EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0128*
HOUSE BILL 128
I1, I3, F2 2lr0595
(PRE–FILED)
By: Delegate Lopez
Requested: September 29, 2021
Introduced and read first time: January 12, 2022
Assigned to: Economic Matters and Appropriations
A BILL ENTITLED
AN ACT concerning 1
Debt Settlement Services – Student Education Loan Debt Relief – Disclosures 2
and Prohibitions 3
FOR the purpose of applying certain provisions of law regarding debt settlement services 4
to student education loan debt relief; requiring a person registered to provide debt 5
settlement services to make certain disclosures to consumers; requiring that an 6
advertisement for debt settlement services for student education loan debt relief 7
include a certain disclosure; prohibiting debt settlement services providers from 8
taking certain actions with respect to student education loan debt relief; and 9
generally relating to student education loan debt and debt settlement services. 10
BY repealing and reenacting, without amendments, 11
Article – Financial Institutions 12
Section 2–104.1(a) 13
Annotated Code of Maryland 14
(2020 Replacement Volume and 2021 Supplement) 15
BY repealing and reenacting, with amendments, 16
Article – Financial Institutions 17
Section 12–1001, 12–1012, and 12–1013 18
Annotated Code of Maryland 19
(2020 Replacement Volume and 2021 Supplement) 20
BY adding to 21
Article – Financial Institutions 22
Section 12–1012.1 23
Annotated Code of Maryland 24
(2020 Replacement Volume and 2021 Supplement) 25
2 HOUSE BILL 128
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Financial Institutions 3
2–104.1. 4
(a) (1) In this section the following words have the meanings indicated. 5
(2) “Servicing” means: 6
(i) Receiving scheduled periodic payments from a student loan 7
borrower according to the terms of a student education loan; 8
(ii) Applying the payments according to the student education loan 9
terms; and 10
(iii) Performing other administrative services. 11
(3) “Student education loan” means any loan, notwithstanding any election 12
of law or designation of status in any contract, used for financing postsecondary education 13
or other postsecondary school–related expenses. 14
(4) “Student loan borrower” means: 15
(i) A resident of the State who has received or agreed to pay a 16
student education loan; or 17
(ii) A resident who shares repayment responsibility with a resident 18
described under item (i) of this paragraph. 19
(5) “Student Loan Ombudsman” means an individu al, whether a paid 20
employee or a volunteer, whom the Commissioner designates to serve as a liaison between 21
student loan borrowers and student loan servicers. 22
(6) (i) “Student loan servicer” means a person, regardless of location, 23
responsible for servicing a student education loan to a student loan borrower. 24
(ii) “Student loan servicer” includes a trust entity performing or 25
receiving the benefit of student education loan servicing. 26
12–1001. 27
(a) In this subtitle the following words have the meanings indicated. 28
(b) (1) “Consumer” means an individual who: 29
HOUSE BILL 128 3
[(1)] (I) Resides in the State; and 1
[(2)] (II) Is seeking debt settlement services or has entered into a debt 2
settlement services agreement in connection with debts that are consumer debts, as defined 3
in § 13–101 of the Commercial Law Article. 4
