Mississippi Debt Management Services Act; delete repealer on., the official text

MISSISSIPPI LEGISLATURE

2026 Regular Session

To: Banking and Financial Services

By: Representative Aguirre

House Bill 1265

(As Sent to Governor)

AN ACT TO REPEAL SECTION 81-22-31, MISSISSIPPI CODE
OF 1972, WHICH IS THE REPEALER ON THE MISSISSIPPI DEBT MANAGEMENT
SERVICES ACT; TO BRING FORWARD SECTIONS 81-22-1 THROUGH 81-22-28, MISSISSIPPI
CODE OF 1972, FOR THE PURPOSE OF POSSIBLE AMENDMENT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1.
Section 81-22-31, Mississippi Code of 1972, which is the repealer on the
Mississippi Debt Management Services Act, is repealed.

SECTION 2.  Section
81-22-1, Mississippi Code of 1972, is brought forward as follows:

81-22-1.  This
chapter may be known and cited as the "Mississippi Debt Management
Services Act."

SECTION 3.  Section
81-22-3, Mississippi Code of 1972, is brought forward as follows:

81-22-3.
As used in this chapter, unless the context otherwise indicates, the following
terms have the following meanings:

(a)
"Commissioner" means the Commissioner of Banking and Consumer Finance
of the State of Mississippi.

(b)
"Debt management service" means:

(i)
The receiving of money from a consumer for the purpose of distributing one or
more payments to or among one or more creditors of the consumer in full or
partial payment of the consumer's obligation;

(ii)
Arranging or assisting a consumer to arrange for the distribution of one or
more payments to or among one or more creditors of the consumer in full or
partial payment of the consumer's obligation;

(iii)
Exercising control, directly or indirectly, or arranging for the exercise of
control over funds of the consumer for the purpose of distributing payments to
or among one or more creditors of the consumer;

(iv)
Acting or offering to act as an intermediary between a consumer and one or more
creditors of the consumer for the purpose of adjusting, compromising,
negotiating, settling, discharging or otherwise deferring, reducing or altering
the terms of payment of the consumer's obligation; or

(v)
Improving or offering to improve a consumer's credit record, history or rating.

(c)
"Debt management service provider" means a person that provides or
offers to provide to a consumer in this state any debt management services, in
return for a fee or other consideration.  "Debt management service
provider" does not include:

(i)
Those situations involving debt adjusting incurred incidentally in the lawful
practice of law in this state;

(ii)
Those situations involving credit report error correction services and
situations covered under paragraph (b)(v) of this section when performed in the
lawful practice of law in this state;

(iii)
Title insurers who adjust debts out of escrow funds only incidentally in the
regular course of their principal business;

(iv)
Judicial officers or others acting under court orders;

(v)
Those situations involving debt adjusting incurred incidentally in connection
with the lawful practice as a certified public accountant;

(vi)
Bona fide trade or mercantile associations in the course of arranging
adjustment of debts with business establishments;

(vii)
Employers who adjust debts for their employees;

(viii)
Any person who, at the request of a debtor, makes a loan to the debtor, and
who, at the authorization of the debtor, acts as an adjuster of the debtor's
debts solely in the disbursement of the proceeds of the loan, without
compensation  for the services rendered in adjusting the debts;

(ix)
Any institution that is regulated, supervised or licensed by the department or
any out-of-state institution that is insured by the Federal Deposit Insurance
Corporation or the National Credit Union Administration;

(x)
Licensed attorneys engaged in the lawful practice of law; or

(xi)
For-profit debt management service providers who do not receive or hold
consumer funds, who do not receive a fee until a settlement is approved by the
consumer and who are regulated by the Federal Trade Commission.

(d)
"Department" means the Department of Banking and Consumer Finance of
the State of Mississippi.

(e)
"Fair share contribution" means voluntary contributions paid to the
licensee by the creditor for collecting funds from clients pursuant to debt
management services.

(f)
"Licensee" means a person or entity who is required to be licensed as
a debt management service provider.

(g)
"Person" means an individual or an organization.

(h)
"Records" or "documents" means any item in hard copy or
produced in a format of storage commonly described as electronic, imaged,
magnetic, microphotographic or otherwise, and any reproduction so made shall
have the same force and effect as the original thereof and be admitted in
evidence equally with the original.

