2009 Iowa Code
Title 13 - Commerce
Subtitle 2 - Financial Institutions
CHAPTER 533A - DEBT MANAGEMENT
533A.8 - LICENSEE REQUIREMENTS.

        533A.8  LICENSEE REQUIREMENTS.
         1.  A licensee shall describe the methodology of its debt
      management program to each potential debtor client so that the debtor
      can make an informed decision as to whether or not the licensee's
      program is an appropriate option for the debtor.
         2.  A licensee shall conduct a comprehensive review of a debtor's
      debts and monthly budget and make a determination that the licensee's
      program is an appropriate option for the debtor before entering into
      a contract with the debtor.  A licensee shall not accept an account
      unless a written and thorough budget analysis has been performed
      which indicates that the debtor can meet the requirements determined
      by the budget analysis.
         3. a.  A licensee, including any third party who markets or
      sells a debt management program on behalf of a licensee, shall make
      the following disclosures to a debtor both verbally and in writing
      before the debtor signs a contract to enroll in the debt management
      program:
         (1)  The total estimated fee the debtor will pay for participating
      in the program if the debtor remains in the program for the entire
      term of the contract.
         (2)  That the licensee cannot guarantee any specific results from
      participation in the program.
         (3)  That the debtor may elect to discontinue participation in the
      program without penalty at any time during the program.
         (4)  If the program includes obtaining concessions regarding the
      principal amount of the debt from creditors, that any concessions may
      be considered income to the debtor subject to income tax.
         (5)  If the program is based on a model which does not require the
      licensee or another licensee to receive money or evidence thereof
      from the debtor to distribute to the debtor's creditors, the
      following:
         (a)  That payments are not made to creditors on the debtor's
      behalf, so the debtor is still obligated to make payments to
      creditors.
         (b)  That creditors may continue to try to collect the debtor's
      debts while the debtor is enrolled in the program.
         (6)  If the program is a debt settlement program, that the
      following may occur:
         (a)  The debtor's credit report and credit score may be harmed by
      participating in the program.
         (b)  Failure to make required minimum payments to the debtor's
      creditors may violate the debtor's agreement with the creditors and
      may result in additional charges, such as late fees, over limit fees,
      and penalties and creditors may raise the debtor's interest rate.
         (c)  The debtor may be sued by creditors if the debtor fails to
      make required minimum payments to the debtor's creditors.
         b.  The verbal disclosures required pursuant to this
      subsection shall be made at a normal rate of speech in a manner
      designed to ensure the debtor understands the disclosures.  The
      written disclosures shall be provided in a separate document from the
      contract between the licensee and the debtor and shall be designed to
      ensure the debtor understands the disclosures.  It is a violation of
      this chapter for a licensee, or any third party who markets or sells
      a debt management program on behalf of a licensee, to contradict
      these disclosures in any representation, advertising, or
      solicitation.
         4.  A licensee shall make a written contract with a debtor and
      shall immediately and before collecting any fee, furnish the debtor
      with a true copy of the contract.  A contract shall not extend for a
      period longer than sixty months.  The contract between a licensee and
      a debtor shall include all of the following:
         a.  The total estimated charges agreed upon for the services
      of the licensee and any third parties providing services for or in
      conjunction with the licensee.
         b.  A statement of how and when the charges are to be paid.
         c.  A statement that the debtor may elect to discontinue
      participation in the program without penalty at any time during the
      program.
         d.  The beginning and expiration date of the contract.
         e.  The name, physical address, mailing address if different
      from the physical address, and telephone number of the licensee.
         f.  A description of the services to be provided by the
      licensee, which shall include educational and counseling services
      designed to assist the debtor in managing the debtor's borrowing,
      spending, and saving habits.
         g.  If the debt management program is a debt settlement
      program, the following:
         (1)  A comprehensive list of every debt at the time of enrollment
      that is to be negotiated for settlement by the licensee, including
      the creditors' names and identifying information.
         (2)  The estimated amount of money needed to fund settlements.
         h.  If the debt management program is based on a model which
      requires the licensee or any licensee to receive money or evidences
      thereof from the debtor to distribute to the debtor's creditors, the
      contract shall set forth the complete list of creditors who are to
      receive payments under the contract.
         5.  If the debt management program is based on a model which
      requires the licensee or any licensee to receive money or evidences
      thereof from the debtor to distribute to the debtor's creditors, the
      licensee who receives the money or evidences thereof from the debtor
      for distribution to the debtor's creditors shall do all of following:

         a.  Maintain a separate bank trust account in which all
      payments received from debtors for the benefit of creditors shall be
      deposited and in which all payments shall remain until a remittance
      is made to either the debtor or the creditor.
         b.  Make remittances to creditors within forty-five days after
      initial receipt of funds, and thereafter remittances shall be made to
      creditors within thirty days of receipt, less fees, unless the
      reasonable payment of one or more of the debtor's obligations
      requires that such funds be held for a longer period so as to
      accumulate a sum certain.
         c.  Provide each debtor a monthly written statement of
      disbursements made and fees deducted from the debtor's account.  The
      licensee shall also provide a verbal accounting of disbursements made
      and fees deducted from the debtor's account at any time the debtor
      requests it during normal business hours.
         d.  Not receive any fee, or have or cause any fee to be
      received by any other licensee, other than the initiation fee
      permitted in section 533A.9, subsection 2, unless the licensee has
      the consent of at least fifty percent of the total number of the
      creditors listed in the licensee's contract with the debtor, or such
      a like number of creditors have accepted a distribution of payment.
      The debtor shall be informed by the licensee of those creditors who
      have not agreed to the licensee's handling of the account.
         6.  If the debt management program is not based on a model which
      requires the licensee or any licensee to receive money or evidences
      thereof from the debtor to distribute to the debtor's creditors, both
      of the following shall apply:
         a.  The debtor shall maintain full control of and access to
      any moneys set aside for payment to creditors.
         b.  The licensee may not receive consideration from any third
      party in connection with services rendered to a debtor.
         7.  A licensee shall keep, and use in the licensee's business,
      books, accounts, and records which will enable the superintendent to
      determine whether such licensee is complying with the provisions of
      this chapter, any applicable state or federal laws or regulations,
      and the rules and regulations of the superintendent.  A licensee
      shall preserve such books, accounts, and records for at least five
      years after making the final entry on any transaction recorded
      therein.  Records shall contain complete information regarding all
      contracts, extensions thereof, payments, disbursements, and charges,
      which records shall be open to inspection by the superintendent and
      the superintendent's duly appointed agents during normal business
      hours.
         8.  In the event a compromise of a debt is arranged by a licensee
      with one or more creditors, the debtor shall have the full benefit of
      such compromise.
         9.  All licensee advertising content, and data supporting any
      claims made in the advertising, shall be maintained in retrievable
      format and available to the superintendent for inspection for a
      minimum of five years.
         10.  If the licensee maintains an internet website, the licensee
      shall make available on its internet website a physical address for
      its headquarters, a main telephone number, and an electronic mail
      contact address.
         11.  The superintendent may adopt additional requirements
      applicable to licensees pursuant to administrative rule.  

         Section History: Early Form

         [C71, 73, 75, 77, 79, 81, § 533A.8] 

         Section History: Recent Form

         2009 Acts, ch 34, §5
         Referred to in § 533A.2, 533A.11