Mississippi Debt Management Services Act; extend repealer on.

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To: Banking and Financial
Services
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative Shanks

HOUSE BILL NO. 1769

AN ACT TO REENACT SECTIONS 81-22-1 THROUGH 81-22-28, 1
MISSISSIPPI CODE OF 1972, WHICH ARE THE MISSISSIPPI DEBT 2
MANAGEMENT SERVICES ACT; TO AMEND SECTION 81-22-31, MISSISSIPPI 3
CODE OF 1972, TO EXTEND THE DATE OF THE REPEALER ON THE 4
MISSISSIPPI DEBT MANAGEMENT SERVICES ACT; AND FOR RELATED 5
PURPOSES. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 7
SECTION 1. Section 81-22-1, Mississippi Code of 1972, is 8
reenacted as follows: 9
81-22-1. This chapter may be known and cited as the 10
"Mississippi Debt Management Services Act." 11
SECTION 2. Section 81-22-3, Mississippi Code of 1972, is 12
reenacted as follows: 13
81-22-3. As used in this chapter, unless the context 14
otherwise indicates, the following terms have the following 15
meanings: 16
(a) "Commissioner" means the Commissioner of Banking 17
and Consumer Finance of the State of Mississippi. 18
(b) "Debt management service" means: 19
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(i) The receiving of money from a consumer for the 20
purpose of distributing one or more payments to or among one or 21
more creditors of the consumer in full or partial payment of the 22
consumer's obligation; 23
(ii) Arranging or assisting a consumer to arrange 24
for the distribution of one or more payments to or among one or 25
more creditors of the consumer in full or partial payment of the 26
consumer's obligation; 27
(iii) Exercising control, directly or indirectly, 28
or arranging for the exercise of control over funds of the 29
consumer for the purpose of distributing payments to or among one 30
or more creditors of the consumer; 31
(iv) Acting or offering to act as an intermediary 32
between a consumer and one or more creditors of the consumer for 33
the purpose of adjusting, compromising, negotiating, settling, 34
discharging or otherwise deferring, reducing or altering the terms 35
of payment of the consumer's obligation; or 36
(v) Improving or offering to improve a consumer's 37
credit record, history or rating. 38
(c) "Debt management service provider" means a person 39
that provides or offers to provide to a consumer in this state any 40
debt management services, in return for a fee or other 41
consideration. "Debt management service provider" does not 42
include: 43
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(i) Those situations involving debt adjusting 44
incurred incidentally in the lawful practice of law in this state; 45
(ii) Those situations involving credit report 46
error correction services and situations covered under paragraph 47
(b)(v) of this section when performed in the lawful practice of 48
law in this state; 49
(iii) Title insurers who adjust debts out of 50
escrow funds only incidentally in the regular course of their 51
principal business; 52
(iv) Judicial officers or others acting under 53
court orders; 54
(v) Those situations involving debt adjusting 55
incurred incidentally in connection with the lawful practice as a 56
certified public accountant; 57
(vi) Bona fide trade or mercantile associations in 58
the course of arranging adjustment of debts with business 59
establishments; 60
(vii) Employers who adjust debts for their 61
employees; 62
(viii) Any person who, at the request of a debtor, 63
makes a loan to the debtor, and who, at the authorization of the 64
debtor, acts as an adjuster of the debtor's debts solely in the 65
disbursement of the proceeds of the loan, without compensation 66
for the services rendered in adjusting the debts; 67
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(ix) Any institution that is regulated, supervised 68
or licensed by the department or any out-of-state institution that 69
is insured by the Federal Deposit Insurance Corporation or the 70
National Credit Union Administration; 71
(x) Licensed attorneys engaged in the lawful 72
practice of law; or 73
(xi) For-profit debt management service providers 74
who do not receive or hold consumer funds, who do not receive a 75
fee until a settlement is approved by the consumer and who are 76
regulated by the Federal Trade Commission. 77
(d) "Department" means the Department of Banking and 78
Consumer Finance of the State of Mississippi. 79
(e) "Fair share contribution" means voluntary 80
contributions paid to the licensee by the creditor for collecting 81
funds from clients pursuant to debt management services. 82
(f) "Licensee" means a person or entity who is required 83
to be licensed as a debt management service provider. 84
(g) "Person" means an individual or an organization. 85
(h) "Records" or "documents" means any item in hard 86
copy or produced in a format of storage commonly described as 87
electronic, imaged, magnetic, microphotographic or otherwise, and 88
