GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 734
Short Title: Modernize Debt Settlement Prohibition. (Public)
Sponsors: Representatives Howard, Setzer, B. Jones, and Liu (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Judiciary 1, if favorable, Finance, if favorable, Rules, Calendar, and Operations of
the House
April 3, 2025
*H734 -v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MODERNIZE AND EXPAND THE PROHI BITION OF DEBT SETTLEMENT 2
BY MAKING DEBT SETTL EMENT AN UNFAIR TRAD E PRACTICE, CLARIFYING 3
THE DEFINITION OF DE BT SETTLEMENT, EXPAN DING CIVIL REMEDIES 4
AVAILABLE TO DEBTORS , AND LIMITING DEBT SETTLEMENT ACTS THAT ARE 5
AUTHORIZED AND TO MA KE OTHER ADMINISTRAT IVE 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 General Assembly Of North Carolina Session 2025
Page 2 House Bill 734-First Edition
his creditors for the purpose of settling, compounding, or in any way altering 1
the terms of payment of any debt of a debtor, and to that end receives money 2
or other property from the debtor, or on behalf of the debtor, for the payment 3
to, or distribution among, the creditors of the debtor. 4
(3) Debt adjusting also includes the business or practice of debt settlement or 5
foreclosure assistance whereby Debt settlement. – The business whereby any 6
person holds himself or herself themselves out as acting for consideration as 7
an intermediary between a debtor and one or more of the debtor's creditors for 8
the purpose of reducing, settling, or altering the terms of the payment of any 9
debt of the debtor, whether or not the person distributes the debtor's funds or 10
property among the creditors, and receives a fee or other consideration for 11
reducing, settling, or altering the terms of the payment of the debt in advance 12
of the debt settlement having been completed or in advance of all the services 13
agreed to having been rendered in full.debtor. 14
(3)(4) "Debtor" means an Debtor. – An individual who resides in North Carolina, 15
and includes two or more individuals who are jointly and severally, or jointly 16
or severally, indebted to a creditor or creditors. 17
(3a) "Nominal consideration" means a fee or a contribution to cover the cost of 18
administering a debt management plan not to exceed forty dollars ($40.00) for 19
origination or setup of the debt management plan and ten percent (10%) of the 20
monthly payment disbursed under the debt management plan, not to exceed 21
forty dollars ($40.00) per month. 22
(4)(5) "Person" means an Person. – An individual, firm, partnership, limited 23
partnership, corporation, or association.association, or other entity. 24
"§ 75-152. Debt adjusting and debt settlement prohibited. 25
No person, directly or through affiliates, shall engage in, offer to engage in, or attempt to 26
engage in debt adjusting or debt settlement. 27
"§ 75-153. Engaging, etc., in business of debt adjusting Debt adjusting and debt settlement 28
a misdemeanor. 29
If any Any person shall engage that engages in, or offer offers to engage in, or attempt to, 30
attempts to engage in the business or practice of debt adjusting, or if any person shall hereafter 31
act, offer to act, or attempt to act as a debt adjuster, he shall be adjusting or debt settlement is 32
guilty of a Class 2 misdemeanor. 33
"§ 75-154. Enjoining practice of debt adjusting; appointment of receiver for money and 34
property employed.Jurisdiction of the superior court to enjoin debt adjusting or 35
debt settlement. 36
(a) The superior court shall have has jurisdiction, in an action brought in the name of the 37
State by the Attorney General or the district attorney of the prosecutorial district as defined in 38
G.S. 7A-60, to enjoin, as an unfair or deceptive trade practice, the continuation of any debt 39
adjusting or debt settlement business or the offering of any debt adjusting services. or debt 40
settlement services in violation of this Article. 41
(b) The Attorney General or the district attorney who brings an action under this section 42
may appoint a receiver for the property and money employed in the transaction of business by 43
such the person as a debt adjuster, to ensure, so far as may be possible, the return to debtors of 44
so much of their money and property as has been received by the debt adjuster, and has not been 45
paid to the creditors of the debtors. 46
(c) The court in an action under this section may also assess civil penalties under 47
G.S. 75-15.2 and award attorneys' fees to the State under G.S. 75-16.1. 48
