North Carolina HB 734: Modernize Debt Settlement Prohibition.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 734

Short Title: Modernize Debt Settlement Prohibition. (Public)
Sponsors: Representatives Howard, Setzer, B. Jones, and Liu (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Judiciary 1, if favorable, Finance, if favorable, Rules, Calendar, and Operations of
the House
April 3, 2025
*H734-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MODERNIZE AND EXPAND THE PROHIBITION OF DEBT SETTLEMENT 2
BY MAKING DEBT SETTLEMENT AN UNFAIR TRADE PRACTICE, CLARIFYING 3
THE DEFINITION OF DEBT SETTLEMENT, EXPANDING CIVIL REMEDIES 4
AVAILABLE TO DEBTORS, AND LIMITING DEBT SETTLEMENT ACTS THAT ARE 5
AUTHORIZED AND TO MAKE OTHER ADMINISTRATIVE AND TECHNICAL 6
CHANGES. 7
The General Assembly of North Carolina enacts: 8
SECTION 1.(a) Article 56 of Chapter 14 of the General Statutes is recodified as 9
Article 9 of Chapter 75 of the General Statutes as follows: 10
11
Former G.S. Citation New G.S. Citation 12
G.S. 14-423 G.S. 75-151 13
G.S. 14-424 G.S. 75-153 14
G.S. 14-425 G.S. 75-154 15
G.S. 14-426 G.S. 75-155 16
SECTION 1.(b) Article 9 of Chapter 75 of the General Statutes, as created by 17
subsection (a) of this section, reads as rewritten: 18
"Article 9. 19
"Debt Adjusting.Adjusting and Debt Settlement Prohibited. 20
"§ 75-151. Definitions. 21
As used in this Article, the following definitions apply: 22
(1) "Debt adjuster" means a person who engages in, attempts to engage in, or 23
offers to engage in the practice or business of debt adjusting. 24
(1) Affiliate. – Any person that controls, is controlled by, or is under common 25
control with any other person. 26
(2) "Debt adjusting" means entering Debt adjusting. – Entering into or making a 27
contract, express or implied, with a particular debtor whereby the debtor 28
agrees to pay a certain amount of money periodically to the person engaged 29
in the debt adjusting business and that person, for consideration, agrees to 30
distribute, or distributes the same among certain specified one or more 31
creditors in accordance with a plan agreed upon. Debt adjusting includes the 32
business or practice of any person who holds himself out as acting or offering 33
or attempting to act for consideration as an intermediary between a debtor and 34

General Assembly Of North Carolina Session 2025
Page 2 House Bill 734-First Edition
his creditors for the purpose of settling, compounding, or in any way altering 1
the terms of payment of any debt of a debtor, and to that end receives money 2
or other property from the debtor, or on behalf of the debtor, for the payment 3
to, or distribution among, the creditors of the debtor. 4
(3) Debt adjusting also includes the business or practice of debt settlement or 5
foreclosure assistance whereby Debt settlement. – The business whereby any 6
person holds himself or herself themselves out as acting for consideration as 7
an intermediary between a debtor and one or more of the debtor's creditors for 8
the purpose of reducing, settling, or altering the terms of the payment of any 9
debt of the debtor, whether or not the person distributes the debtor's funds or 10
property among the creditors, and receives a fee or other consideration for 11
reducing, settling, or altering the terms of the payment of the debt in advance 12
of the debt settlement having been completed or in advance of all the services 13
agreed to having been rendered in full.debtor. 14
(3)(4) "Debtor" means an Debtor. – An individual who resides in North Carolina, 15
and includes two or more individuals who are jointly and severally, or jointly 16
or severally, indebted to a creditor or creditors. 17
(3a) "Nominal consideration" means a fee or a contribution to cover the cost of 18
administering a debt management plan not to exceed forty dollars ($40.00) for 19
origination or setup of the debt management plan and ten percent (10%) of the 20
monthly payment disbursed under the debt management plan, not to exceed 21
forty dollars ($40.00) per month. 22
(4)(5) "Person" means an Person. – An individual, firm, partnership, limited 23
partnership, corporation, or association.association, or other entity. 24
"§ 75-152. Debt adjusting and debt settlement prohibited. 25
No person, directly or through affiliates, shall engage in, offer to engage in, or attempt to 26
engage in debt adjusting or debt settlement. 27
"§ 75-153. Engaging, etc., in business of debt adjusting Debt adjusting and debt settlement 28
a misdemeanor. 29
If any Any person shall engage that engages in, or offer offers to engage in, or attempt to, 30
attempts to engage in the business or practice of debt adjusting, or if any person shall hereafter 31
act, offer to act, or attempt to act as a debt adjuster, he shall be adjusting or debt settlement is 32
guilty of a Class 2 misdemeanor. 33
"§ 75-154. Enjoining practice of debt adjusting; appointment of receiver for money and 34
property employed.Jurisdict