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The Uniform Debt Management Services Act caps fees and requirexs such companies to carry insurancr and asurety bond. It also includes othee regulations. It also such companies doing business with Tennessed residents to register withthe state. Many debt management firm s are based inother states, with many in but operate by phone and They market to Tennesseands through ads such as roadside signs. Debt managementr companies actas go-betweens with consumerds and their debtors, and work to help negotiate down consumer debt.
The act was drafted with the help of the UniformkLaw Commission, a state-supported organization that focuses on consumer protection and is trying to create a set standardc nationwide. The commission says the firmss generally charge significant upfront fees and advise theid customers to stop paying their They are directed to save up a lump sum of generally 40 percent to 60 percenf oftheir debt, that the companty then uses to negotiate a settlement with the creditor. ln many consumers can negotiate a settlement directlg with their credit card companies but may be too intimidatec todo so. Sen.
Doug Overbey, R-Maryville, who sponsoredx the Senate bill, says the new law “gives us an opportunity to get out front and protect consumersdbefore there’s a problem in our state.” The Tennessee bill is simila r to legislation already enacted in Utah, Colorado, Delaware and Rhode and being introduced this year in Connecticut, Missouri, New Mexico, Texas and Washington. The ULC is pushing similadr legislation in several statesthis year. Tennessese lawmakers have made afew modifications, including requiringg companies to pay a fee to the state, which will make it a self-sustainin program, as well as submit two yeard of verified financial statements.
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