Bill Text: NY S05215 | 2011-2012 | General Assembly | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Defines certain terms related to budget planners and regulates the activities of budget planners.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Engrossed - Dead) 2012-06-13 - referred to codes [S05215 Detail]
Download: New_York-2011-S05215-Amended.html
Bill Title: Defines certain terms related to budget planners and regulates the activities of budget planners.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Engrossed - Dead) 2012-06-13 - referred to codes [S05215 Detail]
Download: New_York-2011-S05215-Amended.html
S T A T E O F N E W Y O R K
________________________________________________________________________
5215--B
Cal. No. 1060
2011-2012 Regular Sessions
I N S E N A T E
May 3, 2011
___________
Introduced by Sens. GRIFFO, ZELDIN -- read twice and ordered printed,
and when printed to be committed to the Committee on Consumer
Protection -- reported favorably from said committee and committed to
the Committee on Banks -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- reported
favorably from said committee, ordered to first and second report,
ordered to a third reading, amended and ordered reprinted, retaining
its place in the order of third reading
AN ACT to amend the general business law and the banking law, in
relation to defining terms related to budget planning and regulating
the activities of budget planners
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 455 of the general business law, as amended by
2 chapter 629 of the laws of 2002, subdivisions 1 and 4 as amended by
3 chapter 456 of the laws of 2006, is amended to read as follows:
4 S 455. Definitions. 1. Budget planning, as used in this article, means
5 the making of a contract between a person [or entity] engaged in the
6 business of budget planning with a particular debtor whereby THE DEBTOR
7 AGREES TO PAY TO SUCH PERSON ANY VALUABLE CONSIDERATION AND (i) the
8 debtor agrees to pay a sum or sums of money in any manner or form and
9 the person [or entity] engaged in the business of budget planning
10 distributes, or supervises, coordinates or controls the distribution of,
11 or has a contractual relationship with another person [or entity] that
12 distributes, or supervises, coordinates or controls such distribution
13 of, the same among certain specified creditors in accordance with a plan
14 agreed upon [and]; OR (ii) the [debtor agrees to pay to such person or
15 entity, or such other person or entity that distributes, or supervises,
16 coordinates or controls such distribution of, a sum or sums of money,
17 any valuable consideration for such services or for any other services
18 rendered in connection therewith.] PERSON ENGAGED IN THE BUSINESS OF
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11381-04-1
S. 5215--B 2
1 BUDGET PLANNING PROVIDES ADVICE OR SERVICES, OR ACTS AS AN INTERMEDIARY
2 BETWEEN OR ON BEHALF OF A DEBTOR AND ONE OR MORE OF THE DEBTOR'S CREDI-
3 TORS, WHERE THE PRIMARY PURPOSE OF THE ADVICE, SERVICE, OR ACTION IS TO
4 OBTAIN A SETTLEMENT, ADJUSTMENT, OR SATISFACTION OF THE DEBTOR'S UNSE-
5 CURED DEBT TO A CREDITOR IN AN AMOUNT LESS THAN THE PRINCIPAL AMOUNT OF
6 THE DEBT OR IN AN AMOUNT LESS THAN THE CURRENT OUTSTANDING BALANCE OF
7 THE DEBT; OR (III) THE PERSON ENGAGED IN THE BUSINESS OF BUDGET PLANNING
8 PROVIDES SERVICES RELATED TO, OR PROVIDES SERVICES ADVISING, ENCOURAG-
9 ING, ASSISTING, OR COUNSELING A DEBTOR TO, ACCUMULATE FUNDS FOR THE
10 PRIMARY PURPOSE OF PROPOSING, OBTAINING, OR SEEKING TO OBTAIN A SETTLE-
11 MENT, ADJUSTMENT, OR SATISFACTION OF THE DEBTOR'S UNSECURED DEBT TO A
12 CREDITOR IN AN AMOUNT LESS THAN THE PRINCIPAL AMOUNT OF THE DEBT OR IN
13 AN AMOUNT LESS THAN THE CURRENT OUTSTANDING BALANCE OF THE DEBT TO PAY
14 TO SUCH PERSON. For the purposes of this article, a person [or entity]
15 shall be considered as engaged in the business of budget planning in New
16 York, and subject to this article and the licensing and other require-
17 ments of article twelve-C of the banking law, if such person [or entity]
18 solicits budget planning business within this state and, in connection
19 with such solicitation, enters into a contract for budget planning with
20 an individual then resident in this state.