(i)  "Third-party
payment processor" means any entity that holds, or has access to, or can
effectuate possession of, by any means, the monies of a licensee's debtors, or
distributes, or is in the chain or distribution of such monies, to the
creditors of such debtors, pursuant to an agreement or contract with the
licensee.  This term shall not include entities that solely provide the
electronic routing and settlement of financial transactions and their
sponsoring banks.

SECTION 4.  Section
81-22-5, Mississippi Code of 1972, is brought forward as follows:

81-22-5.
(1)  Licensure and relicensure.  No person or entity may act as a debt
management service provider with respect to consumers who are residents of this
state without a license issued under this chapter.  The license application
must be in a form prescribed by the commissioner.  The commissioner may refuse
the application if it contains erroneous or incomplete information.  A license
may not be issued unless the commissioner, upon investigation, finds that the
financial soundness and responsibility, insurance coverage, consumer education
programs and services component, character and fitness of the applicant and,
when applicable, its partners, officers or directors, warrant belief that the
business will be operated honestly and fairly within the purposes of this
chapter.  Each license shall remain in full force and effect until
relinquished, suspended, revoked or expired.  With each initial application for
a license, the applicant shall pay to the commissioner a license fee of Seven
Hundred Fifty Dollars ($750.00), and on or before December 31 of each year
thereafter, an annual renewal fee of Four Hundred Seventy-five Dollars
($475.00).  If the annual renewal fee remains unpaid after December 31, the
license shall expire.  If any person engages in business as provided for in
this chapter without paying the license fee provided for in this subsection
before beginning business or before the expiration of the person's current
license, as the case may be, then the person shall be liable for the full
amount of the license fee, plus a penalty in an amount not to exceed Twenty-five
Dollars ($25.00) for each day that the person has engaged in such business
without a license or after the expiration of a license.  All licensing fees and
penalties shall be paid into the Consumer Finance Fund of the department.

(2)  Action on
registration application.  The commissioner shall take action on an
application within thirty (30) days after the commissioner has accepted the
application as complete.  Upon written request, the applicant is entitled to a
hearing on the question of the applicant's qualifications for license if the commissioner
has notified the applicant in writing that the application has been denied or
the commissioner has not issued a license within thirty (30) days after the
application for the license was accepted as complete by the commissioner.  A
request for a hearing may not be made more than sixty (60) days after the
application was accepted as complete or the commissioner has mailed a written
notice to the applicant stating that the application has been denied and
stating the reasons for the denial of the application.

SECTION 5.  Section
81-22-7, Mississippi Code of 1972, is brought forward as follows:

81-22-7.  To be
eligible for a license, an applicant shall file with the commissioner a bond
with good security in the penal sum of Fifty Thousand Dollars ($50,000.00),
payable to the State of Mississippi for the faithful performance by the
licensee of the duties and obligations pertaining to the business so licensed
and the prompt payment of any judgment that may be recovered against the
licensee on account of charges or other claims arising directly or collectively
from any violation of the provisions of this chapter.  The applicant may file,
in lieu of the bond, cash, a certificate of deposit or government bonds in the
amount of Fifty Thousand Dollars ($50,000.00).  Those deposits shall be filed
with the commissioner and are subject to the same terms and conditions as are
provided for in the surety bond required in this paragraph.  Any interest or
earnings on those deposits are payable to the depositor.

SECTION 6.  Section
81-22-9, Mississippi Code of 1972, is brought forward as follows:

81-22-9.
(1)  Funds deposited in escrow account.  The debt management service
provider shall deposit, within two (2) business days of receipt, all funds
received from or on behalf of a consumer for payment to a creditor or creditors
in a federally insured escrow account for the benefit of the consumer in a
supervised financial organization.  Any escrow account established to receive
consumer funds is free from trustee process and unavailable to creditors of the
debt management service provider.

(2)
Requirements for handling of funds.  The debt management service
provider shall:

(a)
Maintain separate records of account for each consumer receiving debt
management services;

(b)
Remit funds received from or on behalf of a consumer to the consumer's creditor
or creditors within fifteen (15) business days of receipt of the funds; and

(c)
Correct or remedy any misdirected payments resulting from an error by the debt
management service provider and reimburse the consumer for any actual costs or
fees imposed by a creditor as a result of such misdirection.

(3)  Commingling
of funds.  The debt management service provider may not commingle escrow
accounts established for the benefit of consumers with any operating accounts
of the debt management service provider.