(2) “CONSUMER” INCLUDES A STUDENT L OAN BORROW ER AS 5
DEFINED IN § 2–104.1 OF THIS ARTICLE. 6
(c) “Debt management services” has the meaning stated in § 12–901 of this title. 7
(d) (1) “Debt settlement services” means any service or program represented, 8
directly or by implication, to renegotiate, settle, reduce, or in any way alter the terms of 9
payment or other terms of a debt between a consumer and one or more unsecured creditors 10
or debt collectors, including a reduction in the balance, interest rate, or fees owed by a 11
consumer to an unsecured creditor or debt collector. 12
(2) “DEBT SETTLEMENT SERVI CES” INCLUDES STUDENT EDU CATION 13
LOAN DEBT RELIEF . 14
[(2)] (3) “Debt settlement services” does not include [debt]: 15
(I) DEBT management services; 16
(II) SERVICES OF A STUDENT LOAN SERVICER ; OR 17
(III) SERVICES OF AN ORIGIN ATOR, A GUARANTOR , OR A 18
SERVICER OF FEDERAL EDUCATION LOANS OR P RIVATE EDUCATION LOA NS. 19
(e) “Debt settlement services agreement” means a written contract, plan, or 20
agreement between a debt settlement services provider and a consumer for the performance 21
of debt settlement services. 22
(f) “Debt settlement services fee” means a fee charged to a consumer by a debt 23
settlement services provider for providing debt settlement services for a consumer. 24
(g) (1) “Debt settlement services provider” means a person that provides or 25
offers to provide debt settlement services for a consumer regardless of whether the person 26
provides the debt settlement services on a for–profit or not–for–profit basis. 27
(2) “DEBT SETTLEMENT SERVI CES PROVIDER ” INCLUDES A PERSON 28
THAT: 29
4 HOUSE BILL 128
(I) ENGAGES IN OR HOLDS ITSELF O UT AS ENGAGING IN TH E 1
BUSINESS OF STUDENT EDUCATION LOAN DEBT RELIEF IN EXCHANGE F OR A FEE OR 2
COMPENSATION ASSESSED AGAINST OR CHARGED TO A CONSUME R; OR 3
(II) SOLICITS FOR OR ACTS ON BEHALF OF A PERSO N ENGAGING 4
IN ACTIVITIES DESCRIBED UNDER ITEM (I) OF THIS PARAGRAPH . 5
(3) “DEBT SETTLEMENT SERVI CES PROVIDER ” DOES NOT INCLUDE 6
AN INSTITUTION OF HI GHER EDUCATION AS DEFINED IN THE FEDERAL HIGHER 7
EDUCATION ACT OF 1965. 8
(h) “Dedicated account” means an account described in § 12–1010(d) of this 9
subtitle. 10
(i) “Offer, provide, or attempt to provide debt settlement services” means 11
providing debt settlement services: 12
(1) To consumers through any means, including telephone telemarketing, 13
Internet solicitation, and face–to–face meetings; and 14
(2) On an intrastate or interstate basis. 15
(j) “Principal amount of the debt” means the amount of a debt at the time the 16
debt is included in a debt settlement services agreement. 17
(k) “Registrant” means a person registered under this subtitle to provide debt 18
settlement services. 19
(L) “STUDENT EDUCATION LOA N” HAS THE MEANING STAT ED IN § 20
2–104.1(A) OF THIS ARTICLE. 21
(M) “STUDENT EDUCATION LOAN DEBT RELIEF ” MEANS OFFERING TO 22
PROVIDE ADVICE OR SE RVICE, OR ACTING AS AN INTE RMEDIARY BETWEEN OR ON 23
BEHALF OF A CONSUMER AND THE UNITED STATES DEPARTMENT OF EDUCATION, 24
ANY ORIGINATOR OR GU ARANTOR OF FEDERAL E DUCATION LOANS , OR A STUDENT 25
LOAN SERVICER , IN EXCHANGE FOR A FE E OR COMPENSATION AS SESSED AGAINST 26
OR CHARGED TO A CONS UMER, IN ORDER TO: 27
(1) NEGOTIATE, ARRANGE, OR OBTAIN: 28
(I) A SETTLEMENT , ADJUSTMENT , DISCHARGE, OR 29
SATISFACTION OF A CONSUMER ’S STUDENT EDUCATION LOAN IN AN AMOUNT LE SS 30
