§ 2751. Definitions
As used in this chapter, “debt adjustment” means making an agreement with a debtor
whereby the debt adjuster agrees to distribute, supervise, coordinate, negotiate,
or control the distribution of money or evidences thereof among one or more of the
debtor’s creditors in full or partial payment of obligations of the debtor and includes
services as an intermediary between a debtor and one or more of the debtor’s creditors
for the purpose of obtaining concessions. Debt adjustment also includes any program
or strategy in which the debt adjuster furnishes services to a debtor that includes
a proposed or actual payment or schedule of payments to be made by or on behalf of
the debtor and is used to pay debt owed by the debtor. For purposes of this chapter,
engaging in debt adjustment in this State shall include:
(1) soliciting debt adjustment business from within this State, whether by mail, by telephone,
by electronic means, or by other means regardless of whether the debtor resides within
this State or outside this State;
(2) soliciting debt adjustment business with an individual residing in this State, whether
by mail, by telephone, by electronic means, or by other means;
(3) entering into, or succeeding to, a debt adjustment contract with an individual residing
in this State; or
(4) providing, offering to provide, or agreeing to provide debt adjustment services directly
or through others. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2005, No. 36, § 4, eff. June 1, 2005; 2009, No. 137 (Adj. Sess.), §§ 2, 3; 2011, No. 78 (Adj. Sess.), § 19, eff. April 2, 2012; 2019, No. 20, § 66.)
§ 2752. License
No person shall engage in the business of debt adjustment except as authorized by
this chapter and without first obtaining a license from the Commissioner. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2009, No. 137 (Adj. Sess.), § 3.)
§ 2753. Application for license; additional information
(a) In addition to the information required by section 2102 of this title, an application for a license under this chapter shall state or contain:
(1) A description of any debt adjustment and related services previously provided by the
applicant.
(2) The debt adjustment and related services that the applicant seeks to provide in this
State.
(3) A description of how the applicant will market its services, along with copies of
all scripts, mailings, advertisements, and other marketing materials, provided that
submission of these materials shall not waive any legal claim the State may have with
respect to the content or use of the materials.
(4) A description of the nature and amount of the fees, or the method of calculating the
fees, charged to the debtor.
(5) A list of the applicant’s locations in this State and outside this State where the
applicant proposes to engage Vermont residents in debt adjustment services.
(6) A list of other states in which the applicant is licensed to engage in debt adjustment
services and information concerning any bankruptcy or receivership proceedings affecting
the licensee, and any license revocations, suspensions, or criminal or disciplinary
action taken against the applicant in other states.
(7) A blank copy of the contract the applicant intends to use. The applicant shall notify
the Commissioner of all changes and amendments thereto. The terms and conditions of
all contracts shall be subject to prior approval by the Commissioner.
(8) The name and address of the federally insured financial institution through which
the applicant maintains a separate account for the benefit of debtors.
(b) The Commissioner may waive one or more requirements of this section or permit an applicant
to submit substituted information in lieu of the required information. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3; 2011, No. 78 (Adj. Sess.), § 20, eff. April 2, 2012; 2019, No. 20, § 67.)
§ 2754. Repealed. 2019, No. 20, § 68.
§ 2755. Bond required
(a) Each applicant shall submit to the Commissioner, with the application for a license,
a bond, in such form as the Commissioner shall direct, in the amount of $50,000.00,
or such greater amount as the Commissioner may determine is required by the business
circumstances of the applicant.
(b) The bond shall be in a form and in accordance with such terms and conditions satisfactory
to the Commissioner and payable to the State for use of the State and for the benefit
of any claimant against the licensee to secure the faithful performance of the obligations
of the licensee.
(c) The Commissioner may require a larger bond if he or she determines, in his or her
sole discretion, that a licensee has engaged in a pattern of conduct resulting in
bona fide consumer complaints of misconduct and that such increased bond is necessary
for the protection of consumers; or the Commissioner may increase or decrease the
amount of such bond based upon the applicant’s or licensee’s financial condition,
business plan, number of locations, and the actual or estimated aggregate amount of
payments and fees paid by debtors under the debt adjustment contracts. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.)
§ 2756. Repealed. 2019, No. 20, § 69.
