Mississippi Debt Management Services Act; delete repealer on.

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To: Banking and Financial
Services
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative Aguirre

HOUSE BILL NO. 1265
(As Sent to Governor)

AN ACT TO REPEAL SECTION 81-22-31, MISSISSIPPI CODE OF 1972, 1
WHICH IS THE REPEALER ON THE MISSISSIPPI DEBT MANAGEMENT SERVICES 2
ACT; TO BRING FORWARD SECTIONS 81-22-1 THROUGH 81-22-28, 3
MISSISSIPPI CODE OF 1972, FOR THE PURPOSE OF POSSIBLE AMENDMENT; 4
AND FOR RELATED PURPOSES. 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 6
SECTION 1. Section 81-22-31, Mississippi Code of 1972, which 7
is the repealer on the Mississippi Debt Management Services Act, 8
is repealed. 9
SECTION 2. Section 81-22-1, Mississippi Code of 1972, is 10
brought forward as follows: 11
81-22-1. This chapter may be known and cited as the 12
"Mississippi Debt Management Services Act." 13
SECTION 3. Section 81-22-3, Mississippi Code of 1972, is 14
brought forward as follows: 15
81-22-3. As used in this chapter, unless the context 16
otherwise indicates, the following terms have the following 17
meanings: 18
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(a) "Commissioner" means the Commissioner of Banking 19
and Consumer Finance of the State of Mississippi. 20
(b) "Debt management service" means: 21
(i) The receiving of money from a consumer for the 22
purpose of distributing one or more payments to or among one or 23
more creditors of the consumer in full or partial payment of the 24
consumer's obligation; 25
(ii) Arranging or assisting a consumer to arrange 26
for the distribution of one or more payments to or among one or 27
more creditors of the consumer in full or partial payment of the 28
consumer's obligation; 29
(iii) Exercising control, directly or indirectly, 30
or arranging for the exercise of control over funds of the 31
consumer for the purpose of distributing payments to or among one 32
or more creditors of the consumer; 33
(iv) Acting or offering to act as an intermediary 34
between a consumer and one or more creditors of the consumer for 35
the purpose of adjusting, compromising, negotiating, settling, 36
discharging or otherwise deferring, reducing or altering the terms 37
of payment of the consumer's obligation; or 38
(v) Improving or offering to improve a consumer's 39
credit record, history or rating. 40
(c) "Debt management service provider" means a person 41
that provides or offers to provide to a consumer in this state any 42
debt management services, in return for a fee or other 43
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consideration. "Debt management service provider" does not 44
include: 45
(i) Those situations involving debt adjusting 46
incurred incidentally in the lawful practice of law in this state; 47
(ii) Those situations involving credit report 48
error correction services and situations covered under paragraph 49
(b)(v) of this section when performed in the lawful practice of 50
law in this state; 51
(iii) Title insurers who adjust debts out of 52
escrow funds only incidentally in the regular course of their 53
principal business; 54
(iv) Judicial officers or others acting under 55
court orders; 56
(v) Those situations involving debt adjusting 57
incurred incidentally in connection with the lawful practice as a 58
certified public accountant; 59
(vi) Bona fide trade or mercantile associations in 60
the course of arranging adjustment of debts with business 61
establishments; 62
(vii) Employers who adjust debts for their 63
employees; 64
(viii) Any person who, at the request of a debtor, 65
makes a loan to the debtor, and who, at the authorization of the 66
debtor, acts as an adjuster of the debtor's debts solely in the 67
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disbursement of the proceeds of the loan, without compensation 68
for the services rendered in adjusting the debts; 69
(ix) Any institution that is regulated, supervised 70
or licensed by the department or any out-of-state institution that 71
is insured by the Federal Deposit Insurance Corporation or the 72
National Credit Union Administration; 73
(x) Licensed attorneys engaged in the lawful 74
practice of law; or 75
(xi) For-profit debt management service providers 76
who do not receive or hold consumer funds, who do not receive a 77
fee until a settlement is approved by the consumer and who are 78
regulated by the Federal Trade Commission. 79
(d) "Department" means the Department of Banking and 80
Consumer Finance of the State of Mississippi. 81
(e) "Fair share contribution" means voluntary 82
contributions paid to the licensee by the creditor for collecting 83
funds from clients pursuant to debt management services. 84
(f) "Licensee" means a person or entity who is required 85
to be licensed as a debt management service provider. 86
(g) "Person" means an individual or an organization. 87
(h) "Records" or "documents" means any item in hard 88
