SENATE BILL REPORT

SB 6553

BYSenator Lee; by request of Department of Licensing

Revising the regulation of debt adjusting.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):January 26, 1988; February 1, 1988

Majority Report:  That Substitute Senate Bill No. 6553 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; Cantu, Conner, Deccio, McMullen, Saling, Smitherman, Warnke, West, Williams.

Senate Staff:Steve Boruchowitz (786-7429)

                  February 1, 1988

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, FEBRUARY 1, 1988

BACKGROUND:

Current law requires debt adjusters to obtain a license from the Department of Licensing.  A debt adjuster provides services for managing, settling, prorating or liquidating a person's debt, or receives funds to distribute among a person's creditors for full or partial payment of obligations, and receives a fee for this service.  Exemptions to the definition are provided for lawyers, accountants, investment advisors, etc., who provide these services incidentally to the practice of their profession.  No one is currently licensed as a debt adjuster, and no application for a license has been submitted for over seven years.  As no licenses have been issued, there have been no revenues generated from licensing fees.  The estimated cost to the department of keeping this provision is $15,000 per year.

SUMMARY:

Licensing requirements for debt adjusters are repealed.  The surety bond requirement is increased from $10,000 to $15,000.  Other basic provisions dealing with the conduct of debt adjusting are maintained.  Previous responsibilities of the director of the Department of Licensing are assigned to the attorney general.  References to "licensee" are replaced with "debt adjuster".

EFFECT OF PROPOSED SUBSTITUTE:

Reference to the Consumer Protection Act is added to contract wording.  References to the Attorney General are eliminated where authority exists elsewhere in statute.  The record keeping provision is made consistent with language for other DOL registrants.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 20, 1988

Senate Committee - Testified: Nixon Handy, Attorney General's Office; Cynthia Jones, Department of Licensing