§ 2757. Repealed. 2019, No. 20, § 70.
§ 2757a. Annual report; additional information
In addition to the information required by section 2120 of this title, the annual report shall state or contain:
(1) the number of new debt adjustment contracts entered into with Vermont residents during
the preceding year, the number of Vermont residents that have completed the debt adjustment
contract during the preceding year, the number of Vermont residents that have cancelled
their debt adjustment contract during the preceding year, and the licensee’s total
number of debt adjustment contracts with Vermont residents; and
(2) a list of the locations in this State and outside this State where the licensee engages
in debt adjustment activities with Vermont residents. (Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3; 2019, No. 20, § 71.)
§ 2757b. Repealed. 2019, No. 20, § 72.
§ 2758. Repealed. 2019, No. 20, § 73.
§ 2758a. Repealed. 2019, No. 20, § 74.
§ 2759. Contract with debtor
(a) Prior to taking any fee or receiving any compensation, either directly or indirectly,
or payment of any sum of money by the debtor, each licensee shall make a written contract
between the licensee and the debtor, which contract shall be in such form and shall
contain such conditions as the Commissioner shall have approved in writing prior to
the use of such contract, and the licensee shall immediately furnish the debtor with
a true copy of the contract.
(b) In addition to such other items as the Commissioner may require, the contract shall:
(1) fully disclose all services to be provided;
(2) fully disclose all fees to be charged to the debtor;
(3) disclose that debt adjustment plans are not suitable for all debtors;
(4) if applicable, disclose that creditors may compensate the licensee;
(5) if applicable, disclose that secured debt is not covered by the contract; and
(6) disclose a list of debts covered by the contract and the interest rate of those debts
at the time. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.)
§ 2759a. Rescission
(a) Debtor’s right to cancel.
(1) In addition to any other right to revoke the contract, the debtor may cancel the debt
adjustment contract until midnight of the third business day after the date on which
the debtor signed the debt adjustment contract.
(2) Cancellation occurs when notice of cancellation is given to the licensee.
(3) Notice of cancellation, if given by mail, shall be deemed given when deposited in
a mailbox properly addressed and postage prepaid.
(4) Notice of cancellation need not take any prescribed form and shall be sufficient if
it indicates the intention of the debtor not to be bound.
(b) Disclosure obligations.
(1) The licensee shall furnish the debtor with a fully completed copy of the contract
at the time the debtor signs the debt adjustment contract. The copy of the contract
shall show the date of the debt adjustment contract, shall contain the name and address
of the licensee, and in immediate proximity to the space reserved in the contract
for the signature of the debtor and in boldface type of a minimum size of 10 points,
a statement in substantially the following form:
You may cancel this transaction at any time prior to midnight of the third business
day after the date of this contract. See the attached notice of cancellation for an
explanation of this right.
(2) The licensee shall furnish a notice of cancellation to the debtor at the time the
debtor signs the debt adjustment contract, which notice shall be attached to the contract
and shall be easily detachable.
(A) The notice of cancellation shall contain the following information and statements,
printed in not less than 10 point boldface type:
NOTICE OF CANCELLATION
(enter date of transaction)
.................................................
(date)
You may cancel this transaction, without any penalty or obligation, within three business
days from the above date.
If you cancel, any payments made by you under the contract will be returned within
10 business days following our receipt of your cancellation notice.
To cancel the debt adjustment contract, return a signed and dated copy of this cancellation
notice or any other written notice, using first-class mail or email, to ............................................. at
(name of licensee)
.........................................
(address of licensee’s place of business)
(email address of licensee)
not later than midnight of .......................................................
(date)
I hereby cancel this transaction.
.......................
(date)
.................................
(debtor’s signature)
(B) Before furnishing copies of the “Notice of Cancellation” to the debtor, the licensee
shall complete both copies by entering the name of the licensee, the address of the
licensee’s place of business, the date of the contract, and the date, not earlier
than the third business day following the date of the transaction, by which the debtor
may give notice of cancellation.
(C) The licensee shall leave the “Notice of Cancellation” with the debtor.
(D) In addition to the written notice of cancellation, the licensee shall orally inform
the debtor of his or her right to cancel at the time of the debt adjustment contract.