copy or produced in a format of storage commonly described as 89
electronic, imaged, magnetic, microphotographic or otherwise, and 90
any reproduction so made shall have the same force and effect as 91
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the original thereof and be admitted in evidence equally with the 92
original. 93
(i) "Third-party payment processor" means any entity 94
that holds, or has access to, or can effectuate possession of, by 95
any means, the monies of a licensee's debtors, or distributes, or 96
is in the chain or distribution of such monies, to the creditors 97
of such debtors, pursuant to an agreement or contract with the 98
licensee. This term shall not include entities that solely 99
provide the electronic routing and settlement of financial 100
transactions and their sponsoring banks. 101
SECTION 4. Section 81-22-5, Mississippi Code of 1972, is 102
brought forward as follows: 103
81-22-5. (1) Licensure and relicensure. No person or 104
entity may act as a debt management service provider with respect 105
to consumers who are residents of this state without a license 106
issued under this chapter. The license application must be in a 107
form prescribed by the commissioner. The commissioner may refuse 108
the application if it contains erroneous or incomplete 109
information. A license may not be issued unless the commissioner, 110
upon investigation, finds that the financial soundness and 111
responsibility, insurance coverage, consumer education programs 112
and services component, character and fitness of the applicant 113
and, when applicable, its partners, officers or directors, warrant 114
belief that the business will be operated honestly and fairly 115
within the purposes of this chapter. Each license shall remain in 116
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full force and effect until relinquished, suspended, revoked or 117
expired. With each initial application for a license, the 118
applicant shall pay to the commissioner a license fee of Seven 119
Hundred Fifty Dollars ($750.00), and on or before December 31 of 120
each year thereafter, an annual renewal fee of Four Hundred 121
Seventy-five Dollars ($475.00). If the annual renewal fee remains 122
unpaid after December 31, the license shall expire. If any person 123
engages in business as provided for in this chapter without paying 124
the license fee provided for in this subsection before beginning 125
business or before the expiration of the person's current license, 126
as the case may be, then the person shall be liable for the full 127
amount of the license fee, plus a penalty in an amount not to 128
exceed Twenty-five Dollars ($25.00) for each day that the person 129
has engaged in such business without a license or after the 130
expiration of a license. All licensing fees and penalties shall 131
be paid into the Consumer Finance Fund of the department. 132
(2) Action on registration application. The commissioner 133
shall take action on an application within thirty (30) days after 134
the commissioner has accepted the application as complete. Upon 135
written request, the applicant is entitled to a hearing on the 136
question of the applicant's qualifications for license if the 137
commissioner has notified the applicant in writing that the 138
application has been denied or the commissioner has not issued a 139
license within thirty (30) days after the application for the 140
license was accepted as complete by the commissioner. A request 141
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for a hearing may not be made more than sixty (60) days after the 142
application was accepted as complete or the commissioner has 143
mailed a written notice to the applicant stating that the 144
application has been denied and stating the reasons for the denial 145
of the application. 146
SECTION 5. Section 81-22-7, Mississippi Code of 1972, is 147
brought forward as follows: 148
81-22-7. To be eligible for a license, an applicant shall 149
file with the commissioner a bond with good security in the penal 150
sum of Fifty Thousand Dollars ($50,000.00), payable to the State 151
of Mississippi for the faithful performance by the licensee of the 152
duties and obligations pertaining to the business so licensed and 153
the prompt payment of any judgment that may be recovered against 154
the licensee on account of charges or other claims arising 155
directly or collectively from any violation of the provisions of 156
this chapter. The applicant may file, in lieu of the bond, cash, 157
a certificate of deposit or government bonds in the amount of 158
Fifty Thousand Dollars ($50,000.00). Those deposits shall be 159
filed with the commissioner and are subject to the same terms and 160
conditions as are provided for in the surety bond required in this 161
paragraph. Any interest or earnings on those deposits are payable 162
to the depositor. 163
SECTION 6. Section 81-22-9, Mississippi Code of 1972, is 164
