The Debt Adjustment Act is a 2003 Georgia law regulating companies offering credit counseling and renegotiation and payoff of consumer debt. It limits fees to 7.5 percent and requires annual audits, payment to creditors within 30 days and insurance covering employee dishonesty, depositor forgery and computer fraud.
Introduced by Rep. Ashe
House Bill 385 was introduced Feb. 14, 2003 by Rep. Kathy Ashe, a Democrat from Georgia's 56th District (metropolitan Atlanta), and five co-sponsors. It passed the House on March 26 and the Senate on April 25. Gov. Sonny Perdue signed it on May 30, 2003.
What The Law Does
The law limits debt adjustment company fees to 7.5 percent of what the debtor is paying monthly. So the maximum fee on a plan with a $300 monthly debt payment is $22.50. Debt adjustment company owners must be audited annually and provide the results when requested, pay creditors within 30 days of being paid by the debtor and maintain insurance against dishonesty, forgery and fraud equal to 10 percent of the average monthly receipts.
Penalties
Violation of the Debt Adjustment Act is a misdemeanor punishable at least a $50,000 fine and repayment to the debtor of all "fees, charges or contributions," plus $5,000. It is also a violation of the state's Fair Business Practices Act of 1975. The legislation authorizes criminal prosecution but contains no specific jail sentences.
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