21 2. PERSON, AS USED IN THIS ARTICLE, MEANS AN INDIVIDUAL, LIMITED
22 LIABILITY COMPANY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
23 3. Person, as used in this article, shall not include a person [admit-
24 ted to practice law in this state.
25 3. Entity, as used in this article, shall not include a firm, partner-
26 ship, professional corporation, or other organization, all of the
27 members or principals of which are admitted to practice law in this
28 state.
29 4. Person or entity as used in this article shall not include a type B
30 not-for-profit corporation as defined in section two hundred one of the
31 not-for-profit corporation law of this state, or an entity incorporated
32 in another state and having a similar not-for-profit status,] licensed
33 by the superintendent[,] to engage in the business of budget planning
34 [as defined in this section] OR EXEMPT FROM LICENSURE AS A BUDGET PLAN-
35 NER UNDER ARTICLE TWELVE-C OF THE BANKING LAW.
36 [5. Any attorney licensed to practice law in this state who is engaged
37 in budget planning shall (a) negotiate directly with creditors on behalf
38 of the client; (b) ensure that all moneys received from the client are
39 deposited in the attorney's account maintained for client funds; (c) pay
40 creditors from such account; and (d) offer budget planning services
41 through the same legal entity that the attorney uses to practice law.]
42 S 2. Section 456 of the general business law, as amended by chapter
43 456 of the laws of 2006, is amended to read as follows:
44 S 456. Budget planning prohibited. No person [or entity] shall engage
45 in the business of budget planning as defined in section four hundred
46 fifty-five of this article, except as authorized in article twelve-C of
47 the banking law.
48 S 3. Section 457 of the general business law, as amended by chapter
49 629 of the laws of 2002, is amended to read as follows:
50 S 457. Penalty. Whoever either individually or as officer, director or
51 employee of any person[, firm, association or corporation,] violates any
52 of the provisions of [the preceding] section FOUR HUNDRED FIFTY-SIX OF
53 THIS ARTICLE shall be guilty of a misdemeanor for each such violation.
54 S 4. Section 579 of the banking law is renumbered section 579-a and a
55 new section 579 is added to read as follows:
