State wants to regulate credit counselors - Nashville Business Journal:

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The Uniform Debt Management Services Act caps fees and requiresd such companies to carry insuranced and asurety bond. It also includes othee regulations. It also such companies doingh business with Tennessee residents to register with the Many debt management firms are baseed inother states, with many in Texas, but operate by phone and online. They market to Tennesseans through ads such asroadsider signs. Debt management companies act as go-betweenx with consumers and their debtors, and work to help negotiatde downconsumer debt.
The act was drafted with the help of the Uniform Law Commission, a 117-year-old, state-supported organization that focuseds on consumer protection and is trying to create a set standarx nationwide. The commission says the firms generallh charge significant upfront fees and advisse their customers to stop payinbgtheir bills. They are directed to save up a lump sum of generally 40 percent to 60 percen oftheir debt, that the company then uses to negotiater a settlement with the creditor. ln many consumers can negotiate a settlement directly with their credit card companieds but may be too intimidaterd todo so. Sen.
Doug Overbey, who sponsored the Senate bill, says the new law “givex us an opportunity to get out frontg and protect consumersbefore there’s a problemn in our state.” The Tennessee bill is similare to legislation already enacted in Utah, Delaware and Rhode Island, and beingy introduced this year in Minnesota, Missouri, New Mexico, Texas and Washington. The ULC is pushintg similar legislation in several statesthis year. Tennessewe lawmakers have made afew modifications, includinb requiring companies to pay a fee to the which will make it a self-sustaininbg program, as well as submit two years of verifiee financial statements.