This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0599.IBS
DATE: 3/12/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 599 Debt Management Services
SPONSOR(S):Garcia
TIED BILLS: IDEN./SIM. BILLS: SB 628
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fletcher Lloyd
2) Commerce Committee
SUMMARY ANALYSIS
Debt management services laws regulate the fees credit counseling organizations may charge
debtors for debt management services and credit counseling services. Debt management services
include effectuating an adjustment, compromise, or discharge of indebtedness, and advising debtors
on debt reduction and general money management practices.
There are two types of organization that provide debt management services: non-profit, 501(c)(3)
credit counseling agencies and debt settlement companies, typically for-profit organizations. While
debt settlement companies often ruin a debtor’s credit and sever ties with the debtor’s lenders, non-
profit credit counseling agencies work with debtors’ creditors, educate debtors about credit practices,
and enroll qualifying debtors in debt management plans tailored to their specific situation and budget.
The Legislature created laws in 2004 limiting the amount and types of fees credit counseling agencies
may charge debtors for debt management services. Since 2004, however, Florida’s limitation on fees
for debt management services has not been increased.
The bill revises the fee chargeable to a debtor for receiving from the debtor, and subsequently
disbursing to a creditor, money or anything of value from greater of 7.5 percent of the monthly
payment or $35 monthly to the lesser of 15 percent of the monthly payment or $75 monthly.
This bill will not have a fiscal impact on state and local governments but will have both positive and
negative fiscal impacts on the private sector.
The bill provides an effective date of July 1, 2023. STORAGE NAME: h0599.IBS PAGE: 2
DATE: 3/12/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Current Situation
Credit Counseling Organizations
Debtors seeking to manage and reduce their debts often engage credit counseling organizations
who provide debt management services and credit counseling services.
1
Non-profit credit
counseling agencies assist debtors with managing and reducing their debt by offering free
counseling on credit practices, enrolling qualifying debtors in debt management plans, and
providing community education to individuals and families on money management skills.
2
Floridians are among the many individuals who could benefit from non-profit credit counseling
organizations. According to Experian, the average Floridian carried $84,926 in debt in 2021.
3
The
majority consisted of mortgages which averaged $208,536.
4
Credit card debt, student loans, and
auto loans accounted for the other main sources, with a state average of $5,620, $40,866, and
$10,110, respectively.
5
In 2022, the average Floridian carried $89,195 in debt, a 5% increase
from 2021.
6
Debt Management Services
Debt management services is defined by Florida statute as services provided for a fee to “effect
the adjustment, compromise, or discharge of any unsecured note, account, or other indebtedness
of the debtor; or receive from the debtor and disburse to a creditor any money or other item of
value.”
7
Credit counseling agencies and creditors classify individuals who find it particularly difficult to
manage their debt, whether due to their health or specific situation, as “vulnerable.”
8
If an agency
or creditor is aware an individual is vulnerable, taking extra measures to ensure the individual
receives the same services as others, while not being placed at a disadvantage because of their
unique situation, is imperative.
9
1
Consumer Financial Protection Bureau, What is credit counseling?, https://www.consumerfinance.gov/ask-cfpb/what-is-
credit-counseling-en-1451/ (last visited Mar. 10, 2023).
2
Financial Counseling Association of America, https://fcaa.org/ (last visited Mar. 10, 2023).
3
Experian, Average Consumer Debt Levels Increase in 2022, https://www.experian.com/blogs/ask-
experian/research/consumer-debt-study/ (last visited Mar. 7, 2023).
4
Id.
5
Id.
6
Id.
7
S. 817.801(4), F.S.
8
Step Change: Debt Charity, Dealing with the debts of a vulnerable person, https://www.stepchange.org/debt-
info/dealing-with-the-debts-of-vulnerable-people.aspx (last visited Mar. 10, 2023).
9
Id. STORAGE NAME: h0599.IBS PAGE: 3
DATE: 3/12/2023
Florida’s Limitations on Fees for Debt Management Services
In 2004, the Legislature recognized the importance of easy access to debt management services,
while also acknowledging the vulnerability of debtors, by prescribing the maximum fees a person
or entity could charge a debtor for debt management services.