56 S 579. DEFINITIONS. AS USED IN THIS ARTICLE:
S. 5215--B 3
1 1. "PERSON" MEANS AN INDIVIDUAL, PARTNERSHIP, LIMITED LIABILITY COMPA-
2 NY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
3 2. "PRINCIPAL AMOUNT OF THE DEBT" MEANS THE TOTAL AMOUNT OWED BY A
4 DEBTOR TO ONE OR MORE CREDITORS FOR A DEBT THAT IS INCLUDED IN A DEBT
5 SETTLEMENT PLAN AT THE TIME WHEN THE DEBTOR ENTERS INTO SUCH DSP.
6 3. "DEBT MANAGEMENT PLAN" OR "DMP" MEANS A CONTRACT BETWEEN A PERSON
7 AND A DEBTOR WHEREBY THE PERSON WILL PROVIDE BUDGET PLANNING THAT
8 CONTEMPLATES THAT CREDITORS WILL REDUCE FINANCE CHARGES OR FEES FOR LATE
9 PAYMENT, DEFAULT OR DELINQUENCY.
10 4. "DEBT SETTLEMENT PLAN" OR "DSP" MEANS A CONTRACT BETWEEN A PERSON
11 AND A DEBTOR WHEREBY THE PERSON WILL PROVIDE BUDGET PLANNING THAT
12 CONTEMPLATES THAT CREDITORS WILL SETTLE DEBTS FOR LESS THAN THE PRINCI-
13 PAL AMOUNT OF THE DEBT.
14 S 5. Section 579-a of the banking law, as amended by chapter 629 of
15 the laws of 2002 and as renumbered by section four of this act, is
16 amended to read as follows:
17 S 579-a. Doing business without license prohibited. [Only a type B
18 not-for-profit corporation as defined in section two hundred one of the
19 not-for-profit corporation law of this state, or an entity incorporated
20 in another state and having a similar not-for-profit status,] NO PERSON
21 shall engage in the business of budget planning as defined in subdivi-
22 sion one of section four hundred fifty-five of the general business law
23 of this state except as authorized by this article and without first
24 obtaining a license from the superintendent, EXCEPT:
25 1. ANY ATTORNEY LICENSED TO PRACTICE LAW IN THIS STATE WHEN ACTING IN
26 THE ORDINARY PRACTICE OF LAW AND THROUGH THE ENTITY USED BY THE ATTORNEY
27 IN THE ORDINARY PRACTICE OF LAW, AND NOT HOLDING HIMSELF OR HERSELF OUT
28 AS A BUDGET PLANNER, AND NOT PROVIDING BUDGET PLANNING SERVICES, EXCEPT
29 AS INCIDENTAL TO LEGAL REPRESENTATION; OR
30 2. ANY PUBLIC OFFICER WHILE ACTING IN AN OFFICIAL CAPACITY AND ANY
31 PERSON ACTING UNDER COURT ORDER; OR
32 3. ANY PERSON WHILE PERFORMING SERVICES INCIDENTAL TO THE DISSOLUTION,
33 WINDING UP, OR LIQUIDATING OF A PARTNERSHIP, CORPORATION, OR OTHER BUSI-
34 NESS ENTERPRISE; OR
35 4. ANY BANK, TRUST COMPANY, SAVINGS BANK, SAVINGS AND LOAN ASSOCI-
36 ATION, OR CREDIT UNION, WHETHER INCORPORATED, CHARTERED, OR ORGANIZED
37 UNDER THE LAWS OF THIS STATE OR ANY OTHER STATE OR THE UNITED STATES, OR
38 ANY OPERATING SUBSIDIARY OR AFFILIATE OF ANY SUCH BANK, TRUST COMPANY,
39 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION OR CREDIT UNION WHICH DOES
40 NOT ENGAGE IN BUDGET PLANNING EXCEPT AS INCIDENTAL TO ITS BANKING
41 SERVICES; OR
42 5. AN ATTORNEY IN PROVIDING INFORMATION, ADVICE, OR LEGAL REPRESEN-
43 TATION WITH RESPECT TO FILING A CASE OR PRECEDING UNDER TITLE 11 OF THE
44 UNTIES STATES CODE; OR
45 6. SUCH OTHER PERSONS AS MAY BE SPECIFICALLY EXEMPTED BY THE SUPER-
46 INTENDENT IN HIS OR HER SOLE DISCRETION AND CONSISTENT WITH THE PURPOSES
47 OF THIS ARTICLE AND THE RULES AND REGULATIONS PROMULGATED HEREUNDER.
48 S 6. Subdivision 4 of section 583-a of the banking law, as added by
49 chapter 142 of the laws of 1992, is amended to read as follows:
50 4. As used in this section[: (a)], the term ["person" includes an
51 individual, partnership, corporation, association or any other organiza-
52 tion, and (b) the term] "control" means the possession, directly or
53 indirectly, of the power to direct or cause the direction of the manage-
54 ment and policies of a licensee, whether through the ownership of voting
55 stock of such licensee, the ownership of voting stock of any person
56 which possesses such power or otherwise. Control shall be presumed to
S. 5215--B 4
1 exist if any person, directly or indirectly, owns, controls or holds
2 with power to vote ten per centum or more of the voting stock of any
3 licensee or of any person which owns, controls or holds with power to
4 vote ten per centum or more of the voting stock of any licensee, but no
5 person shall be deemed to control a licensee solely by reason of being
6 an officer or director of such licensee or person. The superintendent
7 may in his discretion, upon the application of a licensee or any person
8 who, directly or indirectly, owns, controls or holds with power to vote
9 or seeks to own, control or hold with power to vote any voting stock of
10 such licensee, determine whether or not the ownership, control or hold-
11 ing of such voting stock constitutes or would constitute control of such
12 licensee for purposes of this section.
