TEXT OF RULE
SECTION 1. DFI-Bkg 73.01 (1) (a) is amended to read:
(1) Both Either of the 2 alternative fee plans set forth below may be used when contracting services with a debtor:
(a) The maximum A monthly fee charged the debtor, which may shall not exceed 10% of the amount of money paid to the licensee to be distributed to a creditor or creditors or $120 in any one calendar month, whichever is less.
SECTION 2. DFI-Bkg 73.01 (1) (b) is renumbered DFI-Bkg 73.01 (1m).
SECTION 3. DFI-Bkg 73.01 (1) (c) is created to read:
(1) (c) A performance-based fee charged the debtor as a percentage of the amount saved as the result of the licensee’s renegotiation, settlement, reduction, or alteration of a debt enrolled in the licensee’s service. The percentage charged cannot change from one individual debt to another and cannot exceed 30 percent of the savings actually negotiated by the licensee on behalf of the debtor. The amount saved is the difference between the amount owed at the time the debtor agreed to enroll the debt in the licensee’s service and the amount the debtor actually paid to satisfy the debt.
SECTION 4. DFI-Bkg 73.02 (2) (b), (c), and (d) are amended to read:
(2) (b) Provide in clear and precise terms payments and time A detailed schedule of payments to be made by the debtor, including the scheduled date and amount of each payment and how it will be applied, which must be based on a reasonable assessment of reasonably within the ability of the debtor to pay.
(c) The licensee’s fee as set forth in s. DFI-Bkg 73.01. No other amounts may be charged or collected. (d) The If the licensee utilizes the fee plan authorized in s. DFI-Bkg 73.01 (1) (c), the amount of each payment debt that the debtor agrees to enroll in the licensee’s service to be paid, renegotiated, settled, reduced, or altered by or in on behalf of the debtor, which may not exceed the actual balance that is due and owing from the debtor on each debt as of the date the agreement is signed by the debtor. Following execution of the contract or agreement, a debt may be added to or removed from this list of enrolled debts only upon the separate written agreement of the parties. SECTION 5. DFI-Bkg 73.02 (2) (f) to (j) are created to read:
(2) (f) If the licensee does not maintain a physical office within the state, the licensee’s office hours, which must comply with the requirements of DFI-Bkg 73.03 (1), together with the telephone number and email address at which the licensee will answer customer inquiries.
(g) If the licensee represents in marketing materials or other communications that the licensee’s services achieve certain results, the amount of time necessary to achieve the represented results.
(h) If the licensee’s services include making a settlement offer to any of the debtor’s creditors or debt collectors, the time by which the licensee will make a bona fide settlement offer to each creditor or debt collector and the amount of money that the debtor must accumulate before the licensee will make an offer.
(i) If any aspect of the licensee’s services relies upon or results in the debtor’s failure to make timely payments to creditors or debt collectors, a statement that the use of the licensee’s services will likely adversely affect the debtor’s creditworthiness, may result in the debtor being subject to collections or sued by creditors or debt collectors, and may increase the amount of money the customer owes due to the accrual of fees and interest.
(j) If the licensee requests or requires the debtor to place funds in an account at an insured financial institution, the following additional statements:
1. That the debtor owns the funds held in the account.
2. That the debtor may withdraw from the licensee’s services at any time without penalty.
3. That if the debtor withdraws from the licensee’s services, the debtor will receive all funds in the account, other than fees earned by the licensee in compliance with DFI-Bkg 73.01.
SECTION 6. DFI-Bkg 73.03 (1) (title) and (1) (a) are repealed.
SECTION 7. DFI-Bkg 73.03 (1) (b) is renumbered DFI-Bkg 73.03 (1).
SECTION 8. DFI-Bkg 73.03 (3) is renumbered DFI-Bkg 73.03 (3) (intro.), and, as renumbered, is amended to read:
(3) Trust fund Debtor funds. A licensee shall may not commingle payments received from debtors with the licensee’s own property or funds, but shall maintain a separate account in an approved bank in which all payments received from debtors for the benefit of creditors shall promptly be deposited after receipt thereof and in which all payments shall remain until disbursements are made in his or her behalf or returned to him or her. Said trust account shall be used only for this purpose. ensure that debtor funds are maintained in one of the following ways:
SECTION 9. DFI-Bkg 73.03 (3) (a) and (b) are created to read:
(a) Trust account. A licensee may maintain a separate account in an approved bank in which all payments received from debtors for the benefit of creditors shall promptly be deposited after receipt thereof and in which all payments shall remain until disbursements are made on the debtor’s behalf or returned to the debtor. The trust account shall be used only for this purpose.
