incurred to conduct the 
examination; 
B. Require or permit a person to file a statement under oath as to all the facts and 
circumstances of a matter to be investigated; and 
C. Seek a court order authorizing seizure from a bank at which the person maintains 
a tmst account required by section 6322, any or all money, books, records, accounts 
and other property of the provider that is in the control of the bank and relates to 
individuals who reside in this State. 
3. General rulemaldng authority. The administrator may adopt rules to implement 
the provisions of this chapter. Rules adopted pursuant to this section are routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
4. 
Cooperative agreements. 
The administrator may enter into cooperative 
arrangements with any other federal or state agency having authority over providers and 
may exchange with any of those agencies information about a provider, including 
information obtained during an examination of the provider. 
5. Fees for providers. The administrator, by rule, shall establish reasonable fees to 
be paid by providers for the expense of administering this chapter. 
6. Fees adjusted to reflect inflation. The administrator, by rule, shall adopt dollar 
amounts instead of those specified in sections 6302, 6305, 6309, 6313, 6323, 6333 and 
6335 to reflect inflation, as measured by the United States Bureau of Labor Statistics 
Consumer Price Index for All Urban Consumers or, if that index is not available, another 
index adopted by mle by the administrator. The administrator shall adopt a base year and 
adjust the dollar amounts, effective on July 1st of each year, if the change in the index 
from the base year as of December 31 st of the preceding year is at least 10%. The dollar 
amount must be rounded to the nearest $100, except that the amounts in section 6323 
must be rounded to the nearest dollar. 
7. Notification of change. The administrator shall notify registered providers of any 
change in dollar amounts made pursuant to subsection 6 and make that information 
available to the public. 
UNIFORM COMMENT 
(This is Section 32 of the Uniform Debt Management Services Act.) 
1. Subsection (b) authorizes the administrator to investigate the activities of a 
provider and its delegees. If permitted by the law generally applicable to administrative 
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agencies, the administrator may publicize the results of an investigation. The administrator 
may not, however, publicize or otherwise disclose information that identifies individual 
customers of a provider. This restriction applies both to general publicity and to freedom-of-
information requests. 
2. Paragraph (3) permits the administrator to obtain a court order to recover money 
and other property from the bank holding the trust account. The procedure for any such 
proceeding is determined by law other than this Act and, if authorized by that other law, may 
occur ex parte. 
3. Subsection (c) gives the administrator broad powers to adopt rules to implement 
and, to the extent permitted by the law governing administrative procedure, further the 
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purposes of this Act. In exercising this power, however, the administrator should be mindful 
of section 38, which exhorts those enforcing the Act to promote uniformity among the 
enacting states. 
4. Under subsection (e) the administrator may establish a uniform fee to be paid by 
all providers. Alternatively, the administrator may adopt a fee structure in which the amount 
of the fee depends on some characteristic of the provider, such as the amount of money 
received from residents of this state, the total amount of debt owed by residents of this state, 
the number of customers who reside in this state, etc. The standard for establishing the fee is 
reasonableness, and a fee structure is reasonable if it is based on, inter alia, a provider's 
presumptive ability to payor on the administrative burden a provider places on the 
enforcement of the Act. 
5. Subsection (f) requires the administrator to adjust annually all dollar amounts that 
appear in the Act. Those amounts are found in the following sections: 
Section 2(2)(B)(iv): threshold for becoming an affiliate ($25,000) 
Section 5(b)(4): employee theft insurance ($250,000) 
Section 9(d)(2): independence of board of directors ($25,000) 
Section 13(b): bond ($50,000) 
Section 23(d)(l), (2), (3): fee caps 
Section 23(g): NSF fee ($25) 
Section 33(a), (b): civil penalty ($10,000, $20,000) 
Section 35(c)(2): minimum damages ($5,000) 
Section 35(d)(2): punitive damages ($10,000) 
6. Since the adjustment will occur by promulgation of a rule, it will be a matter of 
public record, as is any other formally adopted rule. Nevertheless, subsection (g) requires the 
administrator to notify registered providers of the change, and the administrator may wish 
also to post the current amounts on a website dealing with this Act. 
