Iowa Debt Management
Title XIII Commerce
Subtitle 2 Financial Institutions
Chapter 533A Debt Managment
As used in this chapter:
1. "Allowable cost" means an actual, identifiable third-party expense incurred by the licensee on behalf of a specific debtor, such as postage and long distance telephone charges, that may be itemized and charged against the debtor for payment.
2. "Creditor" means a person for whose benefit moneys are being collected and distributed by licensees.
3. "Debt management" means the planning and management of the financial affairs of a debtor and the receiving therefrom of money or evidences thereof for the purpose of distributing the same to the debtor's creditors in payment or partial payment of the debtor's obligations for a fee.
4. "Debtor" means any natural person.
5. "Donation" means money given by the debtor to a licensee as a gift for debt management and outside of the debt management contract.
6. "Fee" means the moneys paid by the debtor to the licensee as payment for debt management and shall not include money paid to the licensee or held by the licensee for distribution to a creditor, allowable costs, a distribution to the debtor as a refund, or a donation.
7. "Gratuitous debt-management service" means debt management without charging a fee.
8. "Licensee" means any person licensed under this chapter.
9. "Natural person" means an individual who is not an association, joint venture, or joint stock company, partnership, limited partnership, business corporation, nonprofit corporation, other business entity, or any group of individuals or business entities, however organized.
10. "Office" means each location by street number, building number, city, and state where any person engages in debt management.
11. "Person" means an individual, an association, joint venture or joint stock company, partnership, limited partnership, business corporation, nonprofit corporation, or any other group of individuals however organized.
12. "Superintendent" means the superintendent of banking.
1. A person shall not engage in the business of debt management in this state without a license as provided for in this chapter unless exempt under subsection 2. A person engages in the business of debt management in this state if the person solicits to provide, or enters into a contract with one or more debtors to provide debt management to a debtor who resides in this state.
2. The following persons, including employees of such persons, shall not be required to be licensed when engaged in the regular course of their respective businesses and professions:
a. Attorneys at law.
b. Banks, savings and loan associations, credit unions, mortgage bankers and mortgage brokers licensed or registered under chapter 535B , insurance companies and similar fiduciaries, regulated loan companies licensed under chapter 536 , and industrial loan companies licensed under chapter 536A , authorized and admitted to transact business in this state and performing credit and financial adjusting in the regular course of their principal business, or while performing an escrow function.
c. Abstract companies, while performing an escrow function.
d. Employees of licensees under this chapter.
e. Judicial officers or others acting under court orders.
f. Nonprofit religious, fraternal, or cooperative organizations offering to debtors gratuitous debt-management service.
g. Those persons whose principal business is the origination of first mortgage loans on real estate for their own portfolios or for sale to institutional investors.
3. The application for a license shall be in the form prescribed by the superintendent. The application shall contain all of the following:
a. The name of the applicant.
b. If the applicant is not a natural person, the type of business entity of the applicant and the date the entity was organized.
c. The address where the business is to be conducted, including information as to any branch office of the applicant.
d. The name and resident address of the applicant's owner or partners, or, if a corporation, association, or agency, of the members, shareholders, directors, trustees, principal officers, managers, and agents. If the applicant is not a natural person, a copy of the legal documents creating the applicant shall be filed with the application.
e. Other pertinent information as the superintendent may require, including a credit report.
4. Each application shall be accompanied by a bond to be approved by the superintendent in favor of the people of the state of Iowa in the penal sum of twenty-five thousand dollars for each office, and conditioned that the obligor will not violate any law pertaining to such business and upon the faithful accounting of all moneys collected upon accounts entrusted to such person engaged in debt management, and their employees and agents for the purpose of indemnifying debtors for loss resulting from conduct prohibited by this chapter. The aggregate liability of the surety to all debtors doing business with the office for which the bond is filed shall, in no event, exceed the penal sum of such bond. The surety on the bond shall have the right to cancel such bond upon giving thirty days' notice to the superintendent and thereafter shall be relieved of liability for any breach of condition occurring after the effective date of the cancellation. A person shall not engage in the business of debt management until a good and sufficient bond is filed in accordance with the provisions of this chapter.
5. Each applicant shall furnish with the application a copy of the contract the applicant proposes to use between the applicant and the debtor, which shall contain a schedule of fees to be charged the debtor for the applicant's services.
6. At the time of making the application the applicant shall pay to the superintendent the sum of two hundred fifty dollars as a license fee for each of the applicant's offices and an investigation fee in the sum of one hundred dollars. A separate application shall be made for each office maintained by the applicant.
1. Upon the filing of each application and the payment of the fees, the superintendent shall conduct an investigation of the facts concerning the application and the requirements provided in subsection 3.
2. The superintendent shall grant or deny each application for a license within sixty days from the date that the application and the required fee are filed and paid, unless the period is extended by written agreement between the applicant and the superintendent.