brought forward as follows: 165
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81-22-9. (1) Funds deposited in escrow account. The debt 166
management service provider shall deposit, within two (2) business 167
days of receipt, all funds received from or on behalf of a 168
consumer for payment to a creditor or creditors in a federally 169
insured escrow account for the benefit of the consumer in a 170
supervised financial organization. Any escrow account established 171
to receive consumer funds is free from trustee process and 172
unavailable to creditors of the debt management service provider. 173
(2) Requirements for handling of funds. The debt management 174
service provider shall: 175
(a) Maintain separate records of account for each 176
consumer receiving debt management services; 177
(b) Remit funds received from or on behalf of a 178
consumer to the consumer's creditor or creditors within fifteen 179
(15) business days of receipt of the funds; and 180
(c) Correct or remedy any misdirected payments 181
resulting from an error by the debt management service provider 182
and reimburse the consumer for any actual costs or fees imposed by 183
a creditor as a result of such misdirection. 184
(3) Commingling of funds. The debt management service 185
provider may not commingle escrow accounts established for the 186
benefit of consumers with any operating accounts of the debt 187
management service provider. 188
SECTION 7. Section 81-22-11, Mississippi Code of 1972, is 189
brought forward as follows: 190
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81-22-11. (1) Written agreement. A debt management service 191
provider may not perform debt management services for a consumer 192
unless the consumer and the debt management service provider first 193
have executed a written agreement with regard to the debt 194
management services to be provided. A copy of the completed 195
agreement must be given to the consumer. 196
(2) Required provisions. Each agreement between a consumer 197
and a debt management service provider must be dated and signed by 198
the consumer and must include the following: 199
(a) The name and address of the consumer and the debt 200
management service provider; 201
(b) A full description of the services to be performed 202
for the consumer, any fees to be charged to the consumer for those 203
services and any contributions, fees or charges the consumer has 204
agreed to make or pay to the debt management service provider; 205
(c) Disclosure of the existence of the surety bond on 206
file with the commissioner under Section 81-22-7 and a notice that 207
the consumer may contact the Department of Banking and Consumer 208
Finance at P.O. Box 23729, Jackson, MS 39225-3729 or 209
1-800-844-2499 with any questions or complaints regarding the debt 210
management service provider; 211
(d) The identification of the federally insured 212
institution where funds remitted by a consumer for payment to one 213
or more creditors will be held; 214
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(e) The right of a party to cancel the agreement by 215
providing a written notice of cancellation to the other party; 216
(f) A complete list of the consumer's obligations that 217
are subject to the agreement and the names and addresses of the 218
creditors holding those obligations; 219
(g) A full description and schedule of the periodic 220
amounts to be remitted to the debt management service provider for 221
payment to the consumer's creditor or creditors and the amounts to 222
be remitted to each creditor; 223
(h) A notice to the consumer that by executing the 224
agreement the consumer authorizes the federally insured 225
institution to disclose financial records relating to the escrow 226
account in which the consumer's funds are held under Section 227
81-22-9 to the commissioner during the course of any examination 228
of the debt management service provider by the commissioner; and 229
(i) The following notice: 230
NOTICE TO CONSUMER: Do not sign this agreement before you 231
read it. You must be given a copy of this agreement. 232
SECTION 8. Section 81-22-13, Mississippi Code of 1972, is 233
brought forward as follows: 234
81-22-13. A debt service management provider may only charge 235
a consumer the following fees for providing debt management 236
services: 237
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(a) A maintenance fee not to exceed Thirty Dollars 238
($30.00) per month after a consumer has received a free initial 239
counseling session; 240
(b) A one-time setup fee not to exceed Seventy-five 241
Dollars ($75.00); 242
(c) A fee for obtaining the consumer's credit report 243
not to exceed Fifteen Dollars ($15.00) for an individual report or 244
Twenty-five Dollars ($25.00) for a joint report; 245
(d) A fee not to exceed Fifty Dollars ($50.00) for 246
educational courses/products that will assist the consumer in 247