10
Specifically, the 2004 legislation made it unlawful for any entity or individual engaging in debt
management services or credit counseling services, to charge a debtor:
a fee greater than $50 for an initial consultation;
11
and
a fee greater than $120 per year for additional consultations or, alternatively, in the case of
receiving debt payments from the debtor and disbursing to a creditor any money or other
item of value, the greater of 7.5% of the amount paid monthly by the debtor or $35 per
month.
12
No state agency directly regulates credit counseling organizations. Regulation is self-executing by
means of private civil actions under part II of ch. 501, including possible action by the Attorney
General or local prosecutors.
13
Any person in violation of the debt services statute “commits an
unfair or deceptive trade practice.”
14
A violation results in criminal and civil penalties. Namely, a
violation is a third-degree felony, and an individual injured by a violation can bring an action for
damages, where judgement is entered for actual damages no less than the amount paid by the
aggrieved individual to the credit counseling organization.
15
Although a 2006 amendment narrowed the scope of debtors protected to those debtors
specifically residing in the State of Florida,
16
the limitation on fees for debt management services
has not been increased since its enactment in 2004.
Effect of the Bill
The bill changes the fee a person or entity may charge for the debt management services
described in s. 817.802(4)(b) (namely, receiving from the debtor and disbursing to a creditor any
money or item of value) to the lesser of 15 percent of the amount paid monthly by the debtor or
$75 per month, rather than the greater of 7.5 percent of the amount paid or $35 per month. The
following table illustrates the current and proposed fees.
Current HB 599
Greater of Lesser of
Monthly
Payment
7.5% of
monthly
$35
Monthly
Fee
Allowed
15% of
monthly
$75
Monthly
Fee
Allowed
Result of
Current vs.
HB 599
$100 $ 7.50 $ 35.00 $ 35.00 $ 15.00 $ 75.00 $ 15.00 Reduction
$500 $ 37.50 $ 35.00 $ 37.50 $ 75.00 $ 75.00 $ 75.00 Increase
$1,000 $ 75.00 $ 35.00 $ 75.00 $ 150.00 $ 75.00 $ 75.00 No Change
$1,500 $ 112.50 $ 35.00 $ 112.50 $ 225.00 $ 75.00 $ 75.00 Reduction
10
Chapter 2004-351, Laws of Florida, created s. 817.802, F.S.
11
S. 817.802(1), F.S.
12
Id.
13
Ch. 501, part II, F.S., relating to the protection of consumers from unfair trade practices, and remedies for violations
thereof, similar to federal policies relating to consumer protection.
14
S. 817.806, F.S.
15
S. 17.806, F.S.
16
Chapter 2006-136, Laws of Florida, amended s. 817.802, F.S. STORAGE NAME: h0599.IBS PAGE: 4
DATE: 3/12/2023
B. SECTION DIRECTORY:
Section 1. Amends s. 817.802(1), F.S., relating to unlawful fees and costs.
Section 2. Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
Credit counseling organizations and debtors residing in Florida would experience fiscal impact
from this bill. Specifically, the change in fees to the greater of 15% of the amount paid monthly
by the debtor and $75 would likely result in an increase in some revenue for credit counseling
organizations. On the other hand, the increase in the maximum chargeable amount might have
a negative, possibly significant, fiscal impact on debtors residing in Florida.
17
Please see
Section III.C., Drafting Issues or Other Comments, below.
D. FISCAL COMMENTS:
The bill would increase some revenues for credit counseling organizations, but the bill would
have a negative fiscal impact on debtors residing in Florida.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
17
Florida Office of Financial Regulations, Agency Analysis of 2023 House Bill 599, p. 3 (Mar. 3, 2023). STORAGE NAME: h0599.IBS PAGE: 5
DATE: 3/12/2023
B. RULE-MAKING AUTHORITY:
This bill does not appear to amend or create rulemaking authority.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Current law and the bill provide for a specified monthly fee allowed to debt management
services providers. However, correspondence received from Cambridge Credit indicates that
they charge less than the allowed fee. If the bill were to provide for a fee “up to” the lesser of
15 percent of the monthly amount or $75, then the debt management service providers would
be specifically authorized to charge less than a maximum allowed fee. The providers would
then have the option to operate within a range of allowed monthly fees, subject to a statutory
cap.
18
This could also mitigate the possible direct fiscal impacts on the private sector (i.e.,
debtors receiving debt management services).
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
18
Email from Martin Lynch, President, Cambridge Credit, Re: HB 599, regarding fee practices (Mar. 10, 2023).