§6333. Administrative remedies 
1. Enforcement. The administrator may enforce this chapter and rules adopted 
under this chapter by taking one or more of the following actions: 
A. Ordering a provider or a director, employee or other agent of a provider to cease 
and desist from any violations; 
B. 
Ordering a provider 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; 
C. Subject to adjustment of the dollar amount pursuant to section 6332, subsection 6, 
imposing on a provider or a person that has caused a violation a civil penalty not 
exceeding $10,000 for each violation; 
D. Prosecuting a civil action to: 
(1) Enforce an order; 
(2) Obtain restitution or an injunction or other equitable relief, or both; or 
E. Intervening in an action brought under section 6335. 
2. Penalty. Subject to adjustment of the dollar amount pursuant to section 6332, 
subsection 6, if a person violates or knowingly authorizes, directs or aids in the violation 
of a final order issued under subsection 1, paragraph A or B, the administrator may 
impose a civil penalty not exceeding $20,000 for each violation. 
3. Action to enforce. The administrator may maintain an action to enforce this 
chapter in any jurisdiction within the State. 
4. Recover costs. The administrator may recover the reasonable costs of enforcing 
this chapter under subsections 1 to 3, including attorney's fees based on the hours 
reasonably expended and the hourly rates for attorneys of comparable experience in the 
community. 
5. Amount of penalty. In determining the amount of a civil penalty to impose under 
subsection 1 or 2, the administrator shall consider the seriousness of the violation, the 
good faith of the violator, any previous violations by the violator, the deleterious effect of 
the violation on the public, the net worth of the violator and any other factor the 
administrator considers relevant to the determination of the civil penalty. 
UNIFORM COMMENT 
(This is Section 33 of the Uniform Debt Management Services Act.) 
1. Paragraphs (1) and (2) of subsection (a) authorize the administrator to take action 
against providers, their directors or employees (including officers), and any other person that 
has caused the provider to violate the Act. Paragraph (3) authorizes imposition of civil 
penalties against any of these persons. The law governing administrative agencies governs the 
procedure to be used. 
2. Paragraph (4) authorizes the administrator to commence civil actions. Hence, the 
administrator may proceed either by administrative proceeding under paragraphs (1 )-(3) or by 
civil action under paragraph (4). Furthermore, section 32(a) authorizes the administrator and, 
if different from the administrator, the attorney general to refer cases to the attorney general 
for prosecution. Enforcement of the Act therefore is the responsibility of both the 
administrator and, if different from the administrator, the attorney general. 
3. Subsection (b) speaks of "a person," which is defined in section 2(12). If a 
provider violates a final order, it is subject to the civil penalty of this subsection. If a director, 
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employee (including officers), agent, etc., commits or directs commission of the act that 
constitutes the provider's violation, that person also is subject to the civil penalty of this 
subsection. 
4. Subsection (d) places on the person violating this Act the costs of enforcing the 
Act against that person. To the extent those costs are attorney's fees, they are to be 
determined by looking to rates in the private-practice sector. This subsection complements 
section 32(b)(I), which authorizes the administrator to assess a provider or its delegee with 
the costs of investigation, but permits the recovery of costs against other persons who are 
found to violated the Act. See subsection (a)(3) (liability of a person that has caused a 
violation). 
§6334. Suspension, revocation or non renewal of registration 
1. Definition. In this section, "insolvent" means: 
A. Having generally ceased to pay debts in the ordinary course of business other than 
as a result of a good faith dispute; 
B. Being unable to pay debts as they become due; or 
C. Being insolvent within the meaning of the federal bankruptcy law, 11 United 
States Code, Section 101 et seq. 
2. Suspend; revoke; deny. The administrator may suspend, revoke or deny renewal 
of a provider's registration if: 
A. A fact or condition exists that, if it had existed when the registrant applied for 
registration as a provider, would have been a reason for denying registration; 
B. The provider has committed a material violation of this chapter or a rule or order 
of the administrator under this chapter; 
C. The provider is insolvent; 
D. The provider or an employee or affiliate of the provider has refused to permit the 
administrator to make an examination authorized by this chapter, failed to comply 
with section 6332, subsection 2, paragraph B within 15 days after request or made a 
material misrepresentation or omission in complying with section 6332, subsection 2, 
paragraph B; or 
E. The provider has not responded within a reasonable time and in an appropriate 
manner to communications from the administrator. 
