North Carolina SB 491: NC Debt Settlement Services Act.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 491

Short Title: NC Debt Settlement Services Act. (Public)
Sponsors: Senators Johnson, Overcash, and Jackson (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S491-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO LICENSE, EXAMINE, AND REGULATE DEBT SETTLEMENT SERVICES IN 2
THE STATE OF NORTH CAROLINA. 3
The General Assembly of North Carolina enacts: 4
SECTION 1. Chapter 53 of the General Statutes is amended by adding a new Article 5
to read: 6
"Article 26. 7
"North Carolina Debt Settlement Services Act. 8
"§ 53-441. Title. 9
This Article may be cited as the North Carolina Debt Settlement Services Act. 10
"§ 53-442. Definitions. 11
In this Article, the following definitions apply: 12
(1) Commission. – The State Banking Commission. 13
(2) Commissioner. – The Commissioner of Banks. 14
(3) Consumer reporting agency. – Defined in 15 U.S.C. § 1681a(f). 15
(4) Covered military member. – A member of the Armed Forces to which either 16
of the following applies: 17
a. The member is on active duty for a period of more than 30 days, as 18
defined in 10 U.S.C. § 101(d). 19
b. The member is on active Guard and Reserve duty, as defined in 10 20
U.S.C. § 101(d), with a rank of E4 or below. 21
(5) Creditor. – Includes persons that extend credit to, or persons that service loans 22
made to, debtors. This term does not include doctors, lawyers, or other 23
professionals who receive payment for their services in installments or 24
persons whose only participation in a credit transaction is to honor a credit 25
card. 26
(6) Debt collector. – A debt collector, as defined in 15 U.S.C. § 1692a, or a 27
collection agency, as defined in G.S. 58-70-15. 28
(7) Debt management organization. – An organization that satisfies all of the 29
following requirements: 30
a. Provides individualized credit counseling and budgeting assistance to 31
a debtor without charge prior to the debtor's enrollment in a debt 32
management plan. 33
b. Determines that the debtor has the financial ability to make payments 34
to complete the debt management plan and that the plan is suitable for 35
the debtor. 36

General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 491-First Edition
c. Disburses the debtor's funds to creditors pursuant to a debt 1
management plan that the debtor has paid for with nominal 2
consideration and has agreed to in a record. 3
d. Provides to the debtor, periodically and on no less than a quarterly 4
basis, an individualized accounting for the most recent period of all of 5
the debtor's payments and disbursements under the debt management 6
plan and all charges paid by the debtor. 7
e. Does not directly or indirectly require the debtor to purchase other 8
services or materials as a condition to participating in the debt 9
management plan. 10
f. Does not receive a payment, commission, or other benefit for referring 11
the debtor to a provider of services. 12
g. Is accredited by an accrediting organization that the Commissioner of 13
Banks approves as being independent and nationally recognized for 14
providing accreditation to organizations that provide credit counseling 15
and debt management services. 16
(8) Debt settlement services. – Any action or negotiation initiated or taken on 17
behalf of a debtor with any creditor of the debtor for the purpose of obtaining 18
debt forgiveness of all or a portion of the credit extended by the creditor to the 19
debtor or a reduction of payments, charges, or fees payable by the debtor. With 20
respect to student loan forgiveness or student loan payment reduction 21
programs established under federal or State law and widely available to 22
similarly situated debtors at no cost, the facilitation of enrollment in or 23
qualification for these programs does not constitute an action or negotiation. 24
(9) Debtor. – An individual who resides in this State or an entity registered to do 25
business in this State. The term includes two or more individuals who are 26
jointly or severally, or jointly and severally, indebted to a creditor. 27
(10) Duplicate original. – An exact copy with signatures created by the same 28
impression as the original, an exact copy bearing an original signature, or, in 29
the case of an electronic transaction, an electronic version with electronic 30
signatures. 31
(11) Electronic signature. – Defined in G.S. 66-312. 32
(12) Licensee. – A person licensed under this Article. 33
(13) Nominal consideration. – A fee to cover the cost of administering a debt 34
management plan not to exceed forty dollars ($40.00) for origination or setup 35
of the debt management plan and ten percent (10%) of the monthly payment 36
disbursed under the debt management plan, not to exceed forty dollars 37
($40.00) per month. 38
(14) Principal. – A person that, directly or indirectly, owns or controls ten percent 39
(10%) or more of the outstanding stock of a corporation or a ten percent (10%) 40
or