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IC 28-1-29-1
Definitions
Sec. 1. The following words, when used in this chapter, shall have
the meaning ascribed to them unless the context clearly requires a
different meaning:
(1) "Person" includes individuals, partnerships, associations,
limited liability company, and corporations.
(2) "Budget service company" is any person doing business as
a budget counseling, credit counseling, debt management, or
debt pooling service or holding himself out, by words of similar
import, as providing services to debtors in the management of
their finances and debts, and contracting with the debtor for a
fee to receive from the debtor and disburse money or anything
of value. "Budget service company" includes an entity that
simply holds any check, personal check, money order, personal
money order, draft, or any other instrument for the transmission
of money.
(3) "License" means a license issued under the provisions of
this chapter.
(4) "Licensee" means any person to whom a license has been
issued pursuant to the provisions of this chapter.
(5) "Contract debtor" means a debtor who has entered into a
contract with a licensee.
(6) "Debt" means an obligation arising out of personal, family,
or household use.
(7) "Debtor" means an individual whose principal debts and
obligations arise out of personal, family, or household use and
shall not apply to persons whose principal indebtedness arises
out of business purpose transactions.
(8) "Department" means the members of the department of
financial institutions.
(9) "Finances" means a savings deposit that is:
(A) made on behalf of a contract debtor;
(B) owned and controlled exclusively by the contract debtor
and not a licensee who has a power of attorney of the
contract debtor; and
(C) placed in a bank or savings institution chartered by the
state or federal government.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.14-1992, SEC.107; P.L.42-1993, SEC.46;
P.L.196-1996, SEC.1.
IC 28-1-29-2
Administration of chapter
Sec. 2. The department shall adopt such rules and regulations as
it deems advisable for the administration of this chapter, and to
provide such forms and procedures as it determines to be necessary
to carry out the provisions of such chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.47.
IC 28-1-29-3
Licensing; persons operating in Indiana; evidence of compliance;
fees; violations
Sec. 3. (a) No person shall operate a budget service company in
Indiana without having obtained a license from the department. For
purposes of this section, a person is operating in Indiana if:
(1) the person or any of the person's employees or agents are
located in Indiana; or
(2) the person:
(A) contracts with debtors who are residents of Indiana; or
(B) solicits business from residents of Indiana by
advertisements or other communications sent or delivered
through any of the following means:
(i) Mail.
(ii) Personal delivery.
(iii) Telephone.
(iv) Radio.
(v) Television.
(vi) The Internet or other electronic communications.
(vii) Any other means of communication.
(b) The director may request evidence of compliance with this
section at:
(1) the time of application;
(2) the time of renewal of a license; or
(3) any other time considered necessary by the director.
(c) For purposes of subsection (b), evidence of compliance with
this section may include:
(1) criminal background checks, including a national criminal
history check by the Federal Bureau of Investigation;
(2) credit histories; and
(3) other background checks considered necessary by the
director.
(d) The fee for a license or renewal shall be fixed by the
department under IC 28-11-3-5 and shall be nonrefundable. A
licensee failing to renew annually shall be required to pay a fee fixed
by the department under IC 28-11-3-5 for a new application.
(e) If a person knowingly acts as a budget service company in
violation of this chapter, any agreement the person has made under
this chapter is void and the debtor under the agreement is not
obligated to pay any fees. If the debtor has paid any amounts to the
person, the debtor, or the department on behalf of the debtor, may
recover the payment from the person that violated this section.
(f) A license issued under this section is not assignable or
transferable.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.48; P.L.172-1997, SEC.18;
P.L.63-2001, SEC.12 and P.L.134-2001, SEC.13; P.L.10-2006,
SEC.33 and P.L.57-2006, SEC.33; P.L.213-2007, SEC.44;
P.L.217-2007, SEC.42.
IC 28-1-29-4
Denial, suspension, or revocation of license; grounds; procedure
Sec. 4. (a) The department may revoke or suspend any license
issued under this chapter for the following causes:
(1) Indictment for, conviction of, or a plea of guilty or nolo
contendere to a felony involving fraud, deceit, or
misrepresentation under the laws of Indiana or any other
jurisdiction.
(2) Violation of any of the provisions of this chapter.
(3) Fraud or deceit in procuring the issuance of a license or
renewal under this chapter.
(4) Indulging in a continuous course of unfair conduct.
(5) Insolvency, bankruptcy, receivership, or assignment for the
benefit of creditors by a licensee.
(6) Licensee lending money to any debtor that has subscribed
to the licensee's services.