3. 
Summary suspension. 
If a provider does not comply with section 6322, 
subsection 6 or if the administrator otherwise finds that the public health or safety or 
general welfare requires emergency action, the administrator may order a summary 
suspension of the provider's registration, effective on the date specified in the order. 
4. 
Seizure. 
If the administrator suspends, revokes or denies renewal of the 
registration of a provider, the administrator may seek a court order authorizing seizure of 
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any or all of the money in a trust account required by section 6322, books, records, 
accounts and other property of the provider that are located in this State. 
5. Appeal. If the administrator suspends or revokes a provider's registration, the 
provider may appeal and request a hearing pursuant to the Maine Administrative 
Procedure Act. 
UNIFORM COMMENT 
(This is Section 34 of the Unifonn Debt Management Services Act.) 
1. Subsection (b) gives the power to suspend or revoke a registration. Subsection (e) 
gives recourse under the administrative law of the state to a provider whose registration has 
been suspended or revoked. 
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2. Section 22(e) requires a trust account at all times to have a balance in an amount 
equal to the sum of the balances in each individual's account, and section 22(f) requires a 
monthly reconciliation of the trust account. If money is missing, or in other proper 
circumstances, subsection (c) authorizes the administrator to take summary action. Subsection 
(e) contemplates prompt judicial review. 
3. As with section 32(b)(3) (authorizing seizure of money and records from the bank 
holding a provider'S trust account), subsection (d) does not specify the procedure to be used. 
If other law authorizes ex parte relief, the administrator may seek that relief under this 
subsection. 
§6335. Private enforcement 
1. Unregistered provider. If an individual voids an agreement pursuant to section 
6325, subsection 2, the individual may recover in a civil action all money paid or 
deposited by or on behalf of the individual pursuant to the agreement, except amounts 
paid to creditors, in addition to the recovery under subsection 3, paragraphs C and D. 
2. Unauthorized charges. If an individual voids an agreement pursuant to section 
6325, subsection 1, the individual may recover in a civil action 3 times the total amount 
of the fees, charges, money and payments made by the individual to the provider, in 
addition to the recovery under subsection 3, paragraph D. 
3. Recovery. Subject to subsection 4, an individual with respect to whom a provider 
violates this chapter may recover in a civil action from the provider and any person that 
caused the violation: 
A. Compensatory damages for injury, including noneconomic injury, caused by the 
violation; 
B. Except as otherwise provided in subsection 4 and subject to adjustment of the 
dollar amount pursuant to section 6332, subsection 6, with respect to a violation of 
section 6317, 6319 to 6324, 6327 or section 6328, subsection 1, 2 or 4, the greater of 
the amount recoverable under paragraph A or $5,000; 
C. Punitive damages; and 
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D. Reasonable attorney's fees and costs. 
4. Class action. In a class action, except for a violation of section 6328, subsection 
1, paragraph E, the minimum damages provided in subsection 3, paragraph B do not 
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5. Additional remedy. In addition to the remedy available under subsection 3, if a 
provider violates an individual's rights under section 6320, the individual may recover in 
a civil action all money paid or deposited by or on behalf of the individual pursuant to the 
agreement, except for amounts paid to creditors. 
6. Good faith error. A provider is not liable under this section for a violation of this 
chapter if the provider proves that the violation was not intentional and resulted from a 
good faith error, notwithstanding the maintenance of procedures reasonably adapted to 
avoid the error. An error of legal judgment with respect to a provider's obligations under 
this chapter is not a good faith error. If, in connection with a violation, the provider has 
received more money than authorized by an agreement or this chapter, the defense 
provided by this subsection is not available unless the provider refunds the excess within 
business days oflearning of the violation. 
7. 