(b) Debtor-controlled account. A licensee may request or require a debtor to place funds in an account to be used for the licensee’s fees and for payments to creditors or debt collectors, if all of the following apply:
1. The funds are held in an account at a federally insured financial institution.
2. The customer owns the funds held in the account and is paid accrued interest on the account, if any.
3. The entity administering the account is not owned or controlled by, or in any way affiliated with, the licensee.
4. The entity administering the account does not give or accept any money or other compensation in exchange for referrals of business involving the licensee.
5. If the debtor withdraws from the licensee’s services, the debtor is entitled to receive all funds in the account, other than fees earned by the licensee in compliance with DFI-Bkg 73.01, within seven business days.
6. Any monthly maintenance or other fees charged to the debtor by the entity administering the account are reasonable and not in excess of market rates for comparable services.
SECTION 10. DFI-Bkg 73.03 (4) and (5) are amended to read:
(4) Remittances. Remittances If the licensee’s services include making timely remittances to creditors on a debtor’s behalf, such remittances shall be made to creditors within 15 days after receipt of funds from the debtor, unless the debtor requests in writing that funds be held in escrow for specific purposes for a period not to exceed 180 days.
(5) Receipt requirements. Whenever a payment is received from a debtor or other person, a receipt record showing the date said the payment was received shall be prepared and a duplicate copy shall be available at all times maintained in the office of the licensee. All receipts must be prepared at least in duplicate, be prenumbered by the printer and filed in consecutive numerical order and shall show the name and account number of the debtor, the name and address of the licensee, the date and amount paid, and the name or initials of the person accepting payment.
SECTION 11. DFI-Bkg 73.04 (intro.) is amended to read:
DFI-Bkg 73.04. Prohibited practices. No licensee shall may:
SECTION 12. DFI-Bkg 73.04 (7) is amended to read:
(7) Sell insurance or any other item to a customer, except to the extent authorized in s. DFI-Bkg 73.03 (3) (b). SECTION 13. DFI-Bkg 73.04 (10) is created to read:
(10) Advise or instruct a debtor to fail to make timely payments to a creditor or debt collector, or to take any other course of action that would cause the debtor to default upon a debt owed to another, unless all of the following apply:
(a) The licensee has verbally disclosed to the debtor the information required by s. 73.02 (2) (i). (b) The licensee has provided the debtor with the following information verbally and in writing:
(i) How the debtor should notify the licensee that a lawsuit related to the debt has been threatened or commenced against the debtor.
(ii) Whether the licensee will provide legal counsel to represent the debtor in the event of a lawsuit related to the debt.
(iii) Contact information for the state bar association’s lawyer referral and information service and at least one nonprofit organization that provides legal resources or other assistance to debtors in court proceedings.
SECTION 14. DFI-Bkg 73.05 is repealed and recreated to read:
DFI-Bkg 73.05 Office records and procedures. (1) A licensee must maintain records of its business practices occurring within this state, including the following:
(a) Contracts and agreements with debtors.
(b) Records of activity relating to each debtor, including debtor payments, disbursements to creditors, and licensee fees assessed and collected.
(c) Reconciliations of trust and operating accounts.
(d) Communications with debtors relating to the licensee’s services, including audio recordings to the extent the licensee records such communications.
(e) Advertising, brochures, scripts, and promotional materials, as well as any data or findings used to support representations made in those materials.
(f) All records required to be maintained under applicable state and federal law.
(2) The division may require a licensee to retain additional records, or to maintain them in a different manner, to ensure the safety and soundness of its business practices or to facilitate the division’s examination of the licensee under ss. 218.02 (7) (c) and 220.04 (9) (b). SECTION 15. EFFECTIVE DATE. This rule shall take effect on the first day of the first month commencing after the date of publication in the Wisconsin Administrative Register as provided in s. 227.22 (2) (intro.), Stats. Department of Financial Institutions
Date: __June 4, 2024____________ By: /s/ Marc Shovers
Marc Shovers
Assistant Chief Legal Counsel