(7) Except as provided in subsection (c), offering to pay or give
any cash, fee, gift, bonus, premiums, reward, or other
compensation to any person for referring any prospective
customer to the licensee.
(8) Except as provided in subsection (d), receiving any cash,
fee, gift, bonus, premium, reward, or other compensation from
any person other than the contract debtor in connection with his
activities as a licensee.
(9) Licensee requiring a debtor to purchase or agree to purchase
a policy of insurance from which licensee receives a fee or
other remuneration.
(10) If the licensee violates any reasonable rule or regulation
made by the department under and within the authority of this
chapter.
(11) Misleading advertising or representing that the licensee can
provide protection from legal recourse or suits of creditors.
(b) Except as provided in section 4.1 of this chapter, the denial,
revocation, or suspension shall be made only after specific charges
have been filed in writing, under oath, with the department or by the
department, whereupon a hearing shall be had as to the reasons for
such denial, revocation, or suspension and a certified copy of the
charges shall be served on the licensee or the applicant for license
not less than ten (10) days prior to the hearing.
(c) Notwithstanding subsection (a)(7), a licensee may reduce the
fees of a contract debtor who is a client of the licensee if the contract
debtor refers a prospective customer to the licensee.
(d) Notwithstanding subsection (a)(8), a licensee may receive a
fair share creditor fee, based on disbursements made to the creditor,
from a debtor's creditors. If any creditor refuses to pay the fair share
creditor fee, the creditor must still be included in the contract
debtor's payment plan.
(e) If the director of the department:
(1) has just cause to believe an emergency exists from which it
is necessary to protect the interests of the public; or
(2) determines that the license was obtained for the benefit of,
or on behalf of, a person who does not qualify for a license;
the director may proceed with the revocation of the license under
IC 4-21.5-3-6.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.49; P.L.176-1996, SEC.15;
P.L.196-1996, SEC.2; P.L.80-1998, SEC.10; P.L.213-2007, SEC.45;
P.L.217-2007, SEC.43.
IC 28-1-29-4.1
Failure to file renewal form or pay renewal fee
Sec. 4.1. (a) A license issued by the department under this chapter
shall be revoked by the department if the person fails to:
(1) file any renewal form required by the department; or
(2) pay any license renewal fee described under section 3 of this
chapter;
for a period of at least two (2) years.
(b) A person whose license is revoked under this section may:
(1) pay all delinquent fees and apply for a new license; or
(2) appeal the revocation to the department for an
administrative review under IC 4-21.5-3. Pending the decision
resulting from the hearing under IC 4-21.5-3 concerning the
license revocation, the license remains in force.
As added by P.L.176-1996, SEC.16.
IC 28-1-29-4.5
Collection agencies or process servers; licenses; restriction
Sec. 4.5. After August 31, 1981, the department may not issue a
license to any person who is an employee of, owner of, or affiliated
in any way with a collection agency or a process serving business.
Any person who was granted a license before September 1, 1981, is
not affected by the restriction imposed in this section.
As added by Acts 1981, P.L.256, SEC.1. Amended by P.L.42-1993,
SEC.50.
IC 28-1-29-4.6
Repealed
(Repealed by P.L.196-1996, SEC.5.)
IC 28-1-29-5
License application; findings by department; felonies involving
fraud, deceit, or misrepresentation; persons not qualifying for
license; hearing
Sec. 5. (a) Every person doing business as a budget service
company shall make application to the department for a license to
engage in such business. Such application shall be in the form
prescribed by the department and shall contain such information as
the department may require.
(b) The department may not issue a license unless the department
finds that the financial responsibility, character, and fitness of:
(1) the applicant; and
(2) the:
(A) members of the applicant, if the applicant is a
partnership or association; or
(B) officers and directors of the applicant, if the applicant is
a corporation;
warrant belief that the business will be operated honestly and fairly
under this article. The department is entitled to request evidence of
an applicant's financial responsibility, character, and fitness.
(c) An application submitted under this section must indicate
whether:
(1) any:
(A) members of the applicant, if the applicant is a
partnership or association; or
(B) officers and directors of the applicant, if the applicant is
a corporation;
are, at the time of the application, under indictment for a felony
involving fraud, deceit, or misrepresentation under the laws of
Indiana or any other jurisdiction; and
(2) any:
(A) members of the applicant, if the applicant is a
partnership or association; or
(B) officers and directors of the applicant, if the applicant is
a corporation;
have been convicted of or pleaded guilty or nolo contendere to
a felony involving fraud, deceit, or misrepresentation under the
laws of Indiana or any other jurisdiction.