any reproduction so made shall have the same force and effect as 89
the original thereof and be admitted in evidence equally with the 90
original. 91
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(i) "Third-party payment processor" means any entity 92
that holds, or has access to, or can effectuate possession of, by 93
any means, the monies of a licensee's debtors, or distributes, or 94
is in the chain or distribution of such monies, to the creditors 95
of such debtors, pursuant to an agreement or contract with the 96
licensee. This term shall not include entities that solely 97
provide the electronic routing and settlement of financial 98
transactions and their sponsoring banks. 99
SECTION 3. Section 81-22-5, Mississippi Code of 1972, is 100
reenacted as follows: 101
81-22-5. (1) Licensure and relicensure. No person or 102
entity may act as a debt management service provider with respect 103
to consumers who are residents of this state without a license 104
issued under this chapter. The license application must be in a 105
form prescribed by the commissioner. The commissioner may refuse 106
the application if it contains erroneous or incomplete 107
information. A license may not be issued unless the commissioner, 108
upon investigation, finds that the financial soundness and 109
responsibility, insurance coverage, consumer education programs 110
and services component, character and fitness of the applicant 111
and, when applicable, its partners, officers or directors, warrant 112
belief that the business will be operated honestly and fairly 113
within the purposes of this chapter. Each license shall remain in 114
full force and effect until relinquished, suspended, revoked or 115
expired. With each initial application for a license, the 116
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applicant shall pay to the commissioner a license fee of Seven 117
Hundred Fifty Dollars ($750.00), and on or before December 31 of 118
each year thereafter, an annual renewal fee of Four Hundred 119
Seventy-five Dollars ($475.00). If the annual renewal fee remains 120
unpaid after December 31, the license shall expire. If any person 121
engages in business as provided for in this chapter without paying 122
the license fee provided for in this subsection before beginning 123
business or before the expiration of the person's current license, 124
as the case may be, then the person shall be liable for the full 125
amount of the license fee, plus a penalty in an amount not to 126
exceed Twenty-five Dollars ($25.00) for each day that the person 127
has engaged in such business without a license or after the 128
expiration of a license. All licensing fees and penalties shall 129
be paid into the Consumer Finance Fund of the department. 130
(2) Action on registration application. The commissioner 131
shall take action on an application within thirty (30) days after 132
the commissioner has accepted the application as complete. Upon 133
written request, the applicant is entitled to a hearing on the 134
question of the applicant's qualifications for license if the 135
commissioner has notified the applicant in writing that the 136
application has been denied or the commissioner has not issued a 137
license within thirty (30) days after the application for the 138
license was accepted as complete by the commissioner. A request 139
for a hearing may not be made more than sixty (60) days after the 140
application was accepted as complete or the commissioner has 141
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mailed a written notice to the applicant stating that the 142
application has been denied and stating the reasons for the denial 143
of the application. 144
SECTION 4. Section 81-22-7, Mississippi Code of 1972, is 145
reenacted as follows: 146
81-22-7. To be eligible for a license, an applicant shall 147
file with the commissioner a bond with good security in the penal 148
sum of Fifty Thousand Dollars ($50,000.00), payable to the State 149
of Mississippi for the faithful performance by the licensee of the 150
duties and obligations pertaining to the business so licensed and 151
the prompt payment of any judgment that may be recovered against 152
the licensee on account of charges or other claims arising 153
directly or collectively from any violation of the provisions of 154
this chapter. The applicant may file, in lieu of the bond, cash, 155
a certificate of deposit or government bonds in the amount of 156
Fifty Thousand Dollars ($50,000.00). Those deposits shall be 157
filed with the commissioner and are subject to the same terms and 158
conditions as are provided for in the surety bond required in this 159
paragraph. Any interest or earnings on those deposits are payable 160
to the depositor. 161
SECTION 5. Section 81-22-9, Mississippi Code of 1972, is 162
reenacted as follows: 163
81-22-9. (1) Funds deposited in escrow account. The debt 164
management service provider shall deposit, within two (2) business 165