THAN THE FULL AMOUNT OF THE PRINCIPAL AMO UNT OF THE DEBT OR THE 31
CURRENT OUTSTANDING BALANCE OF THE DEBT ; OR 32
HOUSE BILL 128 5
(II) A REDUCTION OR ALTERAT ION IN: 1
1. THE AMOUNT OF MONTHLY PAYMENT OF FEES ; OR 2
2. THE AMOUNT OF INTERES T OWED; 3
(2) ENROLL A CONSUMER IN A REPA YMENT PLAN, FORBEARANCE , OR 4
DEFERMENT OF A STUDENT EDUCATION LO AN; 5
(3) APPLY FOR CONSOLIDATI ON OF OR CONSOLIDATE A CON SUMER’S 6
STUDENT EDUCATION LO AN; OR 7
(4) OFFER TO PROVIDE ANY OTHER SERVICE RELATI NG TO ALTERING 8
THE TERMS OF A CONSU MER’S STUDENT EDUCATION LOAN, INCLUDING A 9
REDUCTION IN THE A MOUNT OF: 10
(I) INTEREST OWED BY THE CONSUMER ; 11
(II) THE PRINCIPAL BALANCE OF THE STUDENT EDUCA TION 12
LOAN; OR 13
(III) A MONTHLY PAYMENT OR FEE. 14
(N) “STUDENT LOAN SERVICER ” HAS THE MEANING STAT ED IN § 2–104.1(A) 15
OF THIS ARTICLE. 16
[(l)] (O) “Unique identifier” means a number or another identifier assigned by 17
NMLS. 18
12–1012. 19
(a) A debt settlement services agreement shall: 20
(1) Be signed and dated by the registrant and the consumer; and 21
(2) Include, in at least 12 point type: 22
(i) The name, address, and telephone number of the consumer; 23
(ii) The name, address, and telephone number of the registrant; 24
(iii) A description of the debt settlement services to be provided to the 25
consumer; 26
6 HOUSE BILL 128
(iv) 1. Any debt settlement services fees to be charged to the 1
consumer; and 2
2. A statement that the registrant may not: 3
A. Charge the consumer a fee for consultation or for obtaining 4
a consumer’s credit report; or 5
B. Require a voluntary contribution from the consumer for 6
any service provided by the registrant; 7
(v) The identity of each individual creditor or debt collector whose 8
debts are included in the debt settlement services agreement and the principal amount of 9
the debt owed to each individual creditor or debt collector; 10
(vi) The principal amount of the total debt included in the debt 11
settlement services agreement; 12
(vii) A good faith estimate of the amount of time necessary to achieve 13
the represented results; 14
(viii) To the extent that the debt settlement services may include a 15
debt settlement offer to any of the consumer’s creditors or debt collectors, a good faith 16
estimate of: 17
1. The time by which the registrant will make a bona fide 18
debt settlement offer to each of them; and 19
2. The amount of money or percentage of each debt that the 20
consumer must accumulate before the registrant will make a bona fide debt settlement 21
offer to each of them; 22
(ix) A statement that: 23
1. The consumer may withdraw from the debt settlement 24
services agreement at any time; and 25
2. If a consumer withdraws from the debt settlement services 26
agreement, the registrant: 27
A. May not charge a penalty; and 28
B. May collect debt settlement services fees earned by the 29
registrant; 30
HOUSE BILL 128 7
(X) FOR A DEBT SETTLEMENT SERV ICES AGREEMENT FOR 1
STUDENT EDUCATION LO AN DEBT RELIEF , A STATEMENT IN SUBSTANTIALLY THE 2
FOLLOWING FORM : 3
“(NAME OF COMPANY ) IS A PRIVATE COMPANY , AND IS NOT AFFILIATE D WITH 4
THE UNITED STATES DEPARTMENT OF EDUCATION OR ANY OTHE R ACADEMI C 5
ENTITY OR GOVERNMENT AL AGENCY. (NAME OF COMPANY ) IS NOT A LENDER , 6
GUARANTOR , OR SERVICER OF FEDER AL STUDENT LOANS . YOU CAN APPLY FOR 7