SECTION 7.  Section
81-22-11, Mississippi Code of 1972, is brought forward as follows:

81-22-11.
(1)  Written agreement.  A debt management service provider may not
perform debt management services for a consumer unless the consumer and the
debt management service provider first have executed a written agreement with
regard to the debt management services to be provided.  A copy of the completed
agreement must be given to the consumer.

(2)  Required
provisions.  Each agreement between a consumer and a debt management
service provider must be dated and signed by the consumer and must include the
following:

(a)
The name and address of the consumer and the debt management service provider;

(b)
A full description of the services to be performed for the consumer, any fees
to be charged to the consumer for those services and any contributions, fees or
charges the consumer has agreed to make or pay to the debt management service
provider;

(c)
Disclosure of the existence of the surety bond on file with the commissioner
under Section 81-22-7 and a notice that the consumer may contact the Department
of Banking and Consumer Finance at P.O. Box 23729, Jackson, MS 39225-3729 or 1-800-844-2499
with any questions or complaints regarding the debt management service
provider;

(d)
The identification of the federally insured institution where funds remitted by
a consumer for payment to one or more creditors will be held;

(e)
The right of a party to cancel the agreement by providing a written notice of
cancellation to the other party;

(f)
A complete list of the consumer's obligations that are subject to the agreement
and the names and addresses of the creditors holding those obligations;

(g)
A full description and schedule of the periodic amounts to be remitted to the
debt management service provider for payment to the consumer's creditor or
creditors and the amounts to be remitted to each creditor;

(h)
A notice to the consumer that by executing the agreement the consumer
authorizes the federally insured institution to disclose financial records
relating to the escrow account in which the consumer's funds are held under
Section 81-22-9 to the commissioner during the course of any examination of the
debt management service provider by the commissioner; and

(i)
The following notice:

NOTICE TO CONSUMER:
Do not sign this agreement before you read it.  You must be given a copy of
this agreement.

SECTION 8.  Section 81-22-13,
Mississippi Code of 1972, is brought forward as follows:

81-22-13.
A debt service management provider may only charge a consumer the following
fees for providing debt management services:

(a)
A maintenance fee not to exceed Thirty Dollars ($30.00) per month after a
consumer has received a free initial counseling session;

(b)
A one-time setup fee not to exceed Seventy-five Dollars ($75.00);

(c)
A fee for obtaining the consumer's credit report not to exceed Fifteen Dollars
($15.00) for an individual report or Twenty-five Dollars ($25.00) for a joint
report;

(d)
A fee not to exceed Fifty Dollars ($50.00) for educational courses/products
that will assist the consumer in achieving financial stability.  Products shall
be educational in nature and may include, but not be limited to, the following
topics:  Home Buyer Education, Financial Literacy Education, and Credit Report
Review.  However, the consumer must be informed that those courses and products
are not a mandatory condition to receive debt management services; and

(e)  A bankruptcy
consultation fee, not to exceed Fifty Dollars ($50.00) per consumer, may be
charged by nonprofit credit counseling agencies approved by the U.S. Trustees
pursuant to 11 USC Section 111.

SECTION 9.  Section
81-22-15, Mississippi Code of 1972, is brought forward as follows:

81-22-15.
(1)  Written reports to consumers.  A debt management service provider
shall provide to each consumer receiving debt management services periodic
written reports accounting for funds received from the consumer for payment to
the consumer's creditor or creditors whose obligations are listed in the
consumer's agreement with the debt management service provider and
disbursements made to each such creditor on the consumer's behalf since the
last report.  The debt management service provider shall provide those reports
to the consumer not less than once each calendar quarter.

(2)  Maintenance
of records.  Any person required to be licensed under this chapter shall
maintain in its offices, or such other location as the department permits, the
books, accounts and records necessary for the department to determine whether
or not the person is complying with the provisions of this chapter and the
rules and regulations adopted by the department under this chapter.  These
books, accounts and records shall be maintained apart and separate from any
other business in which the person is involved.  A debt management service
provider shall maintain books and records for each consumer for whom it
provides debt management services for six (6) years following the final
transaction with the consumer.

(3)  Verification of
payments to creditors.  Licensees that participate in fair share
contributions with creditors shall maintain records that reflect client
accounts were credited for the full amount of any payments due and not the net
amount as a result of a fair share contribution.  Such records may consist of
either a copy of the client's statement from the creditor or the licensee may
send a monthly or quarterly statement to clients that reflect payments remitted
to creditors.