days of receipt, all funds received from or on behalf of a 166
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consumer for payment to a creditor or creditors in a federally 167
insured escrow account for the benefit of the consumer in a 168
supervised financial organization. Any escrow account established 169
to receive consumer funds is free from trustee process and 170
unavailable to creditors of the debt management service provider. 171
(2) Requirements for handling of funds. The debt management 172
service provider shall: 173
(a) Maintain separate records of account for each 174
consumer receiving debt management services; 175
(b) Remit funds received from or on behalf of a 176
consumer to the consumer's creditor or creditors within fifteen 177
(15) business days of receipt of the funds; and 178
(c) Correct or remedy any misdirected payments 179
resulting from an error by the debt management service provider 180
and reimburse the consumer for any actual costs or fees imposed by 181
a creditor as a result of such misdirection. 182
(3) Commingling of funds. The debt management service 183
provider may not commingle escrow accounts established for the 184
benefit of consumers with any operating accounts of the debt 185
management service provider. 186
SECTION 6. Section 81-22-11, Mississippi Code of 1972, is 187
reenacted as follows: 188
81-22-11. (1) Written agreement. A debt management service 189
provider may not perform debt management services for a consumer 190
unless the consumer and the debt management service provider first 191
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have executed a written agreement with regard to the debt 192
management services to be provided. A copy of the completed 193
agreement must be given to the consumer. 194
(2) Required provisions. Each agreement between a consumer 195
and a debt management service provider must be dated and signed by 196
the consumer and must include the following: 197
(a) The name and address of the consumer and the debt 198
management service provider; 199
(b) A full description of the services to be performed 200
for the consumer, any fees to be charged to the consumer for those 201
services and any contributions, fees or charges the consumer has 202
agreed to make or pay to the debt management service provider; 203
(c) Disclosure of the existence of the surety bond on 204
file with the commissioner under Section 81-22-7 and a notice that 205
the consumer may contact the Department of Banking and Consumer 206
Finance at P.O. Box 23729, Jackson, MS 39225-3729 or 207
1-800-844-2499 with any questions or complaints regarding the debt 208
management service provider; 209
(d) The identification of the federally insured 210
institution where funds remitted by a consumer for payment to one 211
or more creditors will be held; 212
(e) The right of a party to cancel the agreement by 213
providing a written notice of cancellation to the other party; 214
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(f) A complete list of the consumer's obligations that 215
are subject to the agreement and the names and addresses of the 216
creditors holding those obligations; 217
(g) A full description and schedule of the periodic 218
amounts to be remitted to the debt management service provider for 219
payment to the consumer's creditor or creditors and the amounts to 220
be remitted to each creditor; 221
(h) A notice to the consumer that by executing the 222
agreement the consumer authorizes the federally insured 223
institution to disclose financial records relating to the escrow 224
account in which the consumer's funds are held under Section 225
81-22-9 to the commissioner during the course of any examination 226
of the debt management service provider by the commissioner; and 227
(i) The following notice: 228
NOTICE TO CONSUMER: Do not sign this agreement before you 229
read it. You must be given a copy of this agreement. 230
SECTION 7. Section 81-22-13, Mississippi Code of 1972, is 231
reenacted as follows: 232
81-22-13. A debt service management provider may only charge 233
a consumer the following fees for providing debt management 234
services: 235
(a) A maintenance fee not to exceed Thirty Dollars 236
($30.00) per month after a consumer has received a free initial 237
counseling session; 238
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(b) A one-time setup fee not to exceed Seventy-five 239
Dollars ($75.00); 240
(c) A fee for obtaining the consumer's credit report 241
not to exceed Fifteen Dollars ($15.00) for an individual report or 242
Twenty-five Dollars ($25.00) for a joint report; 243
(d) A fee not to exceed Fifty Dollars ($50.00) for 244
educational courses/products that will assist the consumer in 245
achieving financial stability. Products shall be educational in 246
nature and may include, but not be limited to, the following 247
topics: Home Buyer Education, Financial Literacy Education, and 248