(d) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(e) Upon written request, an applicant is entitled to a hearing
under IC 4-21.5 on the question of the qualifications of the applicant
for a license.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.52; P.L.80-1998, SEC.11;
P.L.10-2006, SEC.34 and P.L.57-2006, SEC.34; P.L.213-2007,
SEC.46; P.L.217-2007, SEC.44.
IC 28-1-29-6
Bond
Sec. 6. Each application for a license shall be accompanied by a
bond to the state of Indiana in the sum of twenty-five thousand
dollars ($25,000) with surety to the satisfaction of the department
and be approved as to form by the state's attorney general,
conditioned upon the faithful performance of the rules and
regulations of the department and in compliance with the laws of the
state of Indiana. Said bond shall also indemnify any person damaged
by failure on the part of the licensee to conduct the business in
accordance with the provisions of this chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1981, P.L.256, SEC.3; P.L.42-1993, SEC.53.
IC 28-1-29-7
Display of license
Sec. 7. When a license has been issued such license shall be
prominently displayed by the licensee in his place of business.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
IC 28-1-29-7.5
Felonies involving fraud, deceit, or misrepresentation; notice to
department
Sec. 7.5. (a) This section applies if, after a person has been issued
a license or renewal license under this chapter, any of the following
apply:
(1) Any:
(A) members of the licensee, if the licensee is a partnership
or association; or
(B) officers and directors of the licensee, if the licensee is a
corporation;
are under indictment for a felony involving fraud, deceit, or
misrepresentation under the laws of Indiana or any other
jurisdiction.
(2) Any:
(A) members of the licensee, if the licensee is a partnership
or association; or
(B) officers and directors of the licensee, if the licensee is a
corporation;
have been convicted of or pleaded guilty or nolo contendere to
a felony involving fraud, deceit, or misrepresentation under the
laws of Indiana or any other jurisdiction.
(b) If this section applies, the licensee shall provide to the
department the information required under section 5(c) of this
chapter:
(1) not later than thirty (30) days after any person described in
subsection (a):
(A) has been put on notice of the indictment; or
(B) has been convicted of or pleaded guilty or nolo
contendere to the felony;
whichever applies; or
(2) if the licensee's next license renewal fee under section 3(c)
of this chapter is due before the date described in subdivision
(1), along with the licensee's next license renewal fee under
section 3(d) of this chapter.
As added by P.L.213-2007, SEC.47; P.L.217-2007, SEC.45.
amount for subsequent fees. Unless approved by the department, the
licensee may not retain in the debtor's trust account, for charges, an
amount greater than one (1) month's fee plus the close-out fee. Any
fee charged by the licensee to the debtor under this section for
services rendered by the licensee, other than the amount pursuant to
subsection (g), is not considered a debt owed by the debtor to the
licensee.
(g) Upon:
(1) cancellation of the contract by a contract debtor; or
(2) termination of payments by a contract debtor;
a licensee may not withhold for the licensee's own benefit, in
addition to the amounts specified in subsection (f), more than one
hundred dollars ($100), which may be accrued as a close-out fee. The
licensee may not charge the contract debtor more than one (1) set up
fee or cancellation fee, or both, unless the contract debtor leaves the
services of the licensee for more than six (6) months.
(h) A licensee may not enter into a contract with a debtor unless
a thorough, written budget analysis of the debtor indicates that the
debtor can reasonably meet the payments required under a proposed
debt program or finance program.
(i) A licensee may not enter into a contract with a contract debtor
for a period longer than twenty-four (24) months.
(j) A licensee may provide services under this chapter in the same
place of business in which another business is operating, or from
which other products or services are sold, if the director issues a
written determination that:
(1) the operation of the other business; or
(2) the sale of other products and services;
from the location in question is not contrary to the best interests of
the licensee's contract debtors.
(k) A licensee without a physical location in Indiana may:
(1) solicit sales of; and
(2) sell;
additional products and services to Indiana residents if the director
issues a written determination that the proposed solicitation or sale
is not contrary to the best interests of contract debtors.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1981, P.L.256, SEC.4; P.L.42-1993, SEC.54;
P.L.196-1996, SEC.3; P.L.63-2001, SEC.13 and P.L.134-2001,
SEC.14; P.L.213-2007, SEC.48; P.L.217-2007, SEC.46.
