Debt management

Fees charged to clients

You may not charge or receive a fee until after you have made the required disclosures under ORS 697.707. In addition to anything federal law may restrict regarding charges, Oregon law sets the maximum fees you can charge:

• $50 initial consultation fee to determine if the services would be beneficial to the consumer
• $50 maximum counseling or education fee when the consumer enters into an agreement with the provider
• Monthly fee based on 15 percent of the amount paid to the debt management service provider (maximum of $65)
• A fee of 7.5% of the difference between the principal amount of the debt and the negotiated reduced amount on settled debt.
• Companies that offer credit repair services may charge the $50 initial consultation fee, the $50 counseling/education fee, and a monthly fee of not more than $50 during the term of the agreement between the consumer and provider. NOTE: Only the initial consultation fee and counseling/education fee may be charged in the first month. The monthly fee may be charged only in subsequent months.
  

Written agreements and disclosures

Once you determine you can help a client, you will need to provide them with certain disclosures and a budget and enter into a written agreement for services.

ORS 697.652 requires that you enter into a written agreement to provide debt management services, including credit repair, with the consumer before providing those services. The written agreement must:

• List the name and telephone number for you and the consumer.
• List every debt for which you will provide debt management servicers on the consumer’s behalf. The list must disclose the creditor’s name and the appropriate total of all identified debts.
• Detail the services that you will perform, itemize the fees and explain how the fees are calculated.
• Provide that the consumer may:
  • Examine the consumer’s account at your office during office hours; or
  • Request that you deliver to the consumer a full and complete written statement of the consumer’s account:
    • Within two business days, if you deliver the statement electronically, or
    • Within seven days, if you deliver the statement by mail.
• Estimate the time period necessary to complete the debt management services identified in the agreement.
• Provide that the consumer may cancel the agreement
  • At any time before midnight of the third business day after the consumer entered into the agreement with you and you will refund all fees paid before the cancellation; or
  • At any time during the remaining term of the agreement, for any reason, after giving ten calendar days’ written notice of the cancellation to you. The consumer’s cancellation is effective on the date the consumer mails the notice or immediately if sent electronically or by fax.

For a company that engages in more than just credit repair services, the written agreement must also provide:

• A statement, in precise terms, of how much the consumer can reasonably pay and if you will hold the consumer’s funds for distribution to creditors.
• A statement of the approximate number of installments and the amount of each installment, in the form of a schedule showing the ratio or other arrangement made to pay the debts in full.
• That you may cancel the agreement without the consumer’s written authorization if the consumer fails to make scheduled periodic payments under the terms of the agreement for more than 60 days.
• That you must deliver to the consumer each quarter a financial statement of the consumer’s funds, if any, that you hold, directly or indirectly.
• That if the consumer cancels the agreement after giving ten calendar days’ written notice, you will return all of the consumer’s funds that have not been expended to creditors.

ORS 697.707 provides that certain disclosures must be made to consumers and outlines what must be included in the disclosures based upon the type of debt management service provided. No matter what services your company provides, the disclosures must:

• Provide a space for the consumer to sign the form under statement that indicates that the consumer has read and understands the disclosures in the document.
• State the maximum amount you may charge for all services performed for the consumer.
• Warn the consumer that canceled debt may constitute income that is subject to state and federal taxation and advise the consumer to consult with a tax professional. This is not required if the company only performs credit repair.
• Describe completely and in detail the debt management services that you will perform and the amount the consumer must pay for each service and for all services.
• State that the consumer may bring an action the bond required under ORS 697.642 and list the name and address of the surety that issued the bond.

For a company that engages in credit repair services, the disclosures must also include:

• An accurate and complete description of the consumer’s right to review consumer credit information about the consumer that the report agency maintains; and
• State the approximate price that a consumer reporting agency will charge a consumer to review the consumer credit information and that the consumer may review the information at no charge if the consumer makes a request to the reporting agency within 30 days after the consumer was denied credit.

For a company providing debt settlement services that does not hold a consumer’s funds, directly or indirectly, the disclosures must also include that:

• You cannot predict or guarantee specific results and cannot force or require a creditor to accept a specific settlement.
• You do not make scheduled periodic payments to creditors.
• Creditors may continue collection efforts, including lawsuits.
• The consumer’s failure to make monthly payments on outstanding debt will likely have a negative impact on the consumer’s credit score.
• The consumer must make regular monthly payments of funds in an account the consumer establishes and maintains in the consumer’s name with an insured institution and designates specifically for making disbursements in connection with a debt management service.
• You will withdraw fees for debt management services from the account only with the consumer’s specific authorization and that you do not have custody, control or separate or additional access to the account.