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§ 2552. Prerequisites for providing debt settlement services

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 63 P.S. Professions and Occupations (State Licensed)Effective: January 1, 2015

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 63 P.S. Professions and Occupations (State Licensed) (Refs & Annos)
Chapter 40. Debt Settlement Services Act
Chapter 5. Provider Responsibilities
Effective: January 1, 2015
63 P.S. § 2552
§ 2552. Prerequisites for providing debt settlement services
Currentness
(a) Disclosure.--Before an individual consents to pay for goods or services offered by a provider, the provider must disclose truthfully, in a clear and conspicuous manner in a written agreement signed by the provider and the individual for whom debt settlement services will be rendered, the following material information:
(1) All of the following:
(i) The amount of time necessary to achieve the represented results.
(ii) The extent to which the debt settlement services may include a settlement offer to any of the individual's creditors or debt collectors, including the time by which the provider will make a bona fide settlement offer to each of the individual's creditors or debt collectors.
(iii) The cost to the individual for providing debt settlement services and the method by which any fee for consideration for settling each individual debt will be calculated.
(iv) The total estimated program costs if the individual meets all program obligations and completes the program.
(2) To the extent that any aspect of the debt settlement service relies upon or results in the customer's failure to make timely payments to creditors or debt collectors, that the use of debt settlement services will likely affect the individual's creditworthiness, may result in the individual being subject to collections or sued by creditors or debt collectors and may increase the amount of money the individual owes due to the accrual of fees and interest.
(3) If an aspect of the debt settlement services relies upon or results in the individual's failure to make timely payments to creditors or debt collectors, that the use of the debt settlement services will likely adversely affect the individual's creditworthiness, may result in the individual being subject to collection actions or sued by creditors or debt collectors and may increase the amount of money the individual owes due to the accrual of fees and interest.
(4) If the provider requests or requires the individual to place funds in an account at a bank, that the individual owns the funds held in the account, the individual may withdraw from the debt settlement services at any time without penalty and, if the individual withdraws, that the individual shall receive all funds in the account, other than funds earned by the provider, within seven business days of the individual's request.
(5) That the individual may terminate the debt settlement services agreement upon three days' written notice to the debt settlement provider.
(6) That the amount of a debt that is forgiven or canceled by a creditor may be considered income of the individual for tax purposes.
(b) Prohibition.--A provider may not misrepresent, directly or by implication, any material aspect of any debt settlement services, including:
(1) The amount of money or the percentage of the debt amount that an individual may save by using the service.
(2) The amount of time necessary to achieve the represented result.
(3) The amount of money or the percentage of each outstanding debt that the individual shall accumulate before the provider will initiate attempts with the individual's creditors or debt collectors or make a bona fide offer to negotiate, settle or modify the terms of the individual's debt.
(4) The effect of the service on the individual's creditworthiness.
(5) The effect of the service on collection efforts of the individual's creditors or debt collectors.
(6) The percentage or number of individuals who attain the represented results.
(7) Whether debt settlement services are offered or provided by a nonprofit entity.
(8) The total estimated program costs if the individual meets all program obligations and completes the program.
(c) Payment or consideration.--A provider may not receive payment of a fee or consideration for debt settlement services unless:
(1) the provider has renegotiated, settled, reduced or otherwise altered the terms of at least one debt under a debt settlement plan;
(2) the individual has made at least one payment under the debt settlement plan; and
(3) the fee or consideration for settling each individual debt enrolled in a debt settlement plan meets one of the following:
(i) Bears the same proportional relationship to the total fee for settling the entire debt balance as the individual renegotiated, settled, reduced or otherwise altered debt amount bears to the entire debt amount. For purposes of this subparagraph, the individual debt amount and the entire debt amount shall be amounts owed at the time the debt was enrolled in the debt settlement service.
(ii) Is a percentage of the amount saved as a result of the settlement. The percentage charged may not change from one individual renegotiated, settled, reduced or otherwise altered debt to another. For purposes of this subparagraph, the amount saved shall be the difference between the amount owed at the time the debt was enrolled in the debt settlement service and the amount actually paid to satisfy the debt.
(d) Construction.--Nothing under this section shall prohibit requesting or requiring the individual to place funds in an account to be used for the provider's fees for payments to creditors or debt collectors in connection with the renegotiation, settlement, reduction or other alteration of the terms of payment or other terms of debt, if:
(1) The funds are held in an account at a bank solely in the name of the client.
(2) The individual owns the funds held in the account and is paid any accrued interest on the account, if any is earned.
(3) If the provider does not administer the account, the entity administering the account is not owned, controlled by or affiliated with the provider.
(4) The entity administering the account does not give or accept any money or other compensation in exchange for referrals of business by the provider.
(5) The individual may withdraw from the debt settlement services at any time without penalty and shall receive all funds in the account, other than funds earned by the provider in compliance with this section, within seven days of the individual's request.
(e) Nonlicensed provider.--If a provider is not licensed as required under this act when an individual assents to an agreement, the agreement shall be voidable by the individual.

Credits

2014, July 9, P.L. 1022, No. 118, § 502, effective Jan. 1, 2015.
63 P.S. § 2552, PA ST 63 P.S. § 2552
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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