3. a. The superintendent shall enter an order granting the application, and issue and deliver a license to the applicant if the superintendent finds that both of the following are satisfied:
(1) The experience, financial responsibility, character, and general fitness of the applicant is sufficient as to command the confidence of the public and to warrant belief that the business will be operated lawfully, honestly, fairly, and efficiently within the purposes of this chapter.
(2) The applicant has not been convicted of or pled guilty to a felony or an indictable misdemeanor for financial gain, or has not had a record of having defaulted in payment of money collected for others, including the discharge of such debts through bankruptcy proceedings.
b. If the applicant is not a natural person, this subsection shall apply to the owners, partners, members, shareholders, officers, directors, and managers of the applicant.
4. If the applicant has, at the time of the application, a license for an office located within ten miles of the location of the office named in the application, a license shall not be issued unless the superintendent finds that public convenience will be served by the issuance of the license.
5. A license shall not be transferable or assignable.
6. If the superintendent finds the applicant not qualified under subsection 3, the superintendent shall enter an order denying the application and notify the applicant of the denial, returning the license fee. Within fifteen days after the entry of such order, the superintendent shall prepare written findings and shall deliver a copy to the applicant.
The license issued under this chapter shall expire on July 1 next following its issuance unless sooner surrendered, revoked or suspended, but may be renewed as provided in this chapter.
1. To continue in the business of debt management, each licensee shall apply on or before June 1 to the superintendent for renewal of its license. The superintendent may assess a late fee of ten dollars per day for applications submitted and accepted for processing after June 1.
2. The renewal application shall be on the form prescribed by the superintendent and shall be accompanied by a fee of two hundred fifty dollars. A separate renewal application shall be made for each office maintained by the applicant.
1. The prior written approval of the superintendent is required whenever a change in the control of a licensee is proposed. For purposes of this section, "control" in the case of a corporation means direct or indirect ownership, or the right to control, ten percent or more of the voting shares of the corporation, or the ability of a person to elect a majority of the directors or otherwise effect a change in policy. "Control" in the case of any other entity means the principals of the organization whether active or passive. The superintendent may require information deemed necessary to determine whether a new application is required. When requesting approval, the person shall submit a fee of one hundred dollars to the superintendent.
2. A licensee shall notify the superintendent and submit a fee of twenty-five dollars per license to the superintendent thirty days in advance of the effective date of any of the following:
a. A change in the name of the licensee.
b. A change in the address where the business is conducted.
1. No licensee shall transact business until it shall have first appointed in writing the superintendent as agent of the licensee for service of process in this state. Service upon the superintendent or, in the superintendent's absence, any employee in charge of the superintendent's office, shall be of the same legal force and validity as if served upon any licensee under this chapter.
2. Whenever lawful process against any licensee shall be served upon the superintendent, two copies shall be furnished and the superintendent shall forthwith forward a copy of the process served on the superintendent, by certified mail, postpaid and directed to the licensee. For each service of process the sum of two dollars shall be collected, which shall be paid by the plaintiff at the time of such service, the same to be recovered by the plaintiff as part of the taxable costs, if the plaintiff prevails in the suit.
1. The superintendent may revoke or suspend any license issued or applied for under this chapter for the following causes:
a. Conviction of a felony or of an indictable misdemeanor for financial gain.
b. For intentionally violating any of the provisions of this chapter.
c. For fraud or deceit in procuring the issuance of a license or renewal under this chapter.
d. For indulging in a continuous course of unfair conduct.
e. For insolvency, bankruptcy, receivership or assignment for the benefit of creditors by a licensee or applicant for a license under this chapter.
2. The denial, revocation or suspension shall be made only upon specific charges in writing, under oath, filed with the superintendent or by the superintendent whereupon a hearing shall be had as to the reasons for any denial, revocation or suspension and a certified copy of the charges shall be served on the licensee or applicant for license not less than ten days prior to the hearing.
1. Each licensee shall make a written contract between the licensee and a debtor and shall immediately and before collecting any fee, furnish the debtor with a true copy of the contract. The contract shall set forth the complete list of creditors who are to receive payments under the contract, the total charges agreed upon for the services of the licensee, a statement of how the charges are to be paid, and the beginning and expiration date of the contract. No contract shall extend for a period longer than thirty-six months.
2. Each licensee shall maintain a separate bank trust account in which all payments received from debtors for the benefit of creditors shall be deposited and in which all payments shall remain until a remittance is made to either the debtor or the creditor. Every licensee shall keep, and use in the licensee's business, books, accounts and records which will enable the superintendent to determine whether such licensee is complying with the provisions of this chapter and with the rules and regulations of the superintendent. Every licensee shall preserve such books, accounts and records for at least seven years after making the final entry on any transaction recorded therein.
