GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H D
HOUSE BILL DRH10302-MU-33
Short Title: Modernize Debt Settlement Prohibition. (Public)
Sponsors: Representative Howard.
Referred to:
*DRH10302 -MU-33*
A BILL TO BE ENTITLED 1
AN ACT TO MODERNIZE AND EXPAND THE PROHIBITION OF DEBT SETTLEMENT 2
BY MAKING DEBT SETTLEMENT AN UNFAIR TRADE PRACTICE, CLARIFYING 3
THE DEFINITION OF DEBT SETTLEMENT, EXPANDING CIVIL REMEDIES 4
AVAILABLE TO DEBTORS, AND LIMITING DEBT SETTLEMENT ACTS THAT ARE 5
AUTHORIZED AND TO MAKE OTHER ADMINISTRATIVE AND TECHNICAL 6
CHANGES. 7
The General Assembly of North Carolina enacts: 8
SECTION 1.(a) Article 56 of Chapter 14 of the General Statutes is recodified as 9
Article 9 of Chapter 75 of the General Statutes as follows: 10
11
Former G.S. Citation New G.S. Citation 12
G.S. 14-423 G.S. 75-151 13
G.S. 14-424 G.S. 75-153 14
G.S. 14-425 G.S. 75-154 15
G.S. 14-426 G.S. 75-155 16
SECTION 1.(b) Article 9 of Chapter 75 of the General Statutes, as created by 17
subsection (a) of this section, reads as rewritten: 18
"Article 9. 19
"Debt Adjusting.Adjusting and Debt Settlement Prohibited. 20
"§ 75-151. Definitions. 21
As used in this Article, the following definitions apply: 22
(1) "Debt adjuster" means a person who engages in, attempts to engage in, or 23
offers to engage in the practice or business of debt adjusting. 24
(1) Affiliate. – Any person that controls, is controlled by, or is under common 25
control with any other person. 26
(2) "Debt adjusting" means entering Debt adjusting. – Entering into or making a 27
contract, express or implied, with a particular debtor whereby the debtor 28
agrees to pay a certain amount of money periodically to the person engaged 29
in the debt adjusting business and that person, for consideration, agrees to 30
distribute, or distributes the same among certain specified one or more 31
creditors in accordance with a plan agreed upon. Debt adjusting includes the 32
business or practice of any person who holds himself out as acting or offering 33
or attempting to act for consideration as an intermediary between a debtor and 34
his creditors for the purpose of settling, compounding, or in any way altering 35
the terms of payment of any debt of a debtor, and to that end receives money 36
H.B. 734
Apr 2, 2025
HOUSE PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
Page 2 DRH10302-MU-33
or other property from the debtor, or on behalf of the debtor, for the payment 1
to, or distribution among, the creditors of the debtor. 2
(3) Debt adjusting also includes the business or practice of debt settlement or 3
foreclosure assistance whereby Debt settlement. – The business whereby any 4
person holds himself or herself themselves out as acting for consideration as 5
an intermediary between a debtor and one or more of the debtor's creditors for 6
the purpose of reducing, settling, or altering the terms of the payment of any 7
debt of the debtor, whether or not the person distributes the debtor's funds or 8
property among the creditors, and receives a fee or other consideration for 9
reducing, settling, or altering the terms of the payment of the debt in advance 10
of the debt settlement having been completed or in advance of all the services 11
agreed to having been rendered in full.debtor. 12
(3)(4) "Debtor" means an Debtor. – An individual who resides in North Carolina, 13
and includes two or more individuals who are jointly and severally, or jointly 14
or severally, indebted to a creditor or creditors. 15
(3a) "Nominal consideration" means a fee or a contribution to cover the cost of 16
administering a debt management plan not to exceed forty dollars ($40.00) for 17
origination or setup of the debt management plan and ten percent (10%) of the 18
monthly payment disbursed under the debt management plan, not to exceed 19
forty dollars ($40.00) per month. 20
(4)(5) "Person" means an Person. – An individual, firm, partnership, limited 21
partnership, corporation, or association.association, or other entity. 22
"§ 75-152. Debt adjusting and debt settlement prohibited. 23
No person, directly or through affiliates, shall engage in, offer to engage in, or attempt to 24
engage in debt adjusting or debt settlement. 25
"§ 75-153. Engaging, etc., in business of debt adjusting Debt adjusting and debt settlement 26
a misdemeanor. 27
If any Any person shall engage that engages in, or offer offers to engage in, or attempt to, 28
attempts to engage in the business or practice of debt adjusting, or if any person shall hereafter 29
act, offer to act, or attempt to act as a debt adjuster, he shall be adjusting or debt settlement is 30
guilty of a Class 2 misdemeanor. 31
"§ 75-154. Enjoining practice of debt adjusting; appointment of receiver for money and 32
property employed.Jurisdiction of the superior court to enjoin debt adjusting or 33
debt settlement. 34
(a) The superior court shall have has jurisdiction, in an action brought in the name of the 35
State by the Attorney General or the district attorney of the prosecutorial district as defined in 36
G.S. 7A-60, to enjoin, as an unfair or deceptive trade practice, the continuation of any debt 37
adjusting or debt settlement business or the offering of any debt adjusting services. or debt 38