Judgment against security. The administrator shall assist an individual in 
enforcing a judgment against the surety bond or other security provided under section 
63130r6314. 
UNIFORM COMMENT 
(This is Section 35 of the Uniform Debt Management Services Act.) 
1. This section specifies the private remedies for an individual with respect to whom 
a provider or other person has violated the Act. More than one subsection may apply to a 
particular violation, and the individual may recover under any of them. If there are multiple 
acts that each violate a different provision of the Act, the individual may recover for the loss 
caused by each of them. 
2. Section 25(b) makes an agreement voidable if the provider is not properly 
registered under this Act. Under subsection (a) the individual may recover all money paid by 
the individual, except for amounts passed on to creditors. This sanction is to disgorge all 
money that the provider otherwise would have earned for its services. If the minimum 
damages under subsection (c)(2) are larger than the amount specified in subsection (a), the 
individual is entitled to the minimum damages of subsection (c)(2) rather than recovery under 
subsection (a). 
3. Section 25(a) permits an individual to void an agreement if a provider exceeds the 
fee caps. Subsection (b) permits the individual to recover treble damages, as well as 
recovering under subsection (c)(3) and (4). The amount to be trebled includes all payments 
made to the provider (or its designee), including amounts that thereafter are forwarded to the 
individual's creditors. If the individual opts for recovery under this subsection, he or she may 
not also recover under subsection (c)(1) or (2). On the other hand, if recovery is larger under 
subsection (c)(2) than under this subsection, the individual recovers the larger amount under 
subsection (c)(2). The individual may choose which subsection to assert . 
The treble damages remedy is available only if the individual voids the agreement. If 
the individual does not void the agreement, recovery is under subsection (c) (actual damages 
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but not less than $5,000). 
4. Subsection (c) provides the basic private remedy for an individual. The language in 
paragraph (1), "damages for injury ... caused by the violation" means that there must be 
some causal connection between the violation and the individual's injury. Thus there is little 
likelihood of a private remedy for a provider's violation of some provisions of the Act, e.g., 
section 29 (failure to notify the administrator that it has been sued). 
On the other hand, for violation of the sections specified in paragraph (2), there is no 
requirement of causation. This means, for example, that an individual may recover the 
minimum damages under paragraph (2) for a provider's failure to make the disclosures 
required by section 17 or to conform its agreement to the requirements of section 19. This 
remedy recognizes that the administrator is not likely to have the resources to redress every 
violation of the Act and enlists the customers of a provider as private attorneys general to 
enforce the Act. The individual is entitled to recovery under paragraph (2) even if the 
individual has not suffered any monetary loss. Alternatively, the individual may recover any 
loss that he or she can prove to have been caused by the violation. 
5. "Compensatory damage" in paragraph (I), which includes recovery for 
noneconomic injury, encompasses emotional distress, humiliation, aggravation, etc. 
6. The minimum damages provision in paragraph (2) applies only to the specified 
violations (prerequisites for a plan, form and contents of an agreement, cancellation of 
agreement, translation of documents, trust account, fee caps, voluntary contributions, periodic 
reports, and certain prohibited acts and practices). For violation of other sections of the Act, 
including failure to register and failure to provide customer service, the aggrieved individual 
may recover actual damages (if any are caused by the violation), punitive damages, or both. 
The administrator, of course, may enforce all sections of the Act. 
7. Paragraph (3) authorizes punitive damages. The courts should use the usual 
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standards for determining the appropriateness and amount of punitive damages. Factors 
commonly considered are the seriousness of the violation, previous violations of the violator, 
the deleterious effect of the violation on the public, the net worth of the violator, the 
violator's intent to harm, etc. 
Statutes in some states specify that a portion of an award of punitive damages is to be 
paid to someone other than the successful plaintiff. Paragraph (3) is intended to displace those 
statutes, so that the entire award is paid to the plaintiff. 
