Virginia Code 6.2-2014: Required and prohibited business methods
Each licensee shall comply with the following requirements:
Terms Used In Virginia Code 6.2-2014
- Agency: means any person that provides or offers to provide debt management plans for consumers. See Virginia Code 6.2-2000
- Amortization: Paying off a loan by regular installments.
- Consumer: means an individual residing in the Commonwealth who owes money to one or more creditors, for personal, family, or household purposes, including an individual who owes money jointly with one or more other individuals. See Virginia Code 6.2-2000
- Credit report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Source: OCC
- Debt collector: means a person defined as a debt collector under 15 U. See Virginia Code 6.2-2000
- DMP: means a program whereby a person agrees to engage in debt pooling and distribution services on behalf of a consumer, or multiple consumers if a joint account. See Virginia Code 6.2-2000
- Duplicate original: means an exact copy with signatures created by the same impression as the original, or an exact copy bearing an original signature, or in the case of an electronic transaction, an electronic version with electronic signatures. See Virginia Code 6.2-2000
- Electronic signature: means a signature as defined in § 59. See Virginia Code 6.2-2000
- in writing: include any representation of words, letters, symbols, numbers, or figures, whether (i) printed or inscribed on a tangible medium or (ii) stored in an electronic or other medium and retrievable in a perceivable form and whether an electronic signature authorized by Chapter 42. See Virginia Code 1-257
- Licensee: means a person licensed under this chapter. See Virginia Code 6.2-2000
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity. See Virginia Code 6.2-100
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
- Set-up fee: means a fee paid by a consumer to an agency for the establishment of a DMP. See Virginia Code 6.2-2000
- State: when applied to a part of the United States, includes any of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the United States Virgin Islands. See Virginia Code 1-245
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
1. Each DMP shall be evidenced by an agreement, which shall be maintained in either a hard copy, including a faxed copy, or electronic version and which shall be signed by the consumer and a person authorized by the licensee to sign such agreements and dated the same day the DMP is executed by the consumer. The agreement may be signed by the parties either originally or by electronic signature. The agreement shall set forth, at a minimum: (i) the name and address of both the consumer and the licensee; (ii) a full description of all services to be performed for the consumer by the licensee; (iii) a clear explanation, highlighted in bold type, of the costs to the consumer; (iv) a statement that the DMP agreement can be terminated for any reason by the consumer and that the consumer has no obligation to continue the arrangement unless satisfied with the services provided; (v) a statement that in the event of termination of the agreement, the consumer shall be entitled to a refund of all funds that have not been disbursed to creditors and either (a) all fees paid if terminated within five days of the date the DMP agreement is executed by the consumer or (b) all fees paid less the set-up fee if terminated more than five but less than 31 days after execution by the consumer; (vi) an explanation of the method of dispute resolution under the agreement; (vii) an explanation of the obligations of the consumer and the licensee that are subject to the agreement; (viii) notification of privacy policies in compliance with state and federal laws and regulations; and (ix) a statement that participating in a DMP may have a derogatory effect upon the consumer’s credit report;
2. A licensee shall give to the consumer a duplicate original of the agreement executed by the consumer and licensee upon full execution;
3. At the time of execution of the DMP, a licensee shall have a good faith belief that the creditors listed in the DMP will participate in the DMP. A licensee shall advise the consumer of any changes by a creditor in accepting payments under the DMP promptly upon learning of such changes;
4. A licensee shall provide a consumer enrolled in a DMP with periodic statements, no less often than quarterly, accounting for the funds received from the consumer for payments to the consumer’s creditors and disbursements made to each such creditor on the consumer’s behalf since the last report;
5. A licensee shall not purchase any debt or obligation of a consumer;
6. A licensee shall not lend money or provide credit to any consumer;
7. A licensee shall not obtain a mortgage or any other security interest in the property of a consumer;
8. A licensee shall not operate as a debt collector;
9. A licensee shall not structure an agreement for the consumer that, at the conclusion of the DMP, would knowingly result in negative amortization of any of the consumer’s obligations to creditors;
10. A licensee shall not give legal advice to a consumer or perform legal services on behalf of a consumer;
11. A licensee shall have an established practice of disbursing to creditors funds received from a consumer under a DMP within eight business days of receipt and shall provide consumers its disbursement practices in writing, including any circumstances that would establish an exception to the eight-day practice;
12. A licensee shall maintain appropriate safeguards against conflicts of interest in the conduct of its DMP activities;
13. A licensee shall not employ any person who is employed at the same time by a creditor or collection agency;
14. A licensee shall keep (i) its operating funds separate from the funds entrusted to the licensee by consumers for disbursement to creditors and (ii) consumers’ funds in a trust account, held in the name of the licensee by an insured depository institution;
15. A licensee shall upon request give a consumer signed, dated receipts for funds received from a consumer under a DMP, or provide a means whereby the consumer may view the status of his account electronically; and
16. A licensee shall not obtain any agreement from a consumer (i) giving the licensee or any third person power of attorney or authority to confess judgment for the consumer; (ii) authorizing the licensee or any third party to bring suit against the consumer in a court outside the Commonwealth; or (iii) waiving any right the consumer has under this chapter.