(4)  Within fifteen (15)
days of the occurrence of any of the following events, a licensee shall file a
written report with the commissioner describing the event and its expected
impact on the activities on the licensee's business in this state:

(a)  The filing for
bankruptcy or reorganization by the licensee;

(b)  The institution of
revocation or suspension proceedings against the licensee by any state or
governmental authority; or

(c)  Any felony
indictment or conviction of the licensee or any of its directors or principal
officers.

SECTION 10.  Section
81-22-17, Mississippi Code of 1972, is brought forward as follows:

81-22-17.
The commissioner may exercise the following powers and functions:

(a)
Complaint investigation.  The commissioner may receive and act on
complaints, take action to obtain voluntary compliance with this chapter or
refer cases to the Attorney General, who shall appear for and represent the commissioner
in court.

(b)
Rules.  The commissioner may adopt reasonable administrative
regulations, not inconsistent with law, for the enforcement of this chapter.

(c)
Examination of licensees.  To assure compliance with the provisions of
this chapter, the department may examine the books and records of any licensee
without notice during normal business hours.  The commissioner shall charge the
licensee an examination fee in an amount not less than Three Hundred Dollars
($300.00) nor more than Six Hundred Dollars ($600.00) for each office or
location within the State of Mississippi, plus any actual expenses incurred
while examining the licensee's records or books that are located outside the
State of Mississippi.  However, in no event shall a licensee be examined more
than once in a two-year period unless for cause shown based upon consumer
complaint and/or other exigent reasons as determined by the commissioner.

(d)  Examination of
nonlicensees.  The department, its designated officers and employees, or
its duly authorized representatives, for the purposes of discovering violations
of this chapter and for the purpose of determining whether any person or
individual reasonably suspected by the commissioner of conducting business that
requires a license under this chapter, may investigate those persons and
individuals and examine all relevant books, records and papers employed by
those persons or individuals in the transaction of business, and may summon
witnesses and examine them under oath concerning matters as to the business of
those persons, or other such matters as may be relevant to the discovery of
violations of this chapter, including, without limitation, the conduct of
business without a license as required under this chapter.

SECTION 11.  Section
81-22-19, Mississippi Code of 1972, is brought forward as follows:

81-22-19.
A debt management service provider may not:

(a)
Purchase debt.  Purchase any debt or obligation of a consumer;

(b)
Lend money.  Lend money or provide credit to any consumer;

(c)
Mortgage interest.  Obtain a mortgage or other security interest in
property of a consumer;

(d)
Debt collector.  Operate as a debt collector in this state; or

(e)  Negative
amortization.  Structure an agreement for the consumer that, at the
conclusion of the projected term for the consumer's participation in the debt
management service agreement, would result in negative amortization of any of
the consumer's obligations to creditors.

SECTION 12.  Section
81-22-21, Mississippi Code of 1972, is brought forward as follows:

81-22-21.
(1)  False advertising.  A debt management service provider may not
engage in this state in false or misleading advertising concerning the terms
and conditions of any services or assistance offered.

(2)  Required
words.  A debt management service provider may not advertise its services
in Mississippi in any media disseminated primarily in this state, whether print
or electronic, without the words "Licensed Debt Management Service
Provider."

(3)  Dissemination;
no liability.  This section does not impose liability on the owner or
personnel of any medium in which an advertisement appears or through which an
advertisement is disseminated.

SECTION 13.  Section
81-22-23, Mississippi Code of 1972, is brought forward as follows:

81-22-23.
(1)  Violations; unfair, unconscionable or deceptive practices.  A debt
management service provider that violates any provision of this chapter or any
rule adopted by the commissioner, or that through any unfair, unconscionable or
deceptive practice causes actual damage to a consumer is subject to enforcement
action under subsection (2) of this section.

(2)
Enforcement actions.  The following enforcement actions may be taken by
the commissioner or an aggrieved consumer against a debt management service
provider for violations of any provision of this chapter or any rule adopted
under this chapter, or for unfair, unconscionable or deceptive practices that
cause actual damage to a consumer:

(a)
When the commissioner has reasonable cause to believe that a person is
violating any provision of this chapter, the commissioner, in addition to and
without prejudice to the authority provided elsewhere in this chapter, may
enter an order requiring the person to stop or to refrain from the violation.
The commissioner may sue in any chancery court of the state having jurisdiction
and venue to enjoin the person from engaging in or continuing the violation or
from doing any act in furtherance of the violation.  In such an action, the
court may enter an order or judgment awarding a preliminary or permanent
injunction;

