Bipartisan Bill HB 1067, the “Debt Modernization Act,” continues to move through the North Carolina State Legislature at a rapid pace

REGULATORY ALERT

On May 20, 2020, bipartisan Bill HB 1067, the “Debt Modernization Act,” continues to move through the North Carolina State Legislature at a rapid pace. 

On May 12, 2020 HB 1067 was introduced to the North Carolina General Assembly and was referred to the North Carolina Committee on Finance. The Bill’s primary sponsors are, Rep. Wray (D), Rep. Howard (R), and Rep. Saine (R); with a list of secondary sponsors that add to its robust bipartisan support. On May 19th, the Bill was re-referred to the Committee on Rules, Calendar, and Operations of the House. From here, the Bill began to move very quickly through the House. According to the history of the bill provided on the North Carolina General Assembly website, by the end of that same day, on May 19th, HB 1067 had already passed both its second and third readings, passing with an unanimous vote in the House, and it also passed its first reading in the Senate. As of May 20th, HB 1067 is in the North Carolina Senate, and has been “re-referred to the Senate Committee on Finance. If favorable, it will be re-referred to the Rules and Operations Committee of the Senate.” For more information on the timeline of the Bill, click here

A summary of the Bill issued by the Senate Finance Committee on May 20, 2020, in part states the purpose of HB 1067:

  • “Move the prohibition of debt adjusting and debt settlement from the criminal chapter into the civil chapter on consumer protection and would expand the prohibition as follows:
    • Include the conduct of affiliates to determine if debt adjusting or debt settlement occurred
    • Treat any fees paid as consideration, regardless of when paid
    • Make debt adjusting and debt settlement unfair trade practices subject to civil remedies by the Attorney General and consumers under Article 75
    • Void any contracts for debt adjusting or debt settlement
    • Make other administrative and technical changes”

Additionally, HB 1067 includes a list of parties exempt to the new legislation:

  • “Regular full-time employee of a debtor who acts with respect to an employer’s debts
  • Any person acting pursuant to a court order
  • Any person acting pursuant to authority conferred by a law of this State or of the United States
  • Any person who is a creditor of the debtor, including the creditor’s agent, and who acts without cost to the debtor with respect to debts owed to the creditor
  • Any person who at the request of a debtor arranges for or makes a loan to the debtor and engages in debt adjusting in the disbursement of the proceeds of the loan without cost to the debtor for the services rendered in adjusting such debts, except interest and fees authorized by law
  • An attorney licensed to practice in this State and acting within the attorney client relationship with the debtor or creditor, excluding services provided to a debtor by an attorney, or in the name of an attorney, who has entered into any arrangement with a person engaged, directly or through affiliates, in debt adjusting or debt settlement
  • A provider of credit counseling, education, and debt management services if the provider is accredited by an organization that the Commissioner of Banks approves as being independent and nationally recognized for providing accreditation to providers of credit counseling and debt management services. The exception includes other limitations and a fee capped at the cost of administering a debt management plan not to exceed $40 for setup of the debt management plan and 10% of the monthly payment disbursed not to exceed $40 per month.”

If adopted in the current form, HB 1067 would be effective on July 1, 2020 and apply to offenses committed on or after that date. With such enthusiastic bipartisan support, we can expect this HB 1067 to continue to move at this rapid pace through the North Carolina General Assembly. We will continue to keep you abreast of its progress. 

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email