(d) This section is in addition to any other remedies available under this Chapter or other 49
laws. 50 General Assembly Of North Carolina Session 2025
House Bill 734-First Edition Page 3
"§ 75-155. Certain persons and transactions not deemed debt adjusters or debt 1
adjustment.Acts authorized. 2
The following individuals or transactions shall persons are not be deemed debt adjusters or 3
as being engaged in the business or practice of debt adjusting:adjusting or debt settlement: 4
(1) Any person or individual who is a regular full-time employee of a debtor, 5
debtor and who acts as an adjuster of his with respect to an employer's debts. 6
(2) Any person or individual acting pursuant to any order or judgment of a court, 7
or a court order. 8
(3) Any person acting pursuant to authority conferred by any a law of this State 9
or of the United States. 10
(3)(4) Any person who that is a creditor of the debtor, or an agent of one or more 11
creditors of the debtor, including the creditor's agent, and whose services in 12
adjusting the debtor's debts are rendered that acts without cost to the 13
debtor.debtor with respect to debts owed to the creditor. 14
(4)(5) Any person who that at the request of a debtor, debtor arranges for or makes 15
a loan to the debtor, debtor and who, at the authorization of the debtor, acts as 16
an adjuster of the debtor's debts engages in debt adjusting in the disbursement 17
of the proceeds of the loan, loan without compensation cost to the debtor for 18
the services rendered in adjusting such debts.the debts, except interest and fees 19
authorized by law. 20
(5) An intermittent or casual adjustment of a debtor's debts, for compensation, by 21
an individual or person who is not a debt adjuster or who is not engaged in the 22
business or practice of debt adjusting, and who does not hold himself out as 23
being regularly engaged in debt adjusting. 24
(6) An attorney-at-law licensed to practice in this State who is not employed by a 25
debt adjuster.and acting within the attorney-client relationship with the debtor 26
or creditor, excluding services provided to a debtor by an attorney, or in the 27
name of an attorney, who has entered into any arrangement with a person 28
engaged, directly or through affiliates, in debt adjusting or debt settlement. 29
(7) An organization that provides credit counseling, education, and debt 30
management services to debtors if the organization also does all of the 31
following: 32
a. Provides individualized credit counseling and budgeting assistance to 33
the debtor without charge prior to the debtor's enrollment in a debt 34
management plan provided by the organization. 35
b. Determines that the debtor has the financial ability to make payments 36
to complete the debt management plan and that the plan is suitable for 37
the debtor. 38
c. Disburses the debtor's funds to creditors pursuant to a debt 39
management plan that the debtor has paid for with no more than 40
nominal consideration and has agreed to in writing. 41
d. Charges no fee or a fee to cover the cost of administering a debt 42
management plan not to exceed forty dollars ($40.00) for origination 43
or setup of the debt management plan and ten percent (10%) of the 44
monthly payment disbursed under the debt management plan not to 45
exceed forty dollars ($40.00) per month. 46
d.e. Provides to the debtor, periodically and on no less than a quarterly 47
basis, an individualized accounting for the most recent period of all of 48
the debtor's payments and disbursements under the debt management 49
plan and all charges paid by the debtor. 50 General Assembly Of North Carolina Session 2025
Page 4 House Bill 734-First Edition
e.f. Does not directly or indirectly require the debtor to purchase other 1
services or materials as a condition to participating in the debt 2
management plan. 3
f.g. Does not receive a payment, commission, or other benefit for referring 4
the debtor to a provider of services. 5
g.h. Is accredited Accredited by an accrediting organization that the 6
Commissioner of Banks approves as being independent and nationally 7
recognized for providing accreditation to organizations that provide 8
credit counseling and debt management services. 9
"§ 75-156. Contracts void. 10
Contracts for debt adjusting or debt settlement are void as against public policy. 11
"§ 75-157. Unfair trade practice. 12
A violation of this Article is an unfair trade practice under G.S. 75-1.1." 13
SECTION 2. This act becomes effective July 1, 2025, and applies to offenses 14
committed on or after that date. 15