Credit Report Review. However, the consumer must be informed that 249
those courses and products are not a mandatory condition to 250
receive debt management services; and 251
(e) A bankruptcy consultation fee, not to exceed Fifty 252
Dollars ($50.00) per consumer, may be charged by nonprofit credit 253
counseling agencies approved by the U.S. Trustees pursuant to 11 254
USC Section 111. 255
SECTION 8. Section 81-22-15, Mississippi Code of 1972, is 256
reenacted as follows: 257
81-22-15. (1) Written reports to consumers. A debt 258
management service provider shall provide to each consumer 259
receiving debt management services periodic written reports 260
accounting for funds received from the consumer for payment to the 261
consumer's creditor or creditors whose obligations are listed in 262
the consumer's agreement with the debt management service provider 263
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and disbursements made to each such creditor on the consumer's 264
behalf since the last report. The debt management service 265
provider shall provide those reports to the consumer not less than 266
once each calendar quarter. 267
(2) Maintenance of records. Any person required to be 268
licensed under this chapter shall maintain in its offices, or such 269
other location as the department permits, the books, accounts and 270
records necessary for the department to determine whether or not 271
the person is complying with the provisions of this chapter and 272
the rules and regulations adopted by the department under this 273
chapter. These books, accounts and records shall be maintained 274
apart and separate from any other business in which the person is 275
involved. A debt management service provider shall maintain books 276
and records for each consumer for whom it provides debt management 277
services for six (6) years following the final transaction with 278
the consumer. 279
(3) Verification of payments to creditors. Licensees that 280
participate in fair share contributions with creditors shall 281
maintain records that reflect client accounts were credited for 282
the full amount of any payments due and not the net amount as a 283
result of a fair share contribution. Such records may consist of 284
either a copy of the client's statement from the creditor or the 285
licensee may send a monthly or quarterly statement to clients that 286
reflect payments remitted to creditors. 287
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(4) Within fifteen (15) days of the occurrence of any of the 288
following events, a licensee shall file a written report with the 289
commissioner describing the event and its expected impact on the 290
activities on the licensee's business in this state: 291
(a) The filing for bankruptcy or reorganization by the 292
licensee; 293
(b) The institution of revocation or suspension 294
proceedings against the licensee by any state or governmental 295
authority; or 296
(c) Any felony indictment or conviction of the licensee 297
or any of its directors or principal officers. 298
SECTION 9. Section 81-22-17, Mississippi Code of 1972, is 299
reenacted as follows: 300
81-22-17. The commissioner may exercise the following powers 301
and functions: 302
(a) Complaint investigation. The commissioner may 303
receive and act on complaints, take action to obtain voluntary 304
compliance with this chapter or refer cases to the Attorney 305
General, who shall appear for and represent the commissioner in 306
court. 307
(b) Rules. The commissioner may adopt reasonable 308
administrative regulations, not inconsistent with law, for the 309
enforcement of this chapter. 310
(c) Examination of licensees. To assure compliance 311
with the provisions of this chapter, the department may examine 312
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the books and records of any licensee without notice during normal 313
business hours. The commissioner shall charge the licensee an 314
examination fee in an amount not less than Three Hundred Dollars 315
($300.00) nor more than Six Hundred Dollars ($600.00) for each 316
office or location within the State of Mississippi, plus any 317
actual expenses incurred while examining the licensee's records or 318
books that are located outside the State of Mississippi. However, 319
in no event shall a licensee be examined more than once in a 320
two-year period unless for cause shown based upon consumer 321
complaint and/or other exigent reasons as determined by the 322
commissioner. 323
(d) Examination of nonlicensees. The department, its 324
designated officers and employees, or its duly authorized 325
representatives, for the purposes of discovering violations of 326
this chapter and for the purpose of determining whether any person 327
or individual reasonably suspected by the commissioner of 328
conducting business that requires a license under this chapter, 329
may investigate those persons and individuals and examine all 330