achieving financial stability. Products shall be educational in 248
nature and may include, but not be limited to, the following 249
topics: Home Buyer Education, Financial Literacy Education, and 250
Credit Report Review. However, the consumer must be informed that 251
those courses and products are not a mandatory condition to 252
receive debt management services; and 253
(e) A bankruptcy consultation fee, not to exceed Fifty 254
Dollars ($50.00) per consumer, may be charged by nonprofit credit 255
counseling agencies approved by the U.S. Trustees pursuant to 11 256
USC Section 111. 257
SECTION 9. Section 81-22-15, Mississippi Code of 1972, is 258
brought forward as follows: 259
81-22-15. (1) Written reports to consumers. A debt 260
management service provider shall provide to each consumer 261
receiving debt management services periodic written reports 262
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accounting for funds received from the consumer for payment to the 263
consumer's creditor or creditors whose obligations are listed in 264
the consumer's agreement with the debt management service provider 265
and disbursements made to each such creditor on the consumer's 266
behalf since the last report. The debt management service 267
provider shall provide those reports to the consumer not less than 268
once each calendar quarter. 269
(2) Maintenance of records. Any person required to be 270
licensed under this chapter shall maintain in its offices, or such 271
other location as the department permits, the books, accounts and 272
records necessary for the department to determine whether or not 273
the person is complying with the provisions of this chapter and 274
the rules and regulations adopted by the department under this 275
chapter. These books, accounts and records shall be maintained 276
apart and separate from any other business in which the person is 277
involved. A debt management service provider shall maintain books 278
and records for each consumer for whom it provides debt management 279
services for six (6) years following the final transaction with 280
the consumer. 281
(3) Verification of payments to creditors. Licensees that 282
participate in fair share contributions with creditors shall 283
maintain records that reflect client accounts were credited for 284
the full amount of any payments due and not the net amount as a 285
result of a fair share contribution. Such records may consist of 286
either a copy of the client's statement from the creditor or the 287
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licensee may send a monthly or quarterly statement to clients that 288
reflect payments remitted to creditors. 289
(4) Within fifteen (15) days of the occurrence of any of the 290
following events, a licensee shall file a written report with the 291
commissioner describing the event and its expected impact on the 292
activities on the licensee's business in this state: 293
(a) The filing for bankruptcy or reorganization by the 294
licensee; 295
(b) The institution of revocation or suspension 296
proceedings against the licensee by any state or governmental 297
authority; or 298
(c) Any felony indictment or conviction of the licensee 299
or any of its directors or principal officers. 300
SECTION 10. Section 81-22-17, Mississippi Code of 1972, is 301
brought forward as follows: 302
81-22-17. The commissioner may exercise the following powers 303
and functions: 304
(a) Complaint investigation. The commissioner may 305
receive and act on complaints, take action to obtain voluntary 306
compliance with this chapter or refer cases to the Attorney 307
General, who shall appear for and represent the commissioner in 308
court. 309
(b) Rules. The commissioner may adopt reasonable 310
administrative regulations, not inconsistent with law, for the 311
enforcement of this chapter. 312
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(c) Examination of licensees. To assure compliance 313
with the provisions of this chapter, the department may examine 314
the books and records of any licensee without notice during normal 315
business hours. The commissioner shall charge the licensee an 316
examination fee in an amount not less than Three Hundred Dollars 317
($300.00) nor more than Six Hundred Dollars ($600.00) for each 318
office or location within the State of Mississippi, plus any 319
actual expenses incurred while examining the licensee's records or 320
books that are located outside the State of Mississippi. However, 321
in no event shall a licensee be examined more than once in a 322
two-year period unless for cause shown based upon consumer 323
complaint and/or other exigent reasons as determined by the 324
commissioner. 325
(d) Examination of nonlicensees. The department, its 326
designated officers and employees, or its duly authorized 327
representatives, for the purposes of discovering violations of 328
this chapter and for the purpose of determining whether any person 329