IC 28-1-29-9
Trust funds; requirements and restrictions
Sec. 9. (a) All funds received by a licensee or the licensee's agent
from and for the purpose of paying bills, invoices, or accounts of a
debtor constitute trust funds owned by and belonging to the person
from whom they were received. All such funds received by a licensee
shall be separated from the funds of the licensee not later than the
end of the same business day following receipt by the licensee. All
such funds shall thereafter be kept separate and apart at all times
from funds belonging to the licensee or any of its officers,
employees, or agents and may be used for no purpose other than
paying bills, invoices, or accounts of said persons. All such trust
funds received at the main or branch offices of a licensee shall be
deposited in a bank or banks in an account or accounts in the name
of the licensee designated .trust account., or by some other
appropriate name indicating that the funds are not the funds of the
licensee or its officers, employees, or agents, on or before the close
of the same banking day following receipt.
(b) Prior to separation and deposit by the licensee, the funds may
only be used by the licensee for the making of change or the cashing
of checks in the normal course of its business. Such funds are not
subject to attachment, levy of execution, or sequestration by order of
court except by an obligor for whom a licensee is acting as an agent
in paying bills, invoices, or accounts.
(c) Each licensee shall make remittances within thirty (30) days
after initial receipt of funds, and thereafter remittances shall be made
within fifteen (15) days of receipt, less fees and costs, unless the
reasonable payment of one (1) or more of the debtor's obligations
requires that the funds be held for a longer period so as to
accumulate a sum certain. For the purpose of this section, the
cancellation fee set forth in section 8(g) of this chapter shall not be
deemed an obligation of the debtor.
(d) At least once every three (3) months the licensee shall render
an accounting to the debtor which must itemize the total amount
received from the debtor, the total amount paid each creditor, the
amount of charges deducted, the amount of fair share fees received
by the licensee from each of the contract debtor's creditors, and any
amount held in reserve. A licensee shall, in addition thereto, render
such an accounting to a debtor within seven (7) days after written
demand, but not more than three (3) per six (6) month period.
(e) Upon the completion or termination of a contract between a
licensee and a contract debtor, the licensee shall mail to the contract
debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the contract debtor; and
(2) listing the name and address of:
(A) each creditor paid in full; and
(B) any creditors remaining unpaid.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.196-1996, SEC.4; P.L.213-2007, SEC.49;
P.L.217-2007, SEC.47.
IC 28-1-29-10
Examination of records; investigations
Sec. 10. The department may examine all books, records, and
accounts of any person doing business as a budget service company
at least once a year. The cost of such examination will be paid by the
company upon a fee basis fixed by the department under
IC 28-11-3-5. The record keeping system of a licensee shall be made
available in Indiana for examination. The department shall determine
the sufficiency of the records and whether the licensee has made the
required information reasonably available. For the purpose of
discovering violations of this chapter and securing information
necessary for the enforcement of this chapter, the department may
investigate:
(1) a licensee; or
(2) a person that the department suspects is operating without
a valid license or in violation of this chapter.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.42-1993, SEC.55; P.L.10-2006, SEC.35 and
P.L.57-2006, SEC.35.
IC 28-1-29-11
Impounding books, records, and accounts
Sec. 11. Upon affidavit of any person, or other information that
the licensee has failed to comply with the provisions of this chapter,
and after a preliminary investigation indicates probable cause that a
violation has occurred, the department shall have authority to
impound such books, records, and accounts as it deems necessary.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by P.L.263-1985, SEC.108; P.L.42-1993, SEC.56.
IC 28-1-29-12
Exemptions from chapter
Sec. 12. This chapter does not apply to any attorney at law
authorized to practice in this state, or to any individual, partnership,
association, limited liability company, or corporation doing business
or operating in this state as a trust company or building and loan
association, licensed lending institution, court appointed receivers,
trustees in bankruptcy, or any not-for-profit corporation providing
the services of a budget service company which does not charge the
debtor any fee for such services, other than fees that are:
(1) incurred and documented by the person in the course of
providing the services, such as fees for postage or fees paid to
a third party; and
(2) bona fide and reasonable, as may be defined by a policy or
rule of the department.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1981, P.L.256, SEC.5; P.L.42-1993, SEC.57;
P.L.213-2007, SEC.50; P.L.217-2007, SEC.48.
IC 28-1-29-13
Violations
Sec. 13. In addition to the revocation provision of section 4 of this
chapter, a person who violates section 3, 5, 6, 8, or 9 of this chapter
commits a Class A misdemeanor, and the license of the licensee shall
be revoked on the date of the conviction of an offense.
(Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10, SEC.6.)
As amended by Acts 1978, P.L.2, SEC.2815; P.L.42-1993, SEC.58.