relevant books, records and papers employed by those persons or 331
individuals in the transaction of business, and may summon 332
witnesses and examine them under oath concerning matters as to the 333
business of those persons, or other such matters as may be 334
relevant to the discovery of violations of this chapter, 335
including, without limitation, the conduct of business without a 336
license as required under this chapter. 337
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SECTION 10. Section 81-22-19, Mississippi Code of 1972, is 338
reenacted as follows: 339
81-22-19. A debt management service provider may not: 340
(a) Purchase debt. Purchase any debt or obligation of 341
a consumer; 342
(b) Lend money. Lend money or provide credit to any 343
consumer; 344
(c) Mortgage interest. Obtain a mortgage or other 345
security interest in property of a consumer; 346
(d) Debt collector. Operate as a debt collector in 347
this state; or 348
(e) Negative amortization. Structure an agreement for 349
the consumer that, at the conclusion of the projected term for the 350
consumer's participation in the debt management service agreement, 351
would result in negative amortization of any of the consumer's 352
obligations to creditors. 353
SECTION 11. Section 81-22-21, Mississippi Code of 1972, is 354
reenacted as follows: 355
81-22-21. (1) False advertising. A debt management service 356
provider may not engage in this state in false or misleading 357
advertising concerning the terms and conditions of any services or 358
assistance offered. 359
(2) Required words. A debt management service provider may 360
not advertise its services in Mississippi in any media 361
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disseminated primarily in this state, whether print or electronic, 362
without the words "Licensed Debt Management Service Provider." 363
(3) Dissemination; no liability. This section does not 364
impose liability on the owner or personnel of any medium in which 365
an advertisement appears or through which an advertisement is 366
disseminated. 367
SECTION 12. Section 81-22-23, Mississippi Code of 1972, is 368
reenacted as follows: 369
81-22-23. (1) Violations; unfair, unconscionable or 370
deceptive practices. A debt management service provider that 371
violates any provision of this chapter or any rule adopted by the 372
commissioner, or that through any unfair, unconscionable or 373
deceptive practice causes actual damage to a consumer is subject 374
to enforcement action under subsection (2) of this section. 375
(2) Enforcement actions. The following enforcement actions 376
may be taken by the commissioner or an aggrieved consumer against 377
a debt management service provider for violations of any provision 378
of this chapter or any rule adopted under this chapter, or for 379
unfair, unconscionable or deceptive practices that cause actual 380
damage to a consumer: 381
(a) When the commissioner has reasonable cause to 382
believe that a person is violating any provision of this chapter, 383
the commissioner, in addition to and without prejudice to the 384
authority provided elsewhere in this chapter, may enter an order 385
requiring the person to stop or to refrain from the violation. 386
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The commissioner may sue in any chancery court of the state having 387
jurisdiction and venue to enjoin the person from engaging in or 388
continuing the violation or from doing any act in furtherance of 389
the violation. In such an action, the court may enter an order or 390
judgment awarding a preliminary or permanent injunction; 391
(b) The commissioner may, after notice and hearing, 392
impose a civil penalty against any licensee if the licensee, 393
individual required to be registered, or employee is adjudged by 394
the commissioner to be in violation of the provisions of this 395
chapter. The civil penalty shall not exceed Five Hundred Dollars 396
($500.00) per violation and shall be deposited into the Consumer 397
Finance Fund of the department; 398
(c) The state may enforce its rights under the surety 399
bond as required in Section 81-22-7 as an available remedy for the 400
collection of any civil penalties, criminal fines or costs of 401
investigation and/or prosecution incurred; 402
(d) A civil action by an aggrieved consumer in which 403
that consumer has the right to recover actual damages from the 404
debt management service provider in an amount determined by the 405
court plus costs of the action together with reasonable attorney's 406
fees; or 407
(e) Revocation, suspension or nonrenewal of the debt 408
management service provider's license under Section 81-22-25. 409
SECTION 13. Section 81-22-25, Mississippi Code of 1972, is 410
reenacted as follows: 411
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81-22-25. (1) Suspension or revocation. After notice and 412
hearing, the commissioner may suspend or revoke a debt management 413