or individual reasonably suspected by the commissioner of 330
conducting business that requires a license under this chapter, 331
may investigate those persons and individuals and examine all 332
relevant books, records and papers employed by those persons or 333
individuals in the transaction of business, and may summon 334
witnesses and examine them under oath concerning matters as to the 335
business of those persons, or other such matters as may be 336
relevant to the discovery of violations of this chapter, 337
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including, without limitation, the conduct of business without a 338
license as required under this chapter. 339
SECTION 11. Section 81-22-19, Mississippi Code of 1972, is 340
brought forward as follows: 341
81-22-19. A debt management service provider may not: 342
(a) Purchase debt. Purchase any debt or obligation of 343
a consumer; 344
(b) Lend money. Lend money or provide credit to any 345
consumer; 346
(c) Mortgage interest. Obtain a mortgage or other 347
security interest in property of a consumer; 348
(d) Debt collector. Operate as a debt collector in 349
this state; or 350
(e) Negative amortization. Structure an agreement for 351
the consumer that, at the conclusion of the projected term for the 352
consumer's participation in the debt management service agreement, 353
would result in negative amortization of any of the consumer's 354
obligations to creditors. 355
SECTION 12. Section 81-22-21, Mississippi Code of 1972, is 356
brought forward as follows: 357
81-22-21. (1) False advertising. A debt management service 358
provider may not engage in this state in false or misleading 359
advertising concerning the terms and conditions of any services or 360
assistance offered. 361
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(2) Required words. A debt management service provider may 362
not advertise its services in Mississippi in any media 363
disseminated primarily in this state, whether print or electronic, 364
without the words "Licensed Debt Management Service Provider." 365
(3) Dissemination; no liability. This section does not 366
impose liability on the owner or personnel of any medium in which 367
an advertisement appears or through which an advertisement is 368
disseminated. 369
SECTION 13. Section 81-22-23, Mississippi Code of 1972, is 370
brought forward as follows: 371
81-22-23. (1) Violations; unfair, unconscionable or 372
deceptive practices. A debt management service provider that 373
violates any provision of this chapter or any rule adopted by the 374
commissioner, or that through any unfair, unconscionable or 375
deceptive practice causes actual damage to a consumer is subject 376
to enforcement action under subsection (2) of this section. 377
(2) Enforcement actions. The following enforcement actions 378
may be taken by the commissioner or an aggrieved consumer against 379
a debt management service provider for violations of any provision 380
of this chapter or any rule adopted under this chapter, or for 381
unfair, unconscionable or deceptive practices that cause actual 382
damage to a consumer: 383
(a) When the commissioner has reasonable cause to 384
believe that a person is violating any provision of this chapter, 385
the commissioner, in addition to and without prejudice to the 386
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authority provided elsewhere in this chapter, may enter an order 387
requiring the person to stop or to refrain from the violation. 388
The commissioner may sue in any chancery court of the state having 389
jurisdiction and venue to enjoin the person from engaging in or 390
continuing the violation or from doing any act in furtherance of 391
the violation. In such an action, the court may enter an order or 392
judgment awarding a preliminary or permanent injunction; 393
(b) The commissioner may, after notice and hearing, 394
impose a civil penalty against any licensee if the licensee, 395
individual required to be registered, or employee is adjudged by 396
the commissioner to be in violation of the provisions of this 397
chapter. The civil penalty shall not exceed Five Hundred Dollars 398
($500.00) per violation and shall be deposited into the Consumer 399
Finance Fund of the department; 400
(c) The state may enforce its rights under the surety 401
bond as required in Section 81-22-7 as an available remedy for the 402
collection of any civil penalties, criminal fines or costs of 403
investigation and/or prosecution incurred; 404
(d) A civil action by an aggrieved consumer in which 405
that consumer has the right to recover actual damages from the 406
debt management service provider in an amount determined by the 407
court plus costs of the action together with reasonable attorney's 408
fees; or 409
(e) Revocation, suspension or nonrenewal of the debt 410
management service provider's license under Section 81-22-25. 411
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SECTION 14. Section 81-22-25, Mississippi Code of 1972, is 412