8. "Costs" in paragraph (4) encompasses filing fees, jury fees, expert witness fees, 
and everything else that may be taxed as costs against the losing party. In determining the 
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reasonable amount of attorney's fees, the court should use the lodestar approach. It should 
pay particular attention to the purpose of this section, which is to ensure that counsel is 
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available for individuals to enforce their rights under this Act. The award of fees must be 
sufficient to encourage attorneys to take on representation of individuals whose rights under 
this Act have been violated. Often this representation will be on the basis of a contingency 
fee. Consequently, the criteria in section 33(d) for determining a fee award to the 
administrator should serve as a floor for fee awards in private actions, and the amount of the 
recovery should play little or no role in determining the amount of the fees. See, e.g., Jordan 
v. Transnational Motors, Inc., 537 N.W.2d 471 (Mich. App. 1993); Bittner v. Tri-County 
Toyota, Inc., 569 N.E.2d 464 (Ohio 1991). The contingent nature of the attorney's 
compensation or the risk of the litigation may justify enhancement of the award. See Bowers 
v. Transamerica Title Ins. Co., 675 P.2d 193,203-06 (Wash. 1983). 
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9. The prerequisite to recovery under this section is a violation by a provider. But 
subsection (c) does not limit liability to just the provider. Under section 33(a)(2), the 
administrator may obtain relief not only against a provider but also against one who causes a 
provider to violate the Act. Similarly, subsection (c) of this section also authorizes relief 
against a person who is responsible for a provider's violation. 
10. An aggrieved individual may proceed by class action if the prerequisites for class 
actions under the rules of civil procedure are satisfied. The minimum damages provision does 
not apply in a class action unless the provider violates section 28(a)(5), which prohibits a 
provider from initiating a transfer of an individual's money unless the transfer is authorized 
by the Act and the agreement. 
11. Subsection (e) implements the remedy implicit in section 20 when an individual 
exercises the right to cancel: if the agreement complies with sections 19, 20, and 28, the 
individual has only three days to cancel. Upon cancellation, the provider must refund all 
money paid by the individual, as stated in section 20(b). The provider can protect itself 
against any out-of-pocket loss by keeping any such money until the three-day period has 
expired, in which event this subsection imposes no loss on the provider. If, however, the 
provider fails to comply with section 19, 20, or 28, the cancellation period is 30 days, in 
which event cancellation may very well occur after the provider has provided services to the 
individual. This subsection requires refund of all money not already paid to creditors, which 
means that the provider must return any money it has booked for set-up or monthly service 
fees. It thus provides an additional modest incentive for the provider to conform to the 
requirements of sections 19, 20, and 28. In addition to refund of fees and money held in trust, 
the individual is entitled to recovery under subsection (c) for minimum (or other actual) 
damages, punitive damages (if otherwise appropriate), and costs. 
12. A provider has a defense to civil liability under subsection (t) if its violation is a 
result of a bona fide error notwithstanding the maintenance of procedures reasonably adapted 
to prevent the error. This defense is adapted from section 130(c) of the federal Truth-in-
Lending Act, 15 U.S.C. § 1640(c). It should be interpreted in a manner similar to the federal 
statute, as exemplified in Teel v. Thorp Credit Inc., 609 F.2d 1268 (7th Cir. 1979). The 
defense extends to clerical errors and mechanical malfunctions, but not to matters of legal 
judgment concerning the obligations imposed by this Act. E.g., Haynes v. Logan Furniture 
Mart, Inc., 503 F.2d 1161 (7th Cir. 1974). 
For the defense under this subsection to be available to a provider with respect to a 
violation by a person to whom the provider has delegated its duties, the provider must prove 
that the person committed the violation unintentionally, as a result of good-faith error, and 
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notwithstanding the maintenance of procedures reasonably designed to prevent the error. It is 
not enough that the provider's violation was unintentional. The provider is liable under 
section 31 for the violations of its delegee, and the provider is exonerated by this subsection 
only if the delegee's conduct meets the standard ofthis subsection. 
13. If a violation relates to section 23 or 24, regulating permissible charges, the 
provider is not liable if both (a) the violation meets the good-faith error test of subsection (t), 
and (b) the provider refunds the excess portion of the charge within two business days of 
learning of its error. If either ofthese conditions is not met, the provider has no defense under 
this section; in addition, if the first condition is not met, the individual has a right to void the 
agreement under section 25 and recover treble damages under subsection (b) of this section. 
