On February 11, 2021, North Carolina State Representatives Julia Howard, Jason Saine, Michael Wray, and John Skoza introduced House Bill 76 (“H.B. 76” or “Bill”), which recodifies Article 56 of Chapter 14 of the General Statutes as an Act to Modernize and Expand the Prohibition of Debt Settlement (“Act”). H.B. 76 has been filed with the House of Representatives Principal Clerk, where it will then be assigned to a House committee. The House committee must vote favorably on the bill to proceed through North Carolina’s legislative process.
H.B. 76 seeks to amend North Carolina’s debt adjusting article to prohibit all debt settlement services in the state generally, making it a Class 2 misdemeanor to engage in such services. The Bill broadens the definition of “debt settlement” to include any business that for consideration acts “as an intermediary between a debtor and one or more of the debtor’s creditors for the purpose of reducing, settling, or altering the terms of the payment of any debt of the debtor.” This definition would seem to exclude frontend debt settlement companies (“DSCs”). However, this Bill would allow an exception for DSCs who provide “credit counseling, education, and debt management services to debtors” and follow a series of other guidelines as established by the Bill.
We will continue to monitor H.B. 76 and update you on its trajectory through the North Carolina Legislature.