Michigan Laws 451.429 – Prohibited practices
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Terms Used In Michigan Laws 451.429
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Business of debt management: means providing or offering to provide debt management to 1 or more residents of this state. See Michigan Laws 451.412
- Contract: A legal written agreement that becomes binding when signed.
- Creditor: means a person for whose benefit a licensee collects and disperses money. See Michigan Laws 451.412
- Debt management: means the planning and management of the financial affairs of a debtor and the receipt of money from the debtor for distribution to 1 or more of the debtor's creditors in payment or partial payment of the debtor's obligations. See Michigan Laws 451.412
- Debtor: means a person from which money is collected for the benefit of a creditor of the debtor. See Michigan Laws 451.412
- Department: means the department of insurance and financial services. See Michigan Laws 451.412
- Director: means the director of the department or his or her authorized representative. See Michigan Laws 451.412
- Fair share program: means a program in which voluntary contributions are made by some creditors to a licensee based on a percentage of the amount disbursed by the licensee on behalf of a debtor. See Michigan Laws 451.412
- Fraud: Intentional deception resulting in injury to another.
- 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
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- in writing: shall be construed to include printing, engraving, and lithographing; except that if the written signature of a person is required by law, the signature shall be the proper handwriting of the person or, if the person is unable to write, the person's proper mark, which may be, unless otherwise expressly prohibited by law, a clear and classifiable fingerprint of the person made with ink or another substance. See Michigan Laws 8.3q
- Licensee: means a person that is licensed, or is required to be licensed, under this act to perform debt management services and is located inside or outside the boundaries of this state. See Michigan Laws 451.412
- Locator service: means a telephone service that automatically connects callers to a network of member service providers, based on geographic location or another parameter. See Michigan Laws 451.412
- 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.
- Office: means each location, described by street name, building number, city, and state, where a person engages in the business of debt management. See Michigan Laws 451.412
- Person: means an individual, corporation, partnership, association, joint stock company, trust if the interests of the beneficiaries are evidenced by a security, limited liability company, or other legal entity. See Michigan Laws 451.412
- Personal property: All property that is not real property.
- 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
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
A licensee shall not do any of the following:
(a) Purchase from a creditor any obligation of a debtor.
(b) Execute a contract or agreement to be signed by the debtor unless the contract or agreement is fully and completely filled in and finished.
(c) Lend money or credit except under a plan approved by the department.
(d) Take a confession of judgment or power of attorney to confess judgment against the debtor or appear as the debtor in a judicial proceeding.
(e) Receive or charge a fee in the form of a promissory note or other promise to pay, or receive or accept a mortgage or other security in real or personal property for a fee, or both.
(f) Concurrently with the signing of the contract or as a part of the contract or as part of the application for the contract, take a release of an obligation the licensee is or was to perform.
(g) Offer, pay, or give any cash, fee, gift, bonus, premiums, reward, or other compensation to a person for referring a prospective customer to the licensee. However, any of the following payments are not subject to this subdivision:
(i) A payment by the licensee for the lawful sale, transfer, or assignment of a contract to the licensee from another licensee.
(ii) A payment by the licensee to credit counseling associations such as the national foundation for credit counseling or the association of independent consumer credit counseling agencies to participate in a locator service.
(h) Receive any cash, fee, gift, bonus, premium, reward, or other compensation from a person other than the debtor or a person in the debtor’s behalf in connection with the licensee’s business of debt management, except under a plan approved by order of the department. However, a payment received by a licensee from a creditor, financial institution, or other third party as part of a fair share program, grant program, or another similar program is not subject to this subdivision.
(i) Disclose the identity of debtors who have contracted with the licensee, except to the director or his or her authorized representative, or disclose the identity of creditors of a debtor to anyone other than the debtor, or the director or his or her authorized representative, or another creditor of the debtor and then only to the extent necessary to secure the cooperation of the creditor in a debt management plan. However, this subdivision does not prohibit a licensee from sharing information about a debtor’s debt management plan or the creditors of the debtor with any person with which the debtor has specifically authorized the licensee in writing to share that information.
(j) Use or permit the use of a false, misleading, or deceptive statement or representation with regard to the services or charges of the licensee in any offer of the licensee’s services.
(k) In any manner, advertise, print, display, publish, distribute, or broadcast any statement or representation with regard to providing services under this act that is false, misleading, or deceptive or permit another person to violate this subdivision.
(l) Use an advertisement that gives a telephone number or post office box without identifying the licensee and the licensee’s office address.
(m) Use an advertisement that contains any of the following representations:
(i) That the licensee will provide funds to pay bills or prevent attachments.
(ii) That a certain payment schedule will handle a certain amount or range of indebtedness.
(iii) That garnishment, attachment, repossession, or loss of job will be prevented.
(n) Fail to provide to the debtor the full benefit of a compromise of a debt arranged by the licensee with a creditor.
(o) Do any of the following in connection with the making of a debt management contract or with operation of the debtor’s account:
(i) Employ any device, scheme, or artifice to defraud.
(ii) Make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.
(iii) Engage in any act, practice, or course of business that operates or would operate as a fraud or deceit on any person.
(p) Conduct the business of debt management without a surety bond, or a deposit or assignment satisfactory to the department in lieu of a surety bond, under section 5(2) in place.