13 S 7. Sections 584-a and 584-b of the banking law are renumbered
14 sections 584-c and 584-d and two new sections 584-a and 584-b are added
15 to read as follows:
16 S 584-A. DISCLOSURES. BEFORE A DEBTOR SIGNS A CONTRACT WITH A LICENSEE
17 FOR BUDGET PLANNING, THE LICENSEE MUST DISCLOSE TRUTHFULLY, IN A CLEAR
18 AND CONSPICUOUS MANNER, THE FOLLOWING MATERIAL INFORMATION:
19 1. THE AMOUNT OF TIME NECESSARY TO ACHIEVE THE REPRESENTED RESULTS,
20 AND TO THE EXTENT THAT THE BUDGET PLANNING MAY INCLUDE A SETTLEMENT
21 OFFER TO ANY OF THE DEBTOR'S CREDITORS OR DEBT COLLECTORS, THE TIME BY
22 WHICH THE LICENSEE WILL MAKE A BONA FIDE SETTLEMENT OFFER TO EACH OF
23 THEM;
24 2. TO THE EXTENT THAT THE BUDGET PLANNING MAY INCLUDE A SETTLEMENT
25 OFFER TO ANY OF THE DEBTOR'S CREDITORS OR DEBT COLLECTORS, THE AMOUNT OF
26 MONEY OR THE PERCENTAGE OF EACH OUTSTANDING DEBT THAT THE DEBTOR MUST
27 ACCUMULATE BEFORE THE LICENSEE WILL MAKE A BONA FIDE SETTLEMENT OFFER TO
28 EACH OF THEM;
29 3. TO THE EXTENT THAT ANY ASPECT OF THE BUDGET PLANNING RELIES UPON OR
30 RESULTS IN THE DEBTOR'S FAILURE TO MAKE TIMELY PAYMENTS TO CREDITORS OR
31 DEBT COLLECTORS, THAT THE USE OF THE BUDGET PLANNING WILL LIKELY
32 ADVERSELY AFFECT THE DEBTOR'S CREDITWORTHINESS, MAY RESULT IN THE DEBTOR
33 BEING SUBJECT TO COLLECTION ACTIONS OR SUED BY CREDITORS OR DEBT COLLEC-
34 TORS, AND MAY INCREASE THE AMOUNT OF MONEY THE DEBTOR OWES DUE TO THE
35 ACCRUAL OF FEES AND INTEREST; AND
36 4. TO THE EXTENT THAT THE LICENSEE REQUESTS OR REQUIRES THE DEBTOR TO
37 PLACE FUNDS IN AN ACCOUNT AT AN INSURED FINANCIAL INSTITUTION, THAT THE
38 DEBTOR OWNS THE FUNDS HELD IN THE ACCOUNT, THE DEBTOR MAY WITHDRAW FROM
39 THE BUDGET PLANNING AT ANY TIME WITHOUT PENALTY, AND, IF THE DEBTOR
40 WITHDRAWS, THE DEBTOR MUST RECEIVE ALL FUNDS IN THE ACCOUNT, OTHER THAN
41 FEES EARNED BY THE LICENSEE, WITHIN SEVEN BUSINESS DAYS OF THE DEBTOR'S
42 REQUEST.
43 S 584-B. FEES. A LICENSEE SHALL NOT RECEIVE PAYMENT OF ANY FEE OR
44 CONSIDERATION FOR ANY BUDGET PLANNING UNTIL AND UNLESS:
45 1. THE LICENSEE HAS RENEGOTIATED, SETTLED, REDUCED, OR OTHERWISE
46 ALTERED THE TERMS OF AT LEAST ONE DEBT PURSUANT TO A DEBT SETTLEMENT
47 PLAN OR DEBT MANAGEMENT PLAN;
48 2. THE DEBTOR HAS MADE AT LEAST ONE PAYMENT PURSUANT TO THAT DEBT
49 SETTLEMENT PLAN OR DEBT MANAGEMENT PLAN; AND
50 3. THE FEE OR CONSIDERATION FOR SETTLING EACH INDIVIDUAL DEBT ENROLLED
51 IN A DEBT SETTLEMENT PLAN SHALL NOT EXCEED TWENTY-FIVE PERCENT OF THE
52 DEBT AT THE TIME IT WAS ENROLLED, AND MUST EITHER:
53 (A) BEAR THE SAME PROPORTIONAL RELATIONSHIP TO THE TOTAL FEE FOR
54 SETTLING THE ENTIRE DEBT BALANCE AS THE INDIVIDUAL DEBT AMOUNT BEARS TO
55 THE ENTIRE DEBT AMOUNT. THE INDIVIDUAL DEBT AMOUNT AND THE ENTIRE DEBT
S. 5215--B 5
1 AMOUNT ARE THOSE OWED AT THE TIME THE DEBT WAS ENROLLED IN THE BUDGET
2 PLANNING; OR
3 (B) BE A PERCENTAGE OF THE AMOUNT SAVED AS A RESULT OF THE SETTLEMENT.
