Indiana Amends Provisions Regarding Financial Institutions
The General Assembly of the State of Indiana has recently passed House Enrolled Act No. 1181, amending various sections of the Indiana Code concerning financial institutions, effective July 1, 2016.
Sec. 12.
- Every credit union and every affiliate of a credit union shall be subject to examination in accordance with IC 28-11-3-1 by the department. A credit union shall be examined by the department as often as the department shall deem necessary. The department shall at all times be given free access to all of the books, papers, securities, and other sources of information, including audit reports and audit working papers for any such credit union. The director, the members of the department, and the supervisor in charge of the division shall have the power to subpoena documents and examine witnesses under oath pertaining to the business of the credit union. The department may accept an audit by a certified public accountant and govern its examination procedures and examination fees accordingly. At the close of each examination, a conference shall be conducted to disclose to the board of directors the findings of the examination.
- If a credit union contracts with an outside vendor to provide a service that would otherwise be undertaken internally by the credit union and be subject to the department’s routine examination procedures, the person that provides the service to the credit union shall, at the request of the director, submit to an examination by the department. If the director determines that an examination under this subsection is necessary or desirable, the examination may be made at the expense of the person to be examined. If the person to be examined under this subsection refuses to permit the examination to be made, the director may order any credit union that receives services from the person refusing the examination to: (1) discontinue receiving one (1) or more services from the person; or (2) otherwise cease conducting business with the person.
Sec. 8
(a) An agreement between a licensee and a debtor must:
- (1) be in a written form;
- (2) be dated and signed by the licensee and the debtor;
- (3) include the name of the debtor and the address where the debtor resides;
- (4) include the name, business address, and telephone number of the licensee;
- (5) be delivered to the debtor immediately upon formation of the agreement; and
- (6) disclose the following:
- (A) The services to be provided.
- (B) The amount or method of determining the amount of all fees and charges, individually itemized, to be paid by the debtor.
- (C) The schedule of payments to be made by or on behalf of the debtor, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment.
- (D) If a plan provides for regular periodic payments to creditors:
- (i) each creditor of the debtor to which payment will be made, the amount owed to each creditor, and any concessions the licensee reasonably believes each creditor will offer; and
- (ii) the schedule of expected payments to each creditor, including the amount of each payment and the date on which the payment will be made.
- (E) Each creditor that the licensee believes will not participate in the plan and to which the licensee will not direct payment.
- (F) The manner in which the licensee will comply with the licensee’s obligations under section 9(k) of this chapter.
- (G) That:
- (i) the licensee may terminate the agreement for good cause, upon return of unexpended money of the debtor; and
- (ii) the debtor may contact the department with any questions or complaints regarding the licensee.
- (H) The address, telephone number, and Internet address or web site of the department.
- (I) That the debtor has a right to terminate the agreement at any time without penalty (notwithstanding the close-out fee as permitted by section 8.3(d) of this chapter) or obligation.
- (J) That the debtor authorizes any bank insured by the Federal Deposit Insurance Corporation in which the licensee or the licensee’s agent has established a trust account to disclose to the department any financial records relating to the trust account.
- (K) That the licensee shall notify the debtor within five (5) days after learning of a creditor’s final decision to reject or withdraw from a plan under the agreement.
(b) For purposes of subsection (a)(5), delivery of an electronic record occurs when:
- (1) the record is made available in a format in which the debtor may retrieve, save, and print the record; and
- (2) the debtor is notified that the record is available.
(c): A debtor may exercise the debtor’s right to terminate the agreement at any time without penalty (notwithstanding the close-out fee as permitted by section 8.3(d) of this chapter) or obligation, as described in subsection (a)(6)(I), by giving the licensee written or electronic notice, in which event:
- (1) the licensee shall:
- (A) refund all unexpended money that the licensee or the licensee’s agent has received from or on behalf of the debtor for the reduction or satisfaction of the debtor’s debt; and
- (B) notify immediately in writing all creditors in the debt management plan of the cancellation by the contract debtor; and
- (2) all powers of attorney granted by the debtor to the licensee are revoked and ineffective.
(d) A licensee’s notice of a creditor’s final decision to reject or withdraw from a plan under the agreement, as described in subsection (a)(6)(K) must include:
- (1) the identity of the creditor; and
- (2) a statement that the debtor has the right to modify or terminate the agreement.
(e) All creditors included in the plan must be notified of the contract debtor’s and licensee’s relationship.
(f) A licensee shall give to the contract debtor a dated receipt for each payment, at the time of the payment, unless the payment is made by check, money order, or automated clearinghouse withdrawal as authorized by the contract debtor.
(g) A licensee may not enter into an agreement with a debtor unless a thorough, written budget analysis of the debtor indicates that the debtor can reasonably meet the payments required under a proposed plan. The following must be included in the budget analysis:
- (1) Documentation and verification of all income considered. All income verification must be dated not more than sixty (60) days before the completion of the budget analysis.
- (2) Monthly living expense figures, which must be reasonable for the particular family size and part of Indiana. If expenditure reductions are part of the planned budget for the debtor, details of the expected savings must be documented in the debtor’s file and set forth in the budget provided to the debtor.
- (3) Documentation and verification, by a current credit bureau report, current debtor account statements, or direct documentation from the creditor, of monthly debt payments and balances to be paid outside the plan.
- (4) Documentation and verification, by a current credit bureau report, current debtor account statements, or direct documentation from the creditor, of the monthly debt payments and current balances to be paid through the plan.
- (5) The date of the budget analysis and the signature of the debtor.
(h) A licensee may not enter into an agreement with a debtor for a period longer than sixty (60) months.
(i) A licensee may provide services under this chapter in the same place of business in which another business is operating, or from which other products or services are sold, if the director issues a written determination that:
- (1) the operation of the other business; or (2) the sale of other products and services; from the location in question is not contrary to the best interests of debtors.
(j) A licensee without a physical location in Indiana may:
- (1) solicit sales of; and (2) sell; additional products and services to Indiana residents if the director issues a written determination that the proposed solicitation or sale is not contrary to the best interests of debtors.
(k) A licensee shall maintain a toll free communication system, staffed at a level that reasonably permits a contract debtor to speak to a counselor, debt specialist, or customer service representative, as appropriate, during ordinary business hours.
(l) A debt management company shall act in good faith in all matters under this chapter.
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
Comments are closed.