ND-North Dakota
CHAPTER 13-06
DEBT ADJUSTING
13-06-01. Definitions.
As used in this chapter, the following words and phrases have
the following meaning, unless the context clearly indicates otherwise:
1. "Debt adjusting" means the making of a contract, express or implied, with a debtor
whereby the debtor agrees to pay a certain amount of money or other thing of value
periodically to the person engaged in the debt adjusting business who shall, for a
consideration, distribute the same among certain specified creditors in accordance
with a plan agreed upon. The term includes debt adjustment, budget counseling,
debt management, or debt pooling service or the holding of oneself out, by words of
similar import, as providing services to debtors in the management of their debts and
contracting with the debtor for a fee to:
- Effect the adjustment, compromise, or discharge of any account, note, or other
indebtedness, of the debtor; or
- Receive from the debtor and disburse to the debtor's creditors any money or
other thing of value.
2. "Person" means an individual, corporation, limited liability company, partnership,
trust, firm, association, or other legal entity.
13-06-02. Penalties.
Any person who engages in the business of debt adjusting, unless
exempted under the provisions of section 13-06-03, is guilty of a class A misdemeanor.
13-06-03. Exemptions. This chapter does not apply to:
1. Situations involving debt adjusting incurred incidentally in the lawful practice of law in
this state.
2. Banks and fiduciaries, as duly authorized and admitted to transact business in this
state and performing credit and
financial adjusting service in the regular course of
their principal business.
3. Title insurers and abstract companies, while doing an escrow business.
4. Judicial officers or others acting under court orders.
5. Nonprofit or charitable corporations or associations engaged in debt adjusting.
6. Situations involving debt adjusting incurred incidentally in connection with lawful
practice as a certified public accountant and licensed public accountant.
7. Bona fide trade or mercantile associations in the course of arranging adjustment or
debts with business establishments.
8. Employers for their employees.
9. Any person who, at the request of a debtor, arranges for or makes a loan to the
debtor, and who, at the authorization of the debtor, acts as an adjuster of the
debtor's debts in the disbursement of the proceeds of the loan, without
compensation for services rendered in adjusting the debts.
10. Licensed and bonded collection agencies.
CHAPTER 13-07
CONSUMER CREDIT COUNSELING SERVICES
13-07-01. Consumer credit counseling service - Definition.
As used in this chapter,
"consumer credit counseling service" means a nonprofit corporation engaged in the business of
debt adjusting as defined in section 13-06-01.
13-07-02. Consumer credit counseling service - Contract requirements.
Any
agreement between a consumer credit counseling service and a debtor for counseling and
assistance must be in writing and signed by both parties. The consumer credit counseling
service shall give the debtor a copy of the signed agreement. The agreement must disclose the
total amount that may be retained by the consumer credit counseling service if the contract is
fully performed, the terms upon which the debtor may cancel the contract, and all debts that are
to be managed by the counseling service, including the name of each creditor and the amount of
each debt. A consumer credit counseling service may not enter an agreement with a debtor
unless a thorough written budget analysis indicates that the debtor can reasonably meet the
requirements of the financial adjustment plan and that the debtor will be benefited by the plan.
13-07-03. Consumer credit counseling service - Surety bond or other security.
A
consumer credit counseling service entering an agreement with a debtor who resides in this state
shall file with the attorney general a surety bond or other security in an amount equal to the
largest sum accrued in the service's trust account during the prior year, or five thousand dollars,
whichever is greater. The bond or other security must be payable to the state of North Dakota
and must be acceptable to the attorney general for the use and benefit of debtors making
payments to a consumer credit counseling service and suffering damages caused by the
consumer credit counseling service.
13-07-04. Consumer credit counseling service - Trust accounts.
A consumer credit
counseling service shall deposit in a trust account in a financial institution, within one business
day of receipt, any payments received from or on behalf of a debtor. A debtor's payments must
be identifiable in the trust account. Funds in the trust account may not be commingled with any
other funds. The consumer credit counseling service shall credit any interest accrued as a result
of payments deposited in a trust account to debt management education programs.
13-07-05. Consumer credit counseling service - Accounting records - Availability
of statements.
A consumer credit counseling service shall maintain books, records, and
accounts in a manner that allows the attorney general to determine compliance with the law. A
consumer credit counseling service shall prepare a weekly statement of all receipts and
disbursements, including payments received from or on behalf of a debtor, disbursements made
on behalf of the debtor, fees collected, and funds held in escrow. The consumer credit
counseling service shall make available to each debtor, upon request, a copy of the debtor's
statement of account. All books, records, and accounts must be retained by a consumer credit
counseling service for at least six years after the final entry of any recorded transaction.
13-07-06. Fees - Payments - Cancellation.
A consumer credit counseling service may
charge an origination fee of up to fifty dollars, which may be subtracted from the initial amount
paid by the debtor to the counseling service. The consumer credit counseling service may
withdraw and retain as partial payment of the service's total fee up to fifteen percent of any sum
deposited by the debtor for distribution. The remainder must be disbursed to the listed creditors
in accordance with the parties' agreement. Disbursement must be made within forty-five days
after deposit by the debtor. Before an automatic termination, either party may cancel the
agreement without cause upon giving to the other party thirty days' written notice of an intent to
cancel. In the event of a cancellation, the consumer credit counseling service shall notify the
debtor's creditors within thirty days.
13-07-07. Prohibitions - Investigation - Civil penalty.
A consumer credit counseling
service may not take a confession of judgment or a power of attorney to confess judgment
against the debtor or appear as the debtor in any judicial proceeding. The attorney general may,upon the attorney general's own motion, and shall, upon receipt of a complaint, investigate any
alleged violation of law by a consumer credit counseling service. For that purpose, the attorney
general may subpoena witnesses, administer oaths, take testimony, and require the production
of books, documents, and other records. The attorney general may institute a civil action in the
name of the state in the district court for an injunction prohibiting any practice in violation of this
chapter. The court, upon notice to the defendant of not less than five days, and upon proof that
the defendant has engaged in a practice in violation of this chapter may enjoin the defendant
from engaging in any practice in violation of this chapter. In addition, the court may impose a
civil penalty not to exceed five thousand dollars for each violation of this chapter. The attorney
general may recover costs and disbursements, including the costs of investigation and
reasonable attorney's fees.
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