The Commissioner of the Connecticut Department of Banking has issued a schedule of the maximum fees that a debt negotiator may charge for specific services in connection with the state's new debt settlement law that will take effect on Thursday this week.

Under the authority of Section 32(b) of Public Act 09-208, the Commissioner has announced that the following are the maximum fees that debt negotiators may charge for services negotiating unsecured debts in Connecticut:

INITIAL FEE:
A debt negotiator of unsecured debt may charge the debtor a reasonable one-time initial or set-up fee in an amount not to exceed fifty dollars ($50).

SERVICE FEES:
A debt negotiator of unsecured debt may charge a monthly service fee not to exceed eight dollars ($8) for each creditor that is listed in the debt negotiation service contract. The total service fee charged to a debtor may not exceed forty dollars ($40) per month.

AGGREGATE FEES:
A debt negotiator of unsecured debt may collect total aggregate fees including the initial fee and service fees, not to exceed ten percent (10% ) of the amount by which the consumer’s debt is reduced as part of each settlement as agreed to in the debt negotiation service contract as each settlement is achieved. A debt negotiator may not charge more than ten percent (10%) of the amount by which the consumer’s debt is reduced on the basis that the consumer has entered into a debt negotiation contract for joint obligations of a consumer and a consumer’s spouse or other member of the consumer’s household.

The new law provides extensive licensing, bonding, disclosure, contract term and other requirements governing the operation and conduct of debt settlement companies in Connecticut.

Additional information and applications for companies seeking to obtain the debt negotiation license under the new law can be obtained from the Department of Banking’s website, at http://www.ct.gov/dob/cwp/view.asp?a=2232&q=446840, or by calling the Consumer Credit Division, at 860.240.8200, or toll-free 1.800.831.7225.

This client alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.