(3) Until the licensee has complied with this subsection, the debtor may cancel the debt
adjustment contract by notifying the licensee in any manner and by any means of the
debtor’s intention to cancel. The cancellation period of three business days shall
begin to run from the time the licensee complies with this subsection.
(c) Restoration of payments. Within 10 days after the debt adjustment contract has been cancelled, the licensee
shall tender to the debtor any payments made by the debtor.
(d) If the debt adjustment contract is principally negotiated in a language other than
English, all of the disclosures required by this section shall be given in that language.
(e) If the debtor is unable to write in his or her own handwriting, any of the statements
required to be written by the debtor under this section shall be handwritten by a
member of the debtor’s household at the request of the debtor. If there is no other
member of the debtor’s household, such statements must be written by the licensee,
at the request of the debtor, and the effect of such statements shall be orally explained
to the debtor by the licensee.
(f) Use of the cancellation provision provided for in this section shall not prevent any
other action being taken under this chapter or otherwise against such licensee. (Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3; 2023, No. 32, § 4, eff. July 1, 2023.)
§ 2759b. Cancellation of contract
A debtor may cancel a debt adjustment contract at any time without a cancellation
premium or penalty. (Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.)
§ 2759c. Periodic statements to debtor
Periodically, but not less frequently than quarterly, the licensee shall provide the
debtor with a statement showing the payments made by the debtor, how such payments
have been distributed, and for each debt covered by the contract:
(1) the beginning amount of such debt;
(2) the current amount due on such debt; and
(3) the basic terms of such debt. (Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.)
§ 2760. Separate bank account for the benefit of creditors; books and records
(a) Each licensee shall maintain a separate federally insured bank account for the benefit
of debtors in which all payments received from debtors for the benefit of creditors
shall be deposited and in which all payments shall remain until a remittance is made
to either a debtor or a creditor.
(b) Every licensee shall keep, and use in its business, books, accounts, and records that
will enable the Commissioner to determine whether such licensee is complying with
the provisions of this chapter and with the regulations of the Commissioner. Every
licensee shall preserve such books, accounts, and records for at least seven years
after making the final entry on any transaction recorded therein. The items specified
in this subsection may be maintained in any form of record as permitted in subsection 11301(c) of this title. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.)
§ 2760a. Timely payments to creditors
Licensees shall make payments to creditors in a timely manner at least once every
30 days in accordance with the contract between the licensee and the debtor. (Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.)
§ 2760b. Prohibited activities
(a) No person, partnership, association, corporation, or other entity, except a licensee,
may make any representation, directly or indirectly, orally or in writing that he,
she, or it is licensed under this chapter.
(b) No licensee shall advertise its services in any media, whether print or electronic,
in any manner that may be false or deceptive. All such advertisements shall contain
the name and office address of such entity, which shall conform to a name and address
on record with the Department and that shall indicate that the licensee is licensed
by the Department.
(c) No person or any other entity, other than a licensee, shall use the titles “debt adjuster,”
“budget planner,” “licensed debt adjuster,” or “licensed budget planner” or the terms
“debt adjuster,” “debt reduction,” “budget planning,” or, in each case, words of similar
import in any public advertisement, business card, or letterhead.
(d) No licensee shall commingle monies received from debtors with any other funds associated
with the operation of its business or with any funds associated with any other type
of business; provided, however, that for the sole purpose of making a single payment
to a creditor, a licensee may commingle monies received from debtors under contract
with one or more of its affiliates authorized to engage in debt adjustment in another
state.
(e) No licensee shall structure an agreement for the debtor that, at the conclusion of
the agreement, would result in negative amortization of any of the debtor’s obligations
to any creditor.
(f) No licensee, or a director, manager, or officer of such licensee, or any immediate
family member of such individual, or a controlling party of such licensee, shall purchase
any obligation of a debtor.
(g) No licensee, or a director, manager, or officer of such licensee, or any immediate
family member of such individual, or a controlling party of such licensee, shall lend
money or provide credit to the debtor.
(h) No licensee, or a director, manager, or officer of such licensee, or any immediate
family member of such individual, or a controlling party of such licensee shall obtain
a mortgage or other security interest in property of the debtor.