(b)
The commissioner may, after notice and hearing, impose a civil penalty against
any licensee if the licensee, individual required to be registered, or employee
is adjudged by the commissioner to be in violation of the provisions of this
chapter.  The civil penalty shall not exceed Five Hundred Dollars ($500.00) per
violation and shall be deposited into the Consumer Finance Fund of the
department;

(c)
The state may enforce its rights under the surety bond as required in Section
81-22-7 as an available remedy for the collection of any civil penalties,
criminal fines or costs of investigation and/or prosecution incurred;

(d)
A civil action by an aggrieved consumer in which that consumer has the right to
recover actual damages from the debt management service provider in an amount
determined by the court plus costs of the action together with reasonable
attorney's fees; or

(e)  Revocation,
suspension or nonrenewal of the debt management service provider's license
under Section 81-22-25.

SECTION 14.  Section
81-22-25, Mississippi Code of 1972, is brought forward as follows:

81-22-25.
(1)  Suspension or revocation.  After notice and hearing, the
commissioner may suspend or revoke a debt management service provider's license
if the commissioner finds that one of the conditions of subsection (2) of this
section is met.

(2)
Conditions for suspension or revocation.  The following conditions are
grounds for suspension or revocation of a registration:

(a)
A fact or condition exists that, if it had existed at the time when the
licensee applied for a license, would have been grounds for denying the
application;

(b)
The licensee knowingly violates a material provision of this chapter or rule or
order validly adopted by the commissioner under authority of this chapter;

(c)
The licensee is insolvent;

(d)
The licensee refuses to permit the commissioner to make an examination
authorized by this chapter; or

(e)  The licensee fails
to respond within a reasonable time and in an appropriate manner to
communications from the commissioner.

SECTION 15.  Section
81-22-27, Mississippi Code of 1972, is brought forward as follows:

81-22-27.  The commissioner
may employ the necessary full-time employees above the number of permanent full-time
employees authorized for the department for the fiscal year 2003, to carry out
and enforce the provisions of this chapter.  The commissioner also may expend
the necessary funds and equip and provide necessary travel expenses for those
employees.

SECTION 16.  Section
81-22-28, Mississippi Code of 1972, is brought forward as follows:

81-22-28.  (1)  If a
licensee seeks to utilize a third-party payment processor, to hold, have access
to, effectuate possession of, by any means, or to distribute or be in the chain
of distribution of the monies of another licensee's consumers, the licensee
shall give the Department of Banking and Consumer Finance ten (10) days'
written notice.

(2)  Such notice shall
contain the name and address of the third-party payment processor, a
description of the services, a copy of the agreement or contract between the
licensee and the third-party payment processor and the highest daily amount of
consumer funds to be held or transmitted.  The third-party payment processor
shall submit to the department, upon request, the highest daily amount held or
transmitted during the previous month.

(3)  Each third-party
payment processor shall file with the commissioner a surety bond, issued by a
bonding company or insurance company authorized to do business in the State of
Mississippi, in the principal sum of Fifty Thousand Dollars ($50,000.00) and in
an additional principal sum of Fifty Thousand Dollars ($50,000.00) for each
additional licensee it contracts with, but in no event shall the bond be
required to be in excess of One Hundred Fifty Thousand Dollars ($150,000.00).
In lieu of the surety bond, a third-party payment processor may file other
assets such as cash, a certificate of deposit or government bonds.

(4)  A licensee shall not
use a third-party payment processor until the licensee receives written notice
from the department confirming that the department has received a surety bond
or other assets from the third-party payment processor.

(5)  Prior to performing any
of its services, the third-party payment processor shall provide written
authorization for the department to examine all books, records, documents and
materials, including those maintained in electronic form, as they relate to the
consumers' monies held by, or distributed by the third-party payment processor
to the creditors of the consumers and shall have received written confirmation
from the department that the written authorization is sufficient.  The cost of
the examination shall be paid by the licensee.

(6)  All agreements or
contracts between a licensee and a third-party payment processor shall provide
for a thirty-day written notice of termination to the party against whom
termination is being sought.  A licensee shall immediately notify the
department in writing of the notice of termination.

(7)  In the event a licensee
elects to maintain cash, a certificate of deposit or government bonds on
deposit, and utilizes the services of a third-party payment processor, there is
no requirement that the third-party payment processor obtain a surety bond or
maintain other assets on deposit with the department.

SECTION 17.  This act
shall take effect and be in force from and after July 1, 2026.