USA Statutes : arizona
Title : Banks and Financial Institutions
Chapter : DEBT MANAGEMENT COMPANIES
In this chapter, unless the context otherwise requires:
1. "Agency" means any business serving the public, which as part of its services
accepts money for and on behalf of a licensee.
2. "Branch office" means any office operated solely for the purpose of accepting
money and performing other services for a licensee.
3. "Creditor" means a person for whose benefit monies are being collected and
disbursed by a licensee.
4. "Debt management company" means a corporation, company, firm, partnership,
association or society, as well as a natural person, that for compensation engages in the
business of receiving money, or evidences thereof, in this state or from a resident of
this state as agent of a debtor for the purpose of distributing the same to his creditors
in payment or partial payment of his obligations.
5. "Debtor" means a person from whom monies are being accepted for disbursement to
6. "License" means a license issued under the provisions of this chapter.
7. "Licensee" means a corporation, company, firm, partnership, association or
society, as well as a natural person, licensed by the superintendent to engage in the
business of a debt management company pursuant to the provisions of this chapter.
8. "Nonprofit religious, fraternal or cooperative organizations" means religious,
fraternal or cooperative organizations or entities whose primary functions or purposes
are not the provision of debt management services.
The provisions of this chapter shall not be applicable to:
1. Attorneys at law, whose principal activities are other than debt management,
when debt management is only incidental to their regular activities.
2. Banks, savings and loan associations or financing and lending institutions duly
authorized and licensed to transact business under the laws of this state or of the
3. Judicial officers or others acting under court orders.
4. Nonprofit religious, fraternal or cooperative organizations that:
(a) Are bonded as provided by section 6-704.
(b) Offer debt management service exclusively for their members.
(c) Do not collect any compensation directly or indirectly from debtors.
(d) File an annual report as provided in section 6-709, subsection M.
5. Nonprofit corporations or nonprofit debt counselor associations that:
(a) Are bonded as provided by section 6-704.
(b) Are organized to render financial planning service or debt management service
to the public.
(c) Do not collect any compensation directly or indirectly from debtors.
(d) File an annual report as provided in section 6-709, subsection M.
6. Any transaction in which money or other property is paid to a joint control
agent for dispersal or use in the payment of the cost of labor, materials, services,
permits, fees, or other items of expense incurred in construction of improvements upon
7. A person licensed pursuant to chapter 7 of this title.
8. A person licensed pursuant to chapter 9, article 2 of this title.
9. A bill paying service provider that complies with all of the following:
(a) Does not accept bills on invoices that are contractually past due at the time
of receipt by the debtor.
(b) Does not initiate any contact with individual creditors of the debtor to
compromise a debt or arrange a new payment schedule.
(c) Does not provide any debt counseling services.
(d) Makes a written contract with the debtor and immediately furnishes the debtor
with a copy of the complete contract.
(e) Furnishes the debtor with a written statement of the debtor's account each
month and a verbal accounting at any time the debtor requests it during normal business
(f) Does not take physical possession of any debtor monies except for fees and
charges for services rendered as agreed to in writing. Nothing in this subdivision shall
be construed to prevent a service provider from obtaining check signing authority on an
account if the account remains solely in the debtor's name, the debtor maintains control
over the monies deposited in the account and the check signing authority is limited to
the payment of obligations that are approved and authorized by the debtor.
6-703 License required
No person shall engage in the business for compensation of receiving money as agent
of a debtor for the purpose of distributing the same to his creditors in payment or
partial payment of his obligations without first obtaining a license from the
6-704 Application for license; bonds;contract
A. An application for a license shall be in writing, under oath and in a form
prescribed by the superintendent, and shall contain the name and address, both of the
residence and place of business, of the applicant and if the applicant is an association
or society, of every member thereof, and if a corporation or partnership, of every
officer and director thereof and a copy of the articles of incorporation, and the
specific address or addresses at which the business is to be conducted. The
superintendent may require as part of the application a credit report and such other
information as he deems necessary.
