2020 Indiana Code
Title 28. Financial Institutions
Article 1. Department of Financial Institutions
Chapter 29. Debt Management Companies
28-1-29-9.5. Prohibited Acts; Unauthorized Practice of Law; Compensation Prohibited
Sec. 9.5. (a) A licensee may not, directly or indirectly, do any of the following:
(1) Misappropriate or misapply money held in trust.
(2) Exercise or attempt to exercise a power of attorney after a contract debtor has terminated an agreement.
(3) Initiate a transfer to or from a contract debtor's account at a bank or with another person unless the transfer is:
(A) a return of money to the contract debtor; or
(B) before the termination of an agreement, properly authorized by the agreement and this chapter, and for:
(i) payment to one (1) or more creditors under an agreement; or
(ii) payment of a fee.
(4) Offer a gift or bonus, premium, reward, or other compensation to a debtor for executing an agreement.
(5) Offer, pay, or give:
(A) a gift or bonus;
(B) a premium;
(C) a reward; or
(D) other compensation;
to a lead generator or another person for referring a prospective customer if the person making the referral has a financial interest in the outcome of debt management services provided to the customer.
(6) Receive a bonus, a commission, or other benefit for referring a debtor to a person.
(7) Structure a plan in a manner that would result in a negative amortization of any of a debtor's debts, unless a creditor that is owed a negatively amortizing debt agrees to refund or waive the finance charge upon payment of the principal amount of the debt.
(8) Compensate the licensee's employees on the basis of a formula that incorporates the number of debtors the employee induces to enter into agreements. It is not a violation of this subsection for a licensee to use the number of successfully completed debt management plans as a criterion for compensation for the licensee's employees.
(9) Settle a debt or lead a contract debtor to believe that a payment to a creditor is in settlement of a debt to the creditor unless, at the time of settlement, the contract debtor receives a certification by the creditor that the payment is in full settlement of the debt.
(10) Make a representation that:
(A) the licensee will furnish money to pay bills or prevent attachments;
(B) payment of a certain amount will permit satisfaction of a certain amount or range of indebtedness; or
(C) participation in a plan will or may prevent litigation, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment.
(11) Misrepresent that the licensee is authorized or competent to furnish legal advice or perform legal services.
(12) Represent in the licensee's agreements, disclosures required by this chapter, advertisements, or Internet web site that the licensee is:
(A) a nonprofit entity unless the licensee is organized and properly operating as a nonprofit entity under the law of the state in which the entity was formed; or
(B) a tax exempt entity unless the entity has received certification of tax exempt status from the Internal Revenue Service and is properly operating as a nonprofit entity under the law of the state in which the entity was formed.
(13) Take a confession of judgment or power of attorney to confess judgment against a contract debtor.
(14) Employ an unfair, unconscionable, or deceptive act or practice, including the knowing omission of any material information.
(b) If a licensee furnishes debt management services to a debtor, the licensee may not, directly or indirectly, do any of the following:
(1) Purchase a debt or obligation of the debtor.
(2) Receive from or on behalf of the debtor:
(A) a promissory note or other negotiable instrument other than a check or a demand draft; or
(B) a postdated check or demand draft.
(3) Lend money or provide credit to the debtor.
(4) Obtain a mortgage or other security interest from any person in connection with the services provided to the debtor.
(5) Except as permitted by federal law, disclose the identity or identifying information of the debtor or the identity of the debtor's creditors, except:
(A) to the department, upon proper demand;
(B) to a creditor of the debtor, to the extent necessary to secure the cooperation of the creditor in a plan; or
(C) to the extent necessary to administer the plan.
(6) Charge the debtor for or provide credit or other insurance, coupons for goods or services, membership in a club, access to computers or the Internet, or any other matter not directly related to debt management services or educational services concerning personal finance.
(7) Furnish legal advice or perform legal services unless the person furnishing the advice or performing the services is licensed to practice law.
(c) This chapter does not authorize any person to engage in the practice of law.
(d) A licensee may not receive a gift, bonus, premium, reward, or other compensation, directly or indirectly, for advising, arranging, or assisting a debtor in connection with obtaining an extension of credit or other service from a lender or service provider.
As added by P.L.35-2010, SEC.132. Amended by P.L.216-2013, SEC.31; P.L.69-2018, SEC.49.
