Kentucky Statutes 380.100 – Agreement for debt adjusting — Contents — Right to confer power of attorney upon debt adjuster — Prohibited provisions
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(1) An agreement for debt adjusting shall: (a) Be in writing;
(b) Be dated and signed by the debt adjuster and the debtor;
(c) Include the name of the debtor and the address where the debtor resides;
(d) Include the name, business address, and telephone number of the debt adjuster;
(e) Be delivered to the debtor immediately upon formation of the agreement.
Delivery of an electronic record occurs when the agreement is made available in a format in which the debtor may retrieve, save, and print the agreement and the debtor is notified that the electronic record is available;
(f) Disclose:
1. The services to be provided;
2. The amount, or method of determining the amount, of all fees, individually itemized, to be paid by the debtor;
3. The schedule of payments to be made by or on behalf of the debtor, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment;
4. Whether a plan provides for regular periodic payments to creditors and, if a plan provides for regular periodic payments to creditors:
a. Each creditor of the debtor to which payment will be made, the amount owed to each creditor, and any concessions the debt adjuster reasonably believes each creditor will offer; and
b. The schedule of expected payments to each creditor, including the amount of each payment and the date on which it will be made;
5. Each creditor that the debt adjuster believes will not participate in the plan and to which the debt adjuster will not direct payment;
6. That the debt adjuster may terminate the agreement for good cause, upon return of unexpended money of the debtor;
7. That the debtor may cancel the agreement as provided in KRS § 380.060;
8. That the debtor may contact the Attorney General with any questions or complaints regarding the debt adjuster;
9. The address, telephone number, and Internet address or Web site of the
Attorney General;
10. That participation in a plan may not prevent litigation, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment, and may not stop efforts to collect a debt from the debtor;
11. That failure to make required minimum payments to creditors may be breaking the terms of agreements with creditors, may lead creditors to increase finance charges and pursue litigation, may be reported to
consumer reporting agencies, and may have an adverse effect on the debtor’s credit report and credit score;
12. The earliest date by which the debt adjuster will contact each creditor to attempt to adjust the debtor’s debts or, for settlement of unsecured debts, the estimated amount of money that shall be accumulated in savings before negotiations may begin; and
13. That fees paid to a debt adjuster will not be used to pay creditors;
(g) Provide that the debtor has a right to terminate the agreement at any time, without penalty or obligation, by giving the debt adjuster written or electronic notice, in which event:
1. The debt adjuster will refund all unexpended money that the debt adjuster or its agent has received from or on behalf of the debtor for the reduction or satisfaction of the individual’s debt; and
2. All powers of attorney granted by the debtor to the debt adjuster are revoked and ineffective;
(h) Provide that the debtor authorizes any financial institution in which the debt adjuster or its agent has established a trust account to disclose to the Attorney General any financial records relating to the trust account; and
(i) Provide that the debt adjuster will notify the debtor within five (5) days after learning of a creditor’s decision to reject or withdraw from a plan. This notice shall include:
1. The identity of the creditor; and
2. The right of the debtor to modify or terminate the agreement.
(2) An agreement may confer on a debt adjuster a power of attorney to negotiate with creditors of the debtor on behalf of the debtor and to settle the debtor’s debt if the amount the debtor will owe after settlement is less than fifty percent (50%) of the amount of the debt prior to settlement. An agreement shall not confer a power of attorney to settle the debtor’s debt if the amount the debtor will owe after settlement is equal to or more than fifty percent (50%) of the amount of the debt prior to settlement. An agreement shall provide that the debt adjuster shall obtain the assent of the debtor prior to settling a debt if the creditor has assented to a settlement for which the amount the debtor will owe after settlement is equal to or more than fifty percent (50%) of the amount of the debt prior to settlement. However, in no event shall an agreement confer on a debt adjuster a power of attorney to negotiate or settle any of the debtor’s debt that is primarily for personal, family, or household use that is secured by a mortgage, deed of trust, other equivalent consensual security interest on residential real property, or collateral that has a mortgage lien interest in residential real property.
(3) An agreement shall not:
(a) Provide for application of the law of any jurisdiction other than the United
States and this state;
(b) Contain a provision that restricts the debtor’s remedies under this chapter or under any other law; or
(c) Contain a provision that:
1. Limits or releases the liability of any person for not performing the agreement or for violating this chapter; or
2. Indemnifies any person for liability arising under the agreement or this chapter.
(4) All rights and obligations specified in paragraphs (g), (h), and (i) of subsection (1) of this section, subsection (2) of this section, subsection (3) of this section, and KRS § 380.060, exist even if not provided in the agreement.
(5) A provision in an agreement which violates paragraphs (g), (h), and (i) of subsection (1) of this section, subsection (2) of this section, or subsection (3) of this section is void.
Effective: July 15, 2010
History: Created 2010 Ky. Acts ch. 86, sec. 11, effective July 15, 2010.
