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Legislation designed for adoption in all 50 States

The National Conference of Commissioners on Uniform State Laws (“NCCUSL”) finalized and issued the UDMSA in July 2005.  Nearly every state has already adopted legislation pertaining to such matters as debt adjusting, debt management, debt pooling, debt settlement, and consumer credit counseling – that vary considerably in scope and content.  According to NCCUSL, the UDMSA represents the first national effort at providing some uniform rules to govern both consumer credit counseling services and debt settlement services.

Preface: Consumer credit counseling and debt settlement services have been available to individuals with serious debt and credit problems going back to the 1950's. There are generally two kinds of services that have been available. Some of these services have provided counseling coupled with assisting debtors in establishing programs to reduce interest charges and pay off debts over an extended time. Others have provided debt settlement services, in which agreements are reached with creditors to settle on a percentage of debt. Most of these services have collected a periodic amount from the debtors from which payment to creditors has been made. The general objective of these services has been debt satisfaction without resort to bankruptcy.

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The history of consumer credit counseling and debt settlement services is somewhat checkered. There have been abuses and efforts to counter abuses statutorily in many states. Consumer credit counseling and debt settlement services services have been criticized in the past for their efforts to steer debtors away from bankruptcy when it may have been more advantageous and less costly for some debtors to file bankruptcy. State legislators have struggled to find legistlative solutions but the industry remains unregulated in most states. One of the controversies in many states was whether for profit services should be allowed to operate along with not for profit services.

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However, federal bankruptcy reform effective in 2005 has changed the perspective on such services. For an individual to file for Chapter 7 bankruptcy, that individual will in most cases have to show that credit counseling and debt education/management has been sought and attempted. This shifts a highly significant burden upon private services to perform honestly and effectively. Because the new bankruptcy rules are federal and apply in every state, regulating the consumer credit counseling and debt settlement services in every state must be uniform in character for the new bankruptcy rules to be effective and for consumers to be protected.


IIn 2005, just in time for consideration in the state legislatures, the Uniform Law Commissioners promulgated the Uniform Debt-Management Services Act (UDMSA). It provides the states with a comprehensive act governing these services that will mean national administration of consumer credit counseling and debt settlement services in a fair and effective way.


UDMSA may be divided into three basic parts: registration of services, service-debtor agreements and enforcement. Each part contributes to the comprehensive quality of the Uniform Act.



No service may enter into an agreement with any debtor in a state without registering as a consumer debt-management service in that state. Registration requires submission of detailed information concerning the service, including its financial condition, the identity of principals, locations at which service will be offered, form for agreements with debtors and business history in other jurisdictions. To register, a service must have an effective insurance policy against fraud, dishonesty, theft and the like in an amount no less than $250,000.00. It must also provide a security bond of a minimum of $50,000.00 which has the state administrator as a beneficiary. If a registration substantially duplicates one in another state, the service may offer proof of registration in that other state to satisfy the registration requirements in a state. A satisfactory application will result in a certificate to do business from the administrator. A yearly renewal is required.



In order to enter into agreements with debtors, there is a disclosure requirement respecting fees and services to be offered, and the risks and benefits of entering into such a contract. The service must offer counseling services from a certified counselor or certified debt specialist and a plan must be created in consultation by the counselor for debt-management service to commence. The contents of the agreements and fees that may be charged are set by the statute. There is a penalty-free three-day right of rescission on the part of the debtor. The debtor may cancel the agreement also after 30 days, but may be subject to fees if that occurs. The service may terminate the agreement if required payments are delinquent for at least 60 days.

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. There are strict accounting requirements and periodic reporting requirements respecting funds held.



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. Enforcement of the Uniform Act occurs at two levels, the administrator and the individual level. The administrator has investigative powers, power to order an individual to cease and desist; power to assess a civil penalty up to $10,000.00, and the power to bring a civil action. An individual may bring a civil action for compensatory damages, including triple damages if a service obtains payments not authorized in the Uniform Act, and may seek punitive damages and attorney’s fees. A service has a good faith mistake defense against liability. The statute of limitations pertaining to an action by the administrator is four years, and two years for a private right of action.


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. For example, a title insurer that provides bill-paying service that is incidental to title insurance is not subject to it.


UDMSA provides comprehensive regulation of debt counseling and debt settlement services. It becomes an essential part of the law of creditor and debtor as bankruptcy reform enacted by Congress in 2005 takes effect.