3. Each licensee shall keep complete and adequate records during the term of the contract and for a period of five years from the date of cancellation or completion of the contract with each debtor, which records shall contain complete information regarding the contract, extensions thereof, payments, disbursements, and charges, which records shall be open to inspection by the superintendent and the superintendent's duly appointed agents during normal business hours.
4. Each licensee shall make remittances to creditors within forty-five days after initial receipt of funds, and thereafter remittances shall be made to creditors within thirty days of receipt, less fees and costs, unless the reasonable payment of one or more of the debtor's obligations requires that such funds be held for a longer period so as to accumulate a sum certain.
5. Each licensee shall, upon request, furnish the debtor a written statement of the debtor's account monthly or a verbal accounting at any time the debtor may request it during normal business hours. A monthly written statement of disbursements made and fees deducted from the debtor's account shall be made to the debtor, whether the debtor requests it or not.
6. A licensee shall not receive any fee unless the licensee has the consent of at least fifty percent of the total number of the creditors listed in the licensee's contract with the debtor, or such a like number of creditors have accepted a distribution of payment. The debtor shall be informed by the licensee of those creditors who have not agreed to the licensee's handling of the account. No licensee shall accept an account unless a written and thorough budget analysis has been performed which indicates that the debtor can meet the requirements determined by the budget analysis.
7. In the event a compromise of a debt is arranged by the licensee with any one or more creditors, the debtor shall have the full benefit of such compromise.
The fee of the licensee charged to the debtor shall be agreed upon in advance and stated in the contract and provision for settlement in case of cancellation or prepayment shall also be clearly stated in the contract. The fee of the licensee charged to the debtor shall not exceed fifteen percent of any payment made by the debtor and distributed to the creditors pursuant to the contract. In case of total payment of the contract before the contract period has expired, the licensee shall be entitled only to a fee of no more than three percent of the final payment.
A donation shall not be charged to a debtor or creditor, deducted from a payment to a creditor, deducted from the debtor's account, or from payments made to the licensee pursuant to the debt management contract. If a licensee requests a donation from a debtor, the licensee must clearly indicate that any donation is voluntary and not a condition or requirement for providing debt management.
1. The superintendent may examine the condition and affairs of a licensee. In connection with any examination, the superintendent may examine on oath any licensee, and any director, officer, employee, customer, creditor, or stockholder of a licensee concerning the affairs and business of the licensee. The superintendent shall ascertain whether the licensee transacts its business in the manner prescribed by the law and applicable rules. The licensee shall pay the cost of the examination as determined by the superintendent based on the actual cost of the operation of the finance bureau of the banking division of the department of commerce, including the proportionate share of the administrative expenses in the operation of the banking division attributable to the finance bureau, as determined by the superintendent, incurred in the discharge of duties imposed upon the superintendent by this chapter. Failure to pay the examination fee within thirty days of receipt of demand from the superintendent shall subject the licensee to a late fee of up to five percent per day of the amount of the examination fee for each day the payment is delinquent.
2. In the investigation of alleged violations of this chapter, the superintendent may compel the attendance of any person or the production of any books, accounts, records and files, and may examine under oath all persons in attendance.
It shall be unlawful and a violation of this chapter for the holder of any license issued under the terms and provisions hereto:
1. To purchase from a creditor any obligation of a debtor.
2. To operate as a collection agent and as a licensee as to the same debtor's account without first disclosing in writing such fact to both the debtor and creditor.
3. To execute any contract or agreement to be signed by the debtor unless the contract or agreement is fully and completely filled in and finished.
4. To receive or charge any fee in the form of a promissory note or other promise to pay, or receive or accept any mortgage or other security for any fee, both as to real or personal property.
5. To pay any bonus or other consideration to any individual, agency, partnership, unincorporated association or corporation for the referral of a debtor to the licensee's business, or to accept or receive any bonus, commission or other consideration for referring any debtor to any individual, partnership, unincorporated association, agency or corporation for any reason.
6. To advertise the licensee's services, display, distribute, broadcast or televise or permit to be displayed, advertised, distributed, broadcast or televised the licensee's services in any manner inconsistent with the law.
The superintendent may adopt administrative rules pursuant to chapter 17A to administer and enforce the provisions of this chapter.
It shall be unlawful for a person to engage in the business of debt management without first obtaining a license as required by this chapter. Any person or any owner, partner, member, officer, director, employee, agent, or representative thereof who shall willfully or knowingly engage in the business of debt management without the license required by this chapter shall be guilty of a serious misdemeanor.
All moneys received by the superintendent from fees, licenses and examinations pursuant to this chapter shall be deposited by the superintendent with the treasurer of state.
Judicial review of actions of the superintendent pursuant to sections 533A.3 and 533A.7 may be sought in accordance with the terms of the Iowa administrative procedure Act, chapter 17A.
IA Iowa Official State Statutes
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