If a provider's violation of section 23 or 24 results from an act or a policy that affects 
more than one individual, the defense is available only if the provider makes refunds to all of 
them within two days of learning of the violation as to one individual. Once informed of the 
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violation by a single individual, the provider has learned of the violation as to all individuals 
who were overcharged in the same way. 
§6336. Violation of Maine Unfair Trade Practices Act 
If an act or practice of a provider violates both this chapter and the Maine Unfair 
Trade Practices Act, an individual may not recover under both for the same act or 
practice. 
UNIFORM COMMENT 
(This is Section 36 of the Uniform Debt Management Services Act.) 
Conduct that violates this Act also may violate a deceptive practices statute, and this 
section prohibits recovery under multiple statutes for the same conduct. The aggrieved 
individual may assert both statutes but may recover only under one. 
§6337. Statute of limitations 
1. Administrative and iudicial proceedings. An action or proceeding brought 
pursuant to section 6333, subsection 1, 2 or 3 must be commenced within 4 years after the 
conduct that is the basis of the administrator's complaint. 
2. Private enforcement. An action brought pursuant to section 6335 must be 
commenced within 2 years after the latest of: 
A. The individual's last transmission of money to a provider; 
B. The individual's last transmission of money to a creditor at the direction of the 
provider; 
C. The provider's last disbursement to a creditor of the individual; 
D. 
The provider's last accounting to the individual pursuant to section 6327, 
subsection 1; 
E. 
The date on which the individual discovered or reasonably should have 
discovered the facts giving rise to the individual's claim; or 
F. 
Termination of actions or proceedings by the administrator with respect to a 
violation of the chapter. 
3. Tolling of period. The period prescribed in subsection 2, paragraph E is tolled 
during any period during which the provider or, if different, the defendant has materially 
and willfully misrepresented information required by this chapter to be disclosed to the 
individual, if the information so misrepresented is material to the establishment of the 
liability of the defendant under this chapter. 
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UNIFORM COMMENT 
(This is Section 37 of the Unifonn Debt Management Services Act.) 
The four-year limit of subsection (a) applies to administrative and judicial 
proceedings under section 33(a). It also applies to actions under section 33(b), as to which the 
actionable conduct is the violation of the final order, not the conduct that gave rise to the final 
order. 
§6338. Uniformity of application and construction 
In applying and construing this chapter, consideration must be given to the need to 
promote unifonnity of the law with respect to its subject matter among states that enact it. 
§6339. Relation to Electronic Signatures in Global and National Commerce Act 
This chapter modifies, limits and supersedes the federal Electronic Signatures in 
Global and National Commerce Act, but does not modify, limit or supersede Section 
ICc) of that act or authorize electronic delivery of any of the notices described In 
Section 1 03(b) of that act. 
§6340. Transitional provisions; application to existing transactions 
Transactions entered into before this chapter takes effect and the rights, duties and 
interests resulting from them may be completed, tenninated or enforced as required or 
pennitted by a law amended, repealed or modified by this chapter as though the 
amendment. repeal or modification had not occurred. 
UNIFORM COMMENT 
(This is Section 40 of the Unifonn Debt Management Services Act.) 
1. "Law" includes statutes, administrative rules, and judicial decisions. A provider 
may continue operating under prior law as to transactions in process when the Act becomes 
effective. It may be burdensome for a provider to comply with prior law for some of its 
customers and with this Act for others of its customers. Hence, the language of this 
subsection, "may be," penn its a provider to comply with this Act even with respect to 
transactions entered before this Act takes effect. 
2. For this section to save a transaction in progress when the Act takes effect, the 
transaction must have been pennitted by prior law. If prior law prohibits a transaction, 
nothing in this section validates it. 
Sec. 4. Effective date. This Act takes effect October 1,2010. 
SUMMARY 
This bill repeals the existing law governing debt management services and enacts in 
its stead the Unifonn Debt Management Services Act.