H1067 - Modernize Debt Settlement Prohibition

• Recodifies debt adjustment and settlement prohibition from Article 56 of Chapter 14 to Article 9 of Chapter 75 of the General Statutes.

• Expands the definition of debt settlement to include any person who acts as an intermediary between a debtor and creditors for consideration to reduce or alter debt payment terms, whether or not funds are distributed by the intermediary.

• Makes debt settlement an unfair trade practice enforceable by the Attorney General or district attorney through civil action in superior court, with authority to appoint receivers and assess civil penalties.

• Establishes narrow exceptions for authorized debt adjusting, including employees acting for their employer, court-ordered actions, attorneys, and nonprofit credit counseling organizations meeting specified requirements including a $40 origination fee and 10% monthly cap on charges.

• Declares contracts for debt adjusting or debt settlement void as against public policy and becomes effective July 1, 2020.