settlement services in violation of this Article. 39
(b) The Attorney General or the district attorney who brings an action under this section 40
may appoint a receiver for the property and money employed in the transaction of business by 41
such the person as a debt adjuster, to ensure, so far as may be possible, the return to debtors of 42
so much of their money and property as has been received by the debt adjuster, and has not been 43
paid to the creditors of the debtors. 44
(c) The court in an action under this section may also assess civil penalties under 45
G.S. 75-15.2 and award attorneys' fees to the State under G.S. 75-16.1. 46
(d) This section is in addition to any other remedies available under this Chapter or other 47
laws. 48
"§ 75-155. Certain persons and transactions not deemed debt adjusters or debt 49
adjustment.Acts authorized. 50 General Assembly Of North Carolina Session 2025
DRH10302-MU-33 Page 3
The following individuals or transactions shall persons are not be deemed debt adjusters or 1
as being engaged in the business or practice of debt adjusting:adjusting or debt settlement: 2
(1) Any person or individual who is a regular full-time employee of a debtor, 3
debtor and who acts as an adjuster of his with respect to an employer's debts. 4
(2) Any person or individual acting pursuant to any order or judgment of a court, 5
or a court order. 6
(3) Any person acting pursuant to authority conferred by any a law of this State 7
or of the United States. 8
(3)(4) Any person who that is a creditor of the debtor, or an agent of one or more 9
creditors of the debtor, including the creditor's agent, and whose services in 10
adjusting the debtor's debts are rendered that acts without cost to the 11
debtor.debtor with respect to debts owed to the creditor. 12
(4)(5) Any person who that at the request of a debtor, debtor arranges for or makes 13
a loan to the debtor, debtor and who, at the authorization of the debtor, acts as 14
an adjuster of the debtor's debts engages in debt adjusting in the disbursement 15
of the proceeds of the loan, loan without compensation cost to the debtor for 16
the services rendered in adjusting such debts.the debts, except interest and fees 17
authorized by law. 18
(5) An intermittent or casual adjustment of a debtor's debts, for compensation, by 19
an individual or person who is not a debt adjuster or who is not engaged in the 20
business or practice of debt adjusting, and who does not hold himself out as 21
being regularly engaged in debt adjusting. 22
(6) An attorney-at-law licensed to practice in this State who is not employed by a 23
debt adjuster.and acting within the attorney-client relationship with the debtor 24
or creditor, excluding services provided to a debtor by an attorney, or in the 25
name of an attorney, who has entered into any arrangement with a person 26
engaged, directly or through affiliates, in debt adjusting or debt settlement. 27
(7) An organization that provides credit counseling, education, and debt 28
management services to debtors if the organization also does all of the 29
following: 30
a. Provides individualized credit counseling and budgeting assistance to 31
the debtor without charge prior to the debtor's enrollment in a debt 32
management plan provided by the organization. 33
b. Determines that the debtor has the financial ability to make payments 34
to complete the debt management plan and that the plan is suitable for 35
the debtor. 36
c. Disburses the debtor's funds to creditors pursuant to a debt 37
management plan that the debtor has paid for with no more than 38
nominal consideration and has agreed to in writing. 39
d. Charges no fee or a fee to cover the cost of administering a debt 40
management plan not to exceed forty dollars ($40.00) for origination 41
or setup of the debt management plan and ten percent (10%) of the 42
monthly payment disbursed under the debt management plan not to 43
exceed forty dollars ($40.00) per month. 44
d.e. Provides to the debtor, periodically and on no less than a quarterly 45
basis, an individualized accounting for the most recent period of all of 46
the debtor's payments and disbursements under the debt management 47
plan and all charges paid by the debtor. 48
e.f. Does not directly or indirectly require the debtor to purchase other 49
services or materials as a condition to participating in the debt 50
management plan. 51 General Assembly Of North Carolina Session 2025
Page 4 DRH10302-MU-33
f.g. Does not receive a payment, commission, or other benefit for referring 1
the debtor to a provider of services. 2
g.h. Is accredited Accredited by an accrediting organization that the 3
Commissioner of Banks approves as being independent and nationally 4
recognized for providing accreditation to organizations that provide 5
credit counseling and debt management services. 6
"§ 75-156. Contracts void. 7
Contracts for debt adjusting or debt settlement are void as against public policy. 8
"§ 75-157. Unfair trade practice. 9
A violation of this Article is an unfair trade practice under G.S. 75-1.1." 10
SECTION 2. This act becomes effective July 1, 2025, and applies to offenses 11
committed on or after that date. 12