(i) No licensee shall operate as a person or entity seeking payment of obligations on
behalf of any creditors that are not receiving payments pursuant to a contract between
a debtor and a licensee.
(j) No licensee shall execute any contract or agreement to be signed by the debtor unless
the contract or agreement is fully completed, and the duration of any such contract
shall be in conformance with any limitations specified pursuant to rules adopted by
the Commissioner.
(k) No licensee shall pay any bonus or other consideration to any person or entity for
the referral of a debtor to its business, or accept or receive any bonus, commission,
or other consideration for referring any debtor to any person or entity for any reason;
provided, however, that nothing herein shall prohibit the payment of rebates from
creditors to licensees.
(l) No licensee shall disclose or threaten to disclose information concerning the existence
of a debt or any other conduct that could coerce payment of the debt of a debtor with
whom it has a contract.
(m) No licensee shall use a communication that simulates in any manner a legal or judicial
process, or that gives the false appearance of being authorized, issued, or approved
by a government, a governmental agency, or an attorney-at-law.
(n) No licensee, or a director, a manager, or an officer of such licensee, or any immediate
family member of such individual, or a controlling party of such licensee, shall be
a director, a manager, an officer, an owner, or a controlling party of any creditor
or a subsidiary of any such creditor, that is receiving or will receive payments from
the licensee on behalf of a debtor with whom the licensee has contracted, without
the express written consent of the Commissioner. (Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3; 2015, No. 97 (Adj. Sess.), § 12; 2021, No. 25, § 1, eff. May 12, 2021.)
§ 2760c. Financial privacy
The licensee shall be subject to and shall comply with subchapter 2 of chapter 200
of this title and any rules or regulations adopted in connection therewith. (Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.)
§ 2761. Examinations
The Commissioner shall examine or cause to be examined, with or without notice, the
condition and affairs of each licensee under this chapter at least once every three
years and otherwise as required or determined by the Commissioner. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 1979, No. 157 (Adj. Sess.), § 7; 1999, No. 153 (Adj. Sess.), § 26, eff. Jan. 1, 2001; 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3; 2011, No. 78 (Adj. Sess.), § 21, eff. April 2, 2012; 2019, No. 20, § 75.)
§ 2762. Fee of licensee
The fee charged by the licensee shall be agreed upon in advance. The fee retained
shall in no case exceed a $50.00 initial set up fee plus 10 percent of any payment
received by the licensee from the debtor for the purpose of distribution to creditors. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.)
§ 2763. Exceptions
The provisions of this chapter shall not apply to the following:
(1) any attorney admitted to the practice of law in this State, when engaged in such practice;
(2) any financial institution as defined in subdivision 11101(32) of this title or a lender licensed under chapter 73 of this title, which performs debt adjustment
in the regular course of its principal business;
(3) any person acting pursuant to any law of this State or of the United States or acting
under the order of a court;
(4) any bona fide nonprofit religious, fraternal, or cooperative organization offering
debt adjustment services exclusively for members;
(5) any employee of a licensee when acting in the regular course of his or her employment;
and
(6) a certified public accountant licensed in this State, when services are rendered in
the course of his or her practice as a certified public accountant. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.)
§ 2764. Private right of action and Consumer Protection Act
(a) A consumer may bring a private action against a licensee or any person that should
have been licensed under this chapter for restitution because of a violation of this
chapter.
(b) The powers vested in the Commissioner by this chapter shall be in addition to any
other powers or rights of consumers or the Attorney General or others under any other
applicable law or rule, including without limitation the Vermont Consumer Protection
Act and any applicable rules issued in connection therewith, provided that the Commissioner’s
determinations concerning the interpretation and administration of the provisions
of this chapter and any rules adopted thereunder shall carry a presumption of validity. (Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 1995, No. 167 (Adj. Sess.), § 21; 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3; 2011, No. 109 (Adj. Sess.), § 3, eff. May 8, 2012; 2011, No. 136 (Adj. Sess.), § 1b, eff. May 18, 2012; 2019, No. 20, § 76.)
§ 2765. Repealed. 2019, No. 20, § 77.
§ 2766. Repealed. 2019, No. 20, § 78.
§ 2767. Repealed. 2019, No. 20, § 79.
§ 2768. Repealed. 2019, No. 20, § 80.