This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0599c.COM
DATE: 4/6/2023
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 16 Y, 0 N Fletcher Lloyd
2) Commerce Committee Fletcher Hamon
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. Nonprofit 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: h0599c.COM PAGE: 2
DATE: 4/6/2023
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
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
1
Consumer Financial Protection Bureau, What is credit counseling?, https://www.consumerfinance.gov/ask-cfpb/what-
iscredit-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/askexperian/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/debtinfo/dealing-
with-the-debts-of-vulnerable-people.aspx (last visited Mar. 10, 2023).
9
Id.
10
Chapter 2004-351, Laws of Florida, created s. 817.802, F.S. STORAGE NAME: h0599c.COM PAGE: 3
DATE: 4/6/2023
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
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.
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: h0599c.COM PAGE: 4
DATE: 4/6/2023
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:
None.
B. RULE-MAKING AUTHORITY
This bill does not appear to amend or create rulemaking authority.
17
Florida Office of Financial Regulations, Agency Analysis of 2023 House Bill 599, p. 3 (Mar. 3, 2023). STORAGE NAME: h0599c.COM PAGE: 5
DATE: 4/6/2023
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). An amendment is expected to address this issue.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
18
Email from Martin Lynch, President, Cambridge Credit, Re: HB 599, regarding fee practices (Mar. 10, 2023)