(b) Be dated and signed by the debt adjuster and the debtor;
Terms Used In Kentucky Statutes 380.100
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Attorney: means attorney-at-law. See Kentucky Statutes 446.010
- Credit report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Source: OCC
- Credit Score: A number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report. Source: OCC
- Debt adjuster: means a person engaged in the business of debt adjusting. See Kentucky Statutes 380.010
- Debt adjusting: means doing business in this state in debt adjusting, budget counseling, debt management, debt modification or settlement, foreclosure assistance, or debt pooling service, or holding oneself out as acting or offering or attempting to act as an intermediary between a debtor and his or her creditors for a fee, contribution, or other consideration, or by words of similar import, as providing services to debtors in the management, settlement, modification, or adjustment of their debts, to do any of the following:
(a) Effect the adjustment, compromise, settlement, modification, or discharge of any account, note or other indebtedness of the debtor. See Kentucky Statutes 380.010 - Debtor: means an individual who resides in Kentucky and is indebted to a creditor or creditors, including two (2) or more individuals who are jointly and severally, or jointly or severally, indebted to a creditor or creditors. See Kentucky Statutes 380.010
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes , but is not limited to, individuals, partnerships, associations, corporations, limited liability companies, trusts, and other legal entities. See Kentucky Statutes 380.010
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
(c) Include the name of the debtor and the address where the debtor resides;
(d) Include the name, business address, and telephone number of the debt adjuster;
(e) Be delivered to the debtor immediately upon formation of the agreement.
Delivery of an electronic record occurs when the agreement is made available in a format in which the debtor may retrieve, save, and print the agreement and the debtor is notified that the electronic record is available;
(f) Disclose:
1. The services to be provided;
2. The amount, or method of determining the amount, of all fees, individually itemized, to be paid by the debtor;
3. The schedule of payments to be made by or on behalf of the debtor, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment;
4. Whether a plan provides for regular periodic payments to creditors and, if a plan provides for regular periodic payments to creditors:
a. Each creditor of the debtor to which payment will be made, the amount owed to each creditor, and any concessions the debt adjuster reasonably believes each creditor will offer; and
b. The schedule of expected payments to each creditor, including the amount of each payment and the date on which it will be made;
5. Each creditor that the debt adjuster believes will not participate in the plan and to which the debt adjuster will not direct payment;
6. That the debt adjuster may terminate the agreement for good cause, upon return of unexpended money of the debtor;
7. That the debtor may cancel the agreement as provided in KRS § 380.060;
8. That the debtor may contact the Attorney General with any questions or complaints regarding the debt adjuster;
9. The address, telephone number, and Internet address or Web site of the
Attorney General;
10. That participation in a plan may not prevent litigation, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment, and may not stop efforts to collect a debt from the debtor;
11. That failure to make required minimum payments to creditors may be breaking the terms of agreements with creditors, may lead creditors to increase finance charges and pursue litigation, may be reported to
consumer reporting agencies, and may have an adverse effect on the debtor’s credit report and credit score;
12. The earliest date by which the debt adjuster will contact each creditor to attempt to adjust the debtor’s debts or, for settlement of unsecured debts, the estimated amount of money that shall be accumulated in savings before negotiations may begin; and
13. That fees paid to a debt adjuster will not be used to pay creditors;
(g) Provide that the debtor has a right to terminate the agreement at any time, without penalty or obligation, by giving the debt adjuster written or electronic notice, in which event:
1. The debt adjuster will refund all unexpended money that the debt adjuster or its agent has received from or on behalf of the debtor for the reduction or satisfaction of the individual’s debt; and
2. All powers of attorney granted by the debtor to the debt adjuster are revoked and ineffective;
(h) Provide that the debtor authorizes any financial institution in which the debt adjuster or its agent has established a trust account to disclose to the Attorney General any financial records relating to the trust account; and
(i) Provide that the debt adjuster will notify the debtor within five (5) days after learning of a creditor’s decision to reject or withdraw from a plan. This notice shall include:
1. The identity of the creditor; and
2. The right of the debtor to modify or terminate the agreement.
(2) An agreement may confer on a debt adjuster a power of attorney to negotiate with creditors of the debtor on behalf of the debtor and to settle the debtor’s debt if the amount the debtor will owe after settlement is less than fifty percent (50%) of the amount of the debt prior to settlement. An agreement shall not confer a power of attorney to settle the debtor’s debt if the amount the debtor will owe after settlement is equal to or more than fifty percent (50%) of the amount of the debt prior to settlement. An agreement shall provide that the debt adjuster shall obtain the assent of the debtor prior to settling a debt if the creditor has assented to a settlement for which the amount the debtor will owe after settlement is equal to or more than fifty percent (50%) of the amount of the debt prior to settlement. However, in no event shall an agreement confer on a debt adjuster a power of attorney to negotiate or settle any of the debtor’s debt that is primarily for personal, family, or household use that is secured by a mortgage, deed of trust, other equivalent consensual security interest on residential real property, or collateral that has a mortgage lien interest in residential real property.
(3) An agreement shall not:
(a) Provide for application of the law of any jurisdiction other than the United
States and this state;
(b) Contain a provision that restricts the debtor’s remedies under this chapter or under any other law; or
(c) Contain a provision that:
1. Limits or releases the liability of any person for not performing the agreement or for violating this chapter; or
2. Indemnifies any person for liability arising under the agreement or this chapter.
(4) All rights and obligations specified in paragraphs (g), (h), and (i) of subsection (1) of this section, subsection (2) of this section, subsection (3) of this section, and KRS § 380.060, exist even if not provided in the agreement.
(5) A provision in an agreement which violates paragraphs (g), (h), and (i) of subsection (1) of this section, subsection (2) of this section, or subsection (3) of this section is void.
Effective: July 15, 2010
History: Created 2010 Ky. Acts ch. 86, sec. 11, effective July 15, 2010.