It provides the states with a comprehensive act governing national administration of debt counseling and management in a fair and effective way.
Some of these services have provided counseling coupled with assisting debtors in establishing programs to pay off debts over an extended time.
Others have provided consolidation and management services, in which agreements are reached with creditors to settle on a percentage of debt.
It provides the states with a comprehensive act governing these services that will mean national administration of debt counseling and management in a fair and effective way.
UDMSA may be divided into three basic parts: registration of services, service-debtor agreements and enforcement.
Any payments for creditors received from a debtor must be kept in a trust account that may not be used to hold any other funds of the service.
Enforcement The Act prohibits specific acts on the part of a service including: misappropriation of funds in trust; settlement for more than 50% of a debt with a creditor without a debtor’s consent; gifts or premiums to enter into an agreement; and representation that settlement has occurred without certification from a creditor.
Banks as regulated entities under other law are not subject to the Uniform Act, as are other kinds of activities that are incidental to other functions performed.
It becomes an essential part of the law of creditor and debtor as bankruptcy reform enacted by Congress in 2005 takes effect.
Due to the rise of debt settlement as a debt relief alternative to bankruptcy, groups working in the industry established trade associations to help secure industry standards that will protect consumers against unethical business practices.