This Act provides guidance and regulation to the consumer credt counseling and debt settlement industries. The Act applies to both consumer credit counseling services and debt settlement services. The Act is a comprehensive statute that provides rules for, among other things, registration requirements, bond requirements, certification requirements, disclosure requirements, and penalties for non-compliance.


Completed by the Uniform Law Commissioners (National Conference of Commissioners on Uniform State Laws) in 2005.




Important Note: Colorado is the first State to recognize and treat with their legislation the two distinctly different debt-management functions performed by Consumer Credit Counseling Agencies and Debt Settlement Companies. The Colorado Act requires personnel be "Certified Debt Specialists" for Debt Settlement Companies and "Certified Counselors" for Consumer Credit Counseling Agencies. Other States adopting the act have generally followed Colorado's accreditation criteria for individuals providing services in their State. We attempt to provide accurate and current information but some States may not yet be listed below or may have UDMSA legislation which is pending past the effective date noted due to further review by legislators, each State should be contacted directly to confirm legislation and effective dates.


Colorado » Download the Colorado UDMSA. (Effective January 1, 2008)


Delaware » Download the Delaware UDMSA. (Effective January 17, 2007)


Note: Approved accreditation programs for the Delaware Act can be found on the State's website at:

Delaware Approved Counselor & Debt Specialist Certification Programs

Rhode Island » View the Rhode Island UDMSA. (Effective March 31, 2007)
North Dakota » View the North Dakota UDMSA. (Effective September 1, 2009)

Utah » View the Utah UDMSA. (Effective July 1, 2007)


Note: Approved accreditation programs for the Utah Act can be found on the State's website at:

Utah Approved Counselor & Debt Specialist Certification Programs


Nevada » View the Nevada UDMSA. (Effective July 1, 2010)


Note: Approved accreditation programs for the Nevada Act can be found on the State's website at:

Nevada Approved Counselor & Debt Specialist Certification Programs


Tennessee » View the Tennessee UDMSA. (Effective July 1, 2010)

Act updated effecive July 1, 2014 - Updates:


If an individual assents to an agreement that contemplates that creditors will settle debts for less
than the amount of the debt owned at the time of settlement, a provider may not request or
receive payment of any fee or consideration until and unless:

(1) The provider has renegotiated, settled, reduced, or otherwise altered the terms of at least one
debt pursuant to an agreement executed by the individual;

(2) The individual has made at least one payment pursuant to the agreement between the
individual and the creditor; and

(3) To the extent that debts enrolled in a service are renegotiated, settled, reduced or otherwise
altered individually, the fee or consideration either:

(A) Bears the same proportional relationship to the total fee for renegotiating, settling, reducing
or otherwise altering the terms of the entire debt balance as the individual debt amount bears to
the entire debt amount. The individual debt amount and the entire debt amount are those owed at
the time the debt was enrolled in the service; or

(B) Is a percentage of the amount saved as a result of the renegotiation, settlement, reduction or
alteration. The percentage charged cannot change from one individual debt to another. The
amount saved is the difference between the amount owed at the time the debt was enrolled in the
service and the amount actually paid to satisfy the debt.




New Jersey
New York
Note: Many other states have taken parts of this act for their debt relief legislation which may bear a different name.


UDMSA - Links of Interest


The UDMSA represents the first national effort at providing some uniform rules to govern both credit counseling services and debt settlement services.


The following are links to the Debt Settlement Training, Certification & Trade Associations who are participating in the adoption of the Uniform Debt-Management Services Act (UDMSA) for all 50 States.

Individuals - The International Association of Professional Debt Arbitrators (IAPDA) - Has developed two Certification Training Programs - "Certified Debt Specialist" and "Certified Credit Counseling Specialist" that comply with UDMSA certification requirements specific to Debt Settlement and Consumer Credit Counseling.
Companies - The American Fair Credit Council (AFCC) - Working with and lobbying State Legislators who are introducing the UDMSA on issues specific to the Debt Settlement industry.


The following are links to Consumer Credit Counseling Associations who may participate in the adoption of the Uniform Debt-Management Services Act (UDMSA).


The Association of Independent Consumer Credit Counseling Agencies (AICCCA) - A national membership organization representing non-profit consumer credit counseling companies.
National Foundation for Credit