service provider's license if the commissioner finds that one of 414
the conditions of subsection (2) of this section is met. 415
(2) Conditions for suspension or revocation. The following 416
conditions are grounds for suspension or revocation of a 417
registration: 418
(a) A fact or condition exists that, if it had existed 419
at the time when the licensee applied for a license, would have 420
been grounds for denying the application; 421
(b) The licensee knowingly violates a material 422
provision of this chapter or rule or order validly adopted by the 423
commissioner under authority of this chapter; 424
(c) The licensee is insolvent; 425
(d) The licensee refuses to permit the commissioner to 426
make an examination authorized by this chapter; or 427
(e) The licensee fails to respond within a reasonable 428
time and in an appropriate manner to communications from the 429
commissioner. 430
SECTION 14. Section 81-22-27, Mississippi Code of 1972, is 431
reenacted as follows: 432
81-22-27. The commissioner may employ the necessary 433
full-time employees above the number of permanent full-time 434
employees authorized for the department for the fiscal year 2003, 435
to carry out and enforce the provisions of this chapter. The 436
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commissioner also may expend the necessary funds and equip and 437
provide necessary travel expenses for those employees. 438
SECTION 15. Section 81-22-28, Mississippi Code of 1972, is 439
reenacted as follows: 440
81-22-28. (1) If a licensee seeks to utilize a third-party 441
payment processor, to hold, have access to, effectuate possession 442
of, by any means, or to distribute or be in the chain of 443
distribution of the monies of another licensee's consumers, the 444
licensee shall give the Department of Banking and Consumer Finance 445
ten (10) days' written notice. 446
(2) Such notice shall contain the name and address of the 447
third-party payment processor, a description of the services, a 448
copy of the agreement or contract between the licensee and the 449
third-party payment processor and the highest daily amount of 450
consumer funds to be held or transmitted. The third-party payment 451
processor shall submit to the department, upon request, the 452
highest daily amount held or transmitted during the previous 453
month. 454
(3) Each third-party payment processor shall file with the 455
commissioner a surety bond, issued by a bonding company or 456
insurance company authorized to do business in the State of 457
Mississippi, in the principal sum of Fifty Thousand Dollars 458
($50,000.00) and in an additional principal sum of Fifty Thousand 459
Dollars ($50,000.00) for each additional licensee it contracts 460
with, but in no event shall the bond be required to be in excess 461
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of One Hundred Fifty Thousand Dollars ($150,000.00). In lieu of 462
the surety bond, a third-party payment processor may file other 463
assets such as cash, a certificate of deposit or government bonds. 464
(4) A licensee shall not use a third-party payment processor 465
until the licensee receives written notice from the department 466
confirming that the department has received a surety bond or other 467
assets from the third-party payment processor. 468
(5) Prior to performing any of its services, the third-party 469
payment processor shall provide written authorization for the 470
department to examine all books, records, documents and materials, 471
including those maintained in electronic form, as they relate to 472
the consumers' monies held by, or distributed by the third-party 473
payment processor to the creditors of the consumers and shall have 474
received written confirmation from the department that the written 475
authorization is sufficient. The cost of the examination shall be 476
paid by the licensee. 477
(6) All agreements or contracts between a licensee and a 478
third-party payment processor shall provide for a thirty-day 479
written notice of termination to the party against whom 480
termination is being sought. A licensee shall immediately notify 481
the department in writing of the notice of termination. 482
(7) In the event a licensee elects to maintain cash, a 483
certificate of deposit or government bonds on deposit, and 484
utilizes the services of a third-party payment processor, there is 485
no requirement that the third-party payment processor obtain a 486
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ST: Mississippi Debt Management Services Act;
extend repealer on.
surety bond or maintain other assets on deposit with the 487
department. 488
SECTION 16. Section 81-22-31, Mississippi Code of 1972, is 489
amended as follows: 490
81-22-31. Sections 81-22-1 through 81-22-28, Mississippi 491
Code of 1972, shall stand repealed on July 1, * * * 2029. 492
SECTION 17. This act shall take effect and be in force from 493
and after July 1, 2026. 494