4 THE PERCENTAGE CHARGED CANNOT CHANGE FROM ONE INDIVIDUAL DEBT TO ANOTH-
5 ER. THE AMOUNT SAVED IS THE DIFFERENCE BETWEEN THE AMOUNT OWED AT THE
6 TIME THE DEBT WAS ENROLLED IN THE BUDGET PLANNING AND THE AMOUNT ACTUAL-
7 LY PAID TO SATISFY THE DEBT.
8 4. NOTHING IN THIS SECTION PROHIBITS REQUESTING OR REQUIRING THE
9 DEBTOR TO PLACE FUNDS IN AN ACCOUNT TO BE USED FOR THE LICENSEE'S FEES
10 AND FOR PAYMENTS TO CREDITORS OR DEBT COLLECTORS, PROVIDED THAT:
11 (A) THE FUNDS ARE HELD IN AN ACCOUNT AT AN INSURED FINANCIAL INSTITU-
12 TION;
13 (B) THE DEBTOR OWNS THE FUNDS HELD IN THE ACCOUNT AND IS PAID ACCRUED
14 INTEREST ON THE ACCOUNT, IF ANY;
15 (C) IF THE LICENSEE DOES NOT ADMINISTER THE ACCOUNT, THE ENTITY ADMIN-
16 ISTERING THE ACCOUNT IS NOT OWNED OR CONTROLLED BY, OR IN ANY WAY AFFIL-
17 IATED WITH, THE LICENSEE;
18 (D) THE ENTITY ADMINISTERING THE ACCOUNT DOES NOT GIVE OR ACCEPT ANY
19 MONEY OR OTHER COMPENSATION IN EXCHANGE FOR REFERRALS OF BUSINESS BY THE
20 LICENSEE; AND
21 (E) THE DEBTOR MAY WITHDRAW FROM THE BUDGET PLANNING AT ANY TIME WITH-
22 OUT PENALTY, AND MUST RECEIVE ALL FUNDS IN THE ACCOUNT, OTHER THAN FEES
23 EARNED BY THE LICENSEE, WITHIN SEVEN BUSINESS DAYS OF THE DEBTOR'S
24 REQUEST.
25 S 8. Section 584-d of the banking law, as renumbered by section seven
26 of this act, is amended by adding a new subdivision 3-a to read as
27 follows:
28 3-A. NO LICENSEE SHALL MISREPRESENT, DIRECTLY OR BY IMPLICATION, ANY
29 MATERIAL ASPECT OF ANY BUDGET PLANNING, INCLUDING, BUT NOT LIMITED TO,
30 THE AMOUNT OF MONEY OR THE PERCENTAGE OF THE DEBT AMOUNT THAT A DEBTOR
31 MAY SAVE BY USING SUCH SERVICE; THE AMOUNT OF TIME NECESSARY TO ACHIEVE
32 THE REPRESENTED RESULTS; THE AMOUNT OF MONEY OR THE PERCENTAGE OF EACH
33 OUTSTANDING DEBT THAT THE DEBTOR MUST ACCUMULATE BEFORE THE BUDGET PLAN-
34 NER WILL INITIATE ATTEMPTS WITH THE DEBTOR'S CREDITORS OR DEBT COLLEC-
35 TORS OR MAKE A BONA FIDE OFFER TO NEGOTIATE, SETTLE, OR MODIFY THE TERMS
36 OF THE DEBTOR'S DEBT; THE EFFECT OF THE SERVICE ON A DEBTOR'S CREDITWOR-
37 THINESS; THE EFFECT OF THE SERVICE ON COLLECTION EFFORTS OF THE DEBTOR'S
38 CREDITORS OR DEBT COLLECTORS; THE PERCENTAGE OR NUMBER OF DEBTORS WHO
39 ATTAIN THE REPRESENTED RESULTS; AND WHETHER THE BUDGET PLANNING IS
40 OFFERED OR PROVIDED BY A NON-PROFIT ENTITY.
41 S 9. This act shall take effect on the one hundred eightieth day after
42 it shall have become a law.