CONSOLIDATION AND OT HER REPAYMENT PLANS WITHOUT PAID ASSISTA NCE 8
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION. MORE 9
INFORMATION IS AVAILA BLE ON THE DEPARTMENT ’S WEBSITE OR THROUGH YOUR 10
FEDERAL STUDENT LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS 11
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION.”; 12
[(x)] (XI) If the registrant requests or requires the consumer to 13
deposit funds in a dedicated account, a statement that: 14
1. The consumer owns the funds held in the account, 15
including any accrued interest; and 16
2. If the consumer requests to withdraw from the debt 17
settlement services agreement, within 7 days after the request, all funds in the account, 18
including accrued interest, less any debt settlement services fees earned by the registrant 19
in compliance with § 12–1010 of this subtitle, must be paid to the consumer; and 20
[(xi)] (XII) A statement that the consumer may be required to pay 21
taxes on the amount by which the consumer’s debt is reduced. 22
(b) (1) The disclosures required under subsection (a)(2)(vii) through [(xi)] (XII) 23
of this section shall be provided to the consumer in a clear and conspicuous manner in the 24
debt settlement services agreement. 25
(2) A REGISTRANT REQUIRED TO MAKE A DISCLOSURE UNDER 26
SUBSECTION (A)(2)(X) OF THIS SECTION SHAL L MAKE SUBSTANTIALLY THE SAME 27
STATEMENT ORALLY TO THE CONSUMER BEFORE THE AGREEMENT IS SIG NED. 28
12–1012.1. 29
A DEBT SETTLEMENT SERV ICES PROVIDER ENGAGE D IN STUDENT EDUCATI ON 30
LOAN DEBT RELIEF MAY NOT: 31
(1) ADVISE, EXPRESSLY OR BY IMPL ICATION, THAT A CONSUMER 32
STOP MAKING PAYMENTS OR STOP COMMUNICATIN G WITH THE CONSUMER ’S 33
STUDENT LOAN SERVICE R; OR 34
8 HOUSE BILL 128
(2) ACCESS OR OBTAIN A CONSUMER ’S STUDENT AID INFORM ATION 1
IN VIOLATION OF FEDE RAL LAW. 2
12–1013. 3
(A) An advertisement for debt settlement services shall include clearly and 4
conspicuously a disclosure that, to the extent that any aspect of the debt settlement services 5
relies on or results in the consumer’s failure to make timely payments to the consumer’s 6
creditors or debt collectors, the use of the debt settlement services: 7
(1) Will likely adversely affect the consumer’s creditworthiness; 8
(2) May result in the consumer being subject to collections or being sued by 9
creditors or debt collectors; and 10
(3) May increase the amount of money the consumer owes due to the 11
accrual of fees and interest by creditors or debt collectors. 12
(B) AN ADVERTISEMENT FOR DEBT SETTLEMENT SERV ICES FOR STUDENT 13
EDUCATION LOAN DEBT RELIEF SHALL INCLUDE CLEARL Y AND CONSPICUOUSLY A 14
DISCLOSURE IN SUBSTANTIALLY THE FOLLOWING FORM : 15
“(NAME OF COMPANY ) IS A PRIVATE COMPANY , AND IS NOT AFFILIATE D WITH 16
THE UNITED STATES DEPARTMENT OF EDUCATION OR ANY OTHE R ACADEMIC 17
ENTITY OR GOVERNMENT AL AGENCY. (NAME OF COMPANY ) IS NOT A LENDER , 18
GUARANTOR , OR SERVICER OF FEDER AL STUDENT LOANS . YOU CAN APPLY FOR 19
CONSOLIDATION AND OT HER REPAYMENT PLANS WITHOUT PAID ASSISTA NCE 20
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION. MORE 21
INFORMATION IS AVAIL ABLE ON THE DEPARTMENT ’S WEBSITE OR THROUGH YOUR 22
FEDERAL STUDENT LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS 23
THROUGH THE UNITED STATES DEPARTMENT OF EDUCATION.”. 24
SECTION 2. AND BE IT FURTHER ENACT ED, That this Act shall take effect 25
October 1, 2022. 26