brought forward as follows: 413
81-22-25. (1) Suspension or revocation. After notice and 414
hearing, the commissioner may suspend or revoke a debt management 415
service provider's license if the commissioner finds that one of 416
the conditions of subsection (2) of this section is met. 417
(2) Conditions for suspension or revocation. The following 418
conditions are grounds for suspension or revocation of a 419
registration: 420
(a) A fact or condition exists that, if it had existed 421
at the time when the licensee applied for a license, would have 422
been grounds for denying the application; 423
(b) The licensee knowingly violates a material 424
provision of this chapter or rule or order validly adopted by the 425
commissioner under authority of this chapter; 426
(c) The licensee is insolvent; 427
(d) The licensee refuses to permit the commissioner to 428
make an examination authorized by this chapter; or 429
(e) The licensee fails to respond within a reasonable 430
time and in an appropriate manner to communications from the 431
commissioner. 432
SECTION 15. Section 81-22-27, Mississippi Code of 1972, is 433
brought forward as follows: 434
81-22-27. The commissioner may employ the necessary 435
full-time employees above the number of permanent full-time 436
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employees authorized for the department for the fiscal year 2003, 437
to carry out and enforce the provisions of this chapter. The 438
commissioner also may expend the necessary funds and equip and 439
provide necessary travel expenses for those employees. 440
SECTION 16. Section 81-22-28, Mississippi Code of 1972, is 441
brought forward as follows: 442
81-22-28. (1) If a licensee seeks to utilize a third-party 443
payment processor, to hold, have access to, effectuate possession 444
of, by any means, or to distribute or be in the chain of 445
distribution of the monies of another licensee's consumers, the 446
licensee shall give the Department of Banking and Consumer Finance 447
ten (10) days' written notice. 448
(2) Such notice shall contain the name and address of the 449
third-party payment processor, a description of the services, a 450
copy of the agreement or contract between the licensee and the 451
third-party payment processor and the highest daily amount of 452
consumer funds to be held or transmitted. The third-party payment 453
processor shall submit to the department, upon request, the 454
highest daily amount held or transmitted during the previous 455
month. 456
(3) Each third-party payment processor shall file with the 457
commissioner a surety bond, issued by a bonding company or 458
insurance company authorized to do business in the State of 459
Mississippi, in the principal sum of Fifty Thousand Dollars 460
($50,000.00) and in an additional principal sum of Fifty Thousand 461
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Dollars ($50,000.00) for each additional licensee it contracts 462
with, but in no event shall the bond be required to be in excess 463
of One Hundred Fifty Thousand Dollars ($150,000.00). In lieu of 464
the surety bond, a third-party payment processor may file other 465
assets such as cash, a certificate of deposit or government bonds. 466
(4) A licensee shall not use a third-party payment processor 467
until the licensee receives written notice from the department 468
confirming that the department has received a surety bond or other 469
assets from the third-party payment processor. 470
(5) Prior to performing any of its services, the third-party 471
payment processor shall provide written authorization for the 472
department to examine all books, records, documents and materials, 473
including those maintained in electronic form, as they relate to 474
the consumers' monies held by, or distributed by the third-party 475
payment processor to the creditors of the consumers and shall have 476
received written confirmation from the department that the written 477
authorization is sufficient. The cost of the examination shall be 478
paid by the licensee. 479
(6) All agreements or contracts between a licensee and a 480
third-party payment processor shall provide for a thirty-day 481
written notice of termination to the party against whom 482
termination is being sought. A licensee shall immediately notify 483
the department in writing of the notice of termination. 484
(7) In the event a licensee elects to maintain cash, a 485
certificate of deposit or government bonds on deposit, and 486
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ST: Mississippi Debt Management Services Act;
delete repealer on.
utilizes the services of a third-party payment processor, there is 487
no requirement that the third-party payment processor obtain a 488
surety bond or maintain other assets on deposit with the 489
department. 490
SECTION 17. This act shall take effect and be in force from 491
and after July 1, 2026. 492