B. At the time of filing the application the applicant shall furnish a cash or
surety bond payable to the people of the state in the sum of not less than five thousand
dollars for licensees disbursing less than one hundred thousand dollars each year and for
the following amounts based on the amounts disbursed by the licensee in the previous
Yearly disbursements Amount of bond
$100,000 - $250,000 $10,000.00
$250,001 - $500,000 $15,000.00
$500,001 - $1,000,000 $20,000.00
More than $1,000,000 $25,000.00
C. Each bond prescribed in subsection B shall be conditioned upon the faithful
accounting of all monies collected upon accounts entrusted to such person engaged in debt
management, and their employees and agents, and upon the faithful observance of the
provisions of this article and the contract between the licensee and the debtor. The
bond shall be approved by the superintendent and filed in the office of the
superintendent. The bond shall remain in force and effect until the surety is released
from liability by the superintendent, or until the surety bond is canceled by the
surety. The surety may cancel the surety bond and be relieved of further liability by
delivering thirty days' written notice to the superintendent. The cancellation does not
affect any liability incurred or accrued prior to the termination of the thirty-day
period. Any person who suffers any loss or damage by reason of the neglect or default of
a licensee or his employees or agents or by the licensee's violation of any of the
provisions of this article or of the contract between him and the debtor shall have a
right of action against the licensee and the sureties on his bond. No action may be
brought on the bond by any person after the expiration of two years from the time when
the act or default occurred. When an action is commenced on the bond of a licensee, the
superintendent may require the filing of a new bond, and immediately upon the recovery of
any action on the bond the licensee shall file a new bond. Failure to file a new bond
within ten days of the recovery on a bond, or within ten days after notification that a
bond is required, constitutes sufficient grounds for the suspension or revocation of a
D. In addition to the bond provided in subsection B, the superintendent may require
an applicant to obtain an adequate fidelity bond for each officer, employee, or agent
having access to funds collected by or for the licensee or having authority to draw
against such funds. The fidelity bond required to be filed in accordance with this
section shall remain in force and effect until the surety is released from liability by
the superintendent, or until the bond is canceled by the surety. The surety may cancel
the bond and be relieved of further liability by delivering thirty days' written notice
to the superintendent. The cancellation shall not affect any liability incurred or
accrued prior to the termination of the thirty-day period.
E. Each applicant for a license shall file with his application a blank copy of the
contract intended to be used between the licensee and the debtor and shall file with the
superintendent a copy of all changes and amendments thereto.
6-705 Branch offices and agencies
A licensee may establish branch offices or agencies only if it expressly assumes
responsibility for the acts of any person accepting money in its name or on its behalf at
such places of business. An application for a branch office or agency license shall be
in writing, under oath, in a form prescribed by the superintendent, and shall contain the
name and address of the principal place of business of the licensee and a statement that
it is a branch office.
A. An applicant at the time of filing an application for a license under the terms
of this article shall pay to the superintendent the fee prescribed in section 6-126. The
fee for an agency license is the same as that prescribed for a branch.
B. Prior to June 15, each licensee may obtain a renewal of each license without
investigation by payment of the fee prescribed in section 6-126. The fee for renewal of
an agency license is the same as that prescribed for a branch.
6-707 Issuance of license; display;cancellation on termination
A. Upon the filing of the application and the payment of the fees and the approval
of the bond, or bonds, the superintendent shall investigate the facts, and if he finds
that the financial responsibility, experience, character and general fitness of the
applicant are such as to command the confidence of the community to warrant belief that
the business will be operated fairly and honestly and within the purposes of this
article, the superintendent shall issue the applicant a license to do business as a debt
B. The license shall be kept conspicuously posted in the business office of the
licensee. The license shall not be transferable or assignable.
C. Licenses shall expire on June 30 following the date of the issuance unless
sooner surrendered, revoked or suspended, but may be renewed by filing an application
with the superintendent on or before June 15 each year. The application for renewal
shall be in the form prescribed by the superintendent and shall be accompanied by the fee
prescribed in section 6-126. A separate application shall be made for each initial
license of a principal place of business, agency or branch office.
6-708 Denial; revocation or suspension oflicense
A. If the superintendent finds that the applicant fails to meet any of the
conditions set forth in this article, he shall deny the application for a license. If an
application is denied or withdrawn, the superintendent shall retain the investigation fee
to cover the costs of investigating the applicant and return the license fee to the
B. The superintendent may revoke or suspend any license issued under this article
for the following causes:
1. Conviction in any state of a felony or any crime involving breach of trust or
2. Violating any of the provisions of this article or rules of the department.
3. Fraud or deceit in procuring the issuance of the license.
4. Insolvency, filing in bankruptcy, receivership, or assigning for the benefit of
creditors by any licensee or applicant for a license.
5. Failure to pay the annual license fee.
6. Entry of an order against the licensee by an administrative agency of this
state, the federal government or any other state or territory of the United States that
involves fraud, deceit or misrepresentation by the licensee and the facts relating to the
order indicate that it would be contrary to the interests of the public to permit that
person to be licensed or to control or manage a licensee.
A. A licensee at all times shall maintain minimum liquid assets of at least two
thousand five hundred dollars in excess of his business liabilities and of his
liabilities on account of monies received in the business of a debt management
company. The superintendent may determine by general rule what assets are liquid assets
within the meaning of this section and may determine by specific ruling or demand that a
particular asset is or is not a liquid asset within the meaning of this section.
B. A licensee shall make a written contract between himself and a debtor and
immediately furnish the debtor with a copy of the completed contract. The licensee shall
concurrently furnish the debtor with a list of the creditors, as of the time of the
signing of the contract, with whom he agrees to manage the debtor's obligations. All
contracts shall contain a provision allowing the termination of the contract by either
party at any time. Such termination shall be without penalty, except that the licensee
shall retain the retainer fee if the termination is by the debtor. Termination shall
only be upon a five-day notice to the other party.
C. The basis of fees charged to a debtor by a licensee for assuming the
responsibility of debt management shall be agreed upon in advance and clearly stated in
the contract. The fees charged to a debtor shall not exceed:
1. A retainer fee of thirty-nine dollars.
2. Three-quarters of one per cent of the total indebtedness or fifty dollars,
whichever is less, may be charged monthly and shall be due and payable at the time such
deposited funds are remitted to the creditors. Unusual and necessary "out of pocket"
expense items by the licensee may be charged to the debtor's account if the incurrence of
the expense has advance written approval of the debtor and superintendent.
D. The total debt shall be calculated not less often than annually and the charges
adjusted based on the new total debt. Any fees charged by the licensee shall not be
based on a total debt which includes a mortgage on the residence or a rent payment as a
liability or a debt.
E. A licensee shall not be entitled to any fee until he has given notice of the
debt management contract to all creditors listed in the application form.
F. A licensee shall make remittances to creditors within seven days after receipt
of any funds, unless the reasonable payment of one or more of the debtor's obligations
requires that such funds be held for a longer period so as to accumulate a certain sum.
G. A licensee shall upon request furnish the debtor with a written statement of his
account each month or a verbal accounting at any time the debtor may request it during
normal business hours.
H. A licensee shall, if a compromise of a debt is arranged by the licensee with any
one or more creditors, allow the debtor the full benefit of that compromise.
I. A licensee shall maintain a trustee checking account in a bank in this state for
the benefit of debtors in which all payments received from the debtors shall be deposited
and in which all payments shall remain until disbursed by the licensee in accordance with
the terms of the contract.
J. A licensee shall keep and use in his business books, accounts and records which
will enable the superintendent to determine whether such licensee is complying with the
provisions of this article and with the rules of the department. Each licensee shall
preserve such books, accounts and records for at least three years after making the final
entry on any transaction recorded in the books, accounts or records.
K. If a licensee desires to change his place of business or the name of the company
under which the license is issued, he shall give written notice of the change within
fifteen days to the superintendent and shall submit the license to the superintendent who
shall enter an order permitting the change and who shall amend the license accordingly.
L. A licensee shall, within fifteen days after termination of a debt management
company, a branch office or an agency, inform the superintendent of the name and address
of such company, branch office or agency and shall surrender the license to the
M. A licensee shall annually on or before August 15 file a report with the
superintendent giving such relevant information as the superintendent may require
concerning the business and operations of each place of business during the preceding
year beginning July 1 and ending June 30. The superintendent may assess a penalty of
five dollars for each day the licensee fails to file such report.
It is unlawful for a licensee to:
1. Accept an account unless it appears on the basis of a reasonable budget
analysis, reduced to writing, that the debtor can reasonably meet the payments agreed
upon by the licensee and the debtor and that the agreed upon payment is sufficient to pay
the service charges to the licensee and the full amount of the proposed payments to
creditors as agreed upon by the licensee and debtor. The licensee shall retain the
written budget analysis for at least three years after the termination of the contract in
the files of the licensee. The licensee shall make the analysis available for inspection
by the superintendent, except that such a budget analysis is not deemed unreasonable if
facts which would prove it to be such were not furnished to the licensee by the debtor
2. Unless agreed upon by the debtor, attempt to alter any scheduled payment listed
on the original application from the debtor to any figure other than the amount agreed
upon by the debtor and creditors in those cases when a contractual installment
exists. Acceptance of the proposed payment by the creditor shall not alter any rights
the creditor has under his original contract with the debtor.
3. Purchase from a creditor any obligation of a debtor.
4. Operate as a collection agent and as a licensee as to the same debtor's account.
5. Execute any contract or agreement to be signed by the debtor unless the contract
or agreement is fully and completely filled in.
6. Receive or charge any fee in the form of a promissory note or other promise to
pay or receive or accept any mortgage or other security for any fee either as to real or
7. Pay any bonus or other consideration to any person for the referral of a debtor
to his business, nor accept or receive any bonus, commission or other consideration for
referring any debtor to any person for any reason.
8. Advertise his services, display, distribute, broadcast or televise or permit to
be displayed, advertised, distributed, broadcasted or televised his services in any
manner whatsoever in which any false, misleading or deceptive statement or representation
with regard to the services to be performed by the licensee or the charges to be made for
The rules and regulations of the superintendent shall include standards and criteria
for proper advertising and may include specific prohibitions as to improper advertising
by a licensee.
No person may engage in the business of a debt management company without the
license required by this article.
6-716 Fees collected
All fees collected under the provisions of this article shall be deposited,
pursuant to sections 35-146 and 35-147, in the state general fund.