Bill Summary

• Requires debt settlement services providers to conduct individualized financial analysis before entering agreements and obtain written determination that the debt settlement plan is suitable, feasible, and provides net tangible benefit to the debtor.

• Prohibits debt settlement services providers from holding debtor funds intended for creditor payments; allows only limited fund holding for trust accounts with specific safeguards including independent administration and prohibition on provider affiliation.

• Changes fee structure to prohibit payment until debts are renegotiated, settled, or reduced with at least one payment made under the settlement agreement, and requires fees to maintain proportional relationship to debt reduction or be calculated as percentage of savings.

• Allows debtors to cancel debt settlement agreements without cause upon ten days' written notice and requires immediate refund of fees exceeding those permitted under the revised fee provisions.

• Repeals provisions allowing providers to choose between percentage-of-debt and percentage-of-savings fee structures; effective for agreements entered into on or after August 1, 2012.