(a)All money paid to a licensee by or on behalf
of an Indiana contract debtor for distribution to creditors under a plan
shall be held in trust in a separate account maintained specifically for
the benefit of the licensee's Indiana contract debtors. However, as an
alternative to maintaining a separate trust account specifically for the
benefit of the licensee's Indiana contract debtors, a licensee may submit
a request to the director for approval to maintain a trust account that
holds both money paid to the licensee by or on behalf of Indiana
contract debtors and money paid to the licensee by or on behalf of
contract debtors who do not reside in Indiana. The request must include
documentation of the licensee's account reconciliation procedures
sufficient to demonstrate to the director tha
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(a) All money paid to a licensee by or on behalf
of an Indiana contract debtor for distribution to creditors under a plan
shall be held in trust in a separate account maintained specifically for
the benefit of the licensee's Indiana contract debtors. However, as an
alternative to maintaining a separate trust account specifically for the
benefit of the licensee's Indiana contract debtors, a licensee may submit
a request to the director for approval to maintain a trust account that
holds both money paid to the licensee by or on behalf of Indiana
contract debtors and money paid to the licensee by or on behalf of
contract debtors who do not reside in Indiana. The request must include
documentation of the licensee's account reconciliation procedures
sufficient to demonstrate to the director that the licensee will be able
to:
(1) comply with the reconciliation requirements set forth in
subsection (e) with respect to each Indiana contract debtor whose
money is held in the account; and
(2) accurately determine the appropriate surety bond level under
section 6(d) of this chapter at the time of each renewal of the
licensee's license under this chapter.
Upon approval by the director of a request described in this subsection,
the licensee shall maintain the documentation described in subdivisions
(1) and (2) for review by department examiners during the course of
the department's routine examinations under this chapter. Before the
close of the same banking day that funds are received from an Indiana
contract debtor, the licensee shall deposit the money in the trust
account required under this section.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each contract debtor
to whom the licensee is furnishing debt management services in
Indiana.
(2) Disburse money paid by or on behalf of a contract debtor to
creditors of the contract debtor as disclosed in the agreement
between the licensee and the contract debtor.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds from a contract debtor. After the initial receipt of
funds, remittances, less fees and costs, shall be made not later
than thirty (30) days after receipt of funds, unless the reasonable
payment of one (1) or more of the contract debtor's obligations
requires that the funds be held for a longer period to accumulate
a sum certain. For purposes of this section, the close-out fee set
forth in section 8.3(d) of this chapter is not considered an
obligation of the contract debtor.
(4) Retain for charges in the trust account required under this
section an amount less than or equal to the sum of one (1) month's
fees for the licensee's Indiana contract debtors whose money is
held in the account, as permitted by section 8.3(c)(2) of this
chapter, plus a close-out fee, as permitted by section 8.3(d) of this
chapter, for each of the licensee's Indiana contract debtors whose
money is held in the account, unless a greater amount is approved
in writing by the department.
(5) Promptly:
(A) correct any payments on behalf of a contract debtor that are
not made or that are misdirected as a result of an error by the
licensee or other person in control of the trust account; and
(B) reimburse the contract debtor for any costs or fees imposed
by a creditor as a result of the failure to pay or misdirection.
(c) A licensee may not commingle the licensee's own funds with
money in the trust account established under this section for the benefit
of the licensee's Indiana contract debtors.
(d) The trust account required under this section must at all times
have a cash balance equal to at least the sum of the balances of each
individual account maintained for each Indiana contract debtor whose
money is held in the trust account.
(e) The licensee shall reconcile the trust account required under this
section at least every thirty (30) days after receipt of the bank
statement. The reconciliation must compare the cash balance in the
trust account for all the licensee's Indiana contract debtors whose
money is held in the account with the sum of the balances in each of
those Indiana contract debtor's individual accounts. If the licensee or
the licensee's designee has more than one (1) trust account under this
section, each trust account must be individually reconciled. If the cash
balance held in a trust account for the benefit of the licensee's Indiana
contract debtors reflects a shortage when compared with the sum of the
balances in each of those Indiana contract debtor's individual accounts,
the licensee shall immediately provide written notice to the department
of that fact and of any remedial action taken by the licensee. If the cash
balance held in a trust account for the benefit of the licensee's Indiana
contract debtors reflects a surplus when compared with the sum of the
balances in each of those Indiana contract debtor's individual accounts,
the licensee shall attempt to remedy the surplus and shall retain, for
review by department examiners, documentation of the actions taken.
(f) If a licensee or a licensee's employee discovers, or has a
reasonable suspicion of, embezzlement or other unlawful appropriation
of money held in trust, the licensee or the licensee's employee shall
immediately notify the department in writing. Unless the department
by regulation, rule, policy, or guidance provides otherwise, the licensee
shall give notice to the department describing the remedial action taken
or to be taken not later than five (5) days after the licensee or the
licensee's employee discovers, or has a reasonable suspicion of, the
embezzlement or other unlawful appropriation.
(g) If a contract debtor terminates an agreement or it becomes
reasonably apparent to a licensee that a plan has failed, the licensee
shall, not later than fifteen (15) days after the effective date of the
termination of the agreement or the date on which it becomes apparent
to the licensee that the plan has failed, as applicable, refund to the
contract debtor all money paid by or on behalf of the contract debtor
that has not been paid to creditors less the fee that is payable to the
licensee under section 8.3(d) of this chapter.
(h) Before relocating a trust account from one (1) bank to another,
a licensee shall inform the department of the name, business address,
and telephone number of the new bank. As soon as practicable, the
licensee shall inform the department of the account number of the trust
account at the new bank.
(i) Before adding or replacing any signatory on the trust account
required under this section, the licensee shall:
(1) ensure that the new signatory is qualified based on a
background check consistent with section 3(c) of this chapter; and
(2) maintain, for review by department examiners, documentation
of the background check conducted.
(j) At least once each month while an agreement between a licensee
and a contract debtor is in effect, the licensee shall render to the
contract debtor an accounting statement that includes the following:
(1) The following information with respect to the month for which
the accounting statement is prepared:
(A) The total amount received from the contract debtor.
(B) The total amount paid to each creditor on behalf of the
contract debtor.
(C) The amount of any charges deducted by the licensee.
(D) Any amount held in reserve on behalf of the contract
debtor.
(2) A statement that the contract debtor's plan is regulated by the
department, along with the department's contact information,
including the department's address, Internet web site address, and
toll free telephone number.
A licensee shall also provide an accounting statement described in this
subsection to a contract debtor not later than seven (7) days after
written demand by the contract debtor for such a statement. However,
the licensee is not required to provide more than three (3) such
requested accountings per six (6) month period.
(k) Upon the completion or termination of a contract between a
licensee and a contract debtor, the licensee shall provide to the contract
debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the contract debtor; and
(2) listing the name and address of:
(A) any creditors paid in full; and
(B) any creditors remaining unpaid.
Formerly: Acts 1971, P.L.397, SEC.1; Acts 1972, P.L.10,
SEC.6. As amended by P.L.196-1996, SEC.4; P.L.213-2007, SEC.49;
P.L.217-2007, SEC.47; P.L.35-2010, SEC.131; P.L.89-2011, SEC.43;
P.L.6-2012, SEC.195; P.L.27-2012, SEC.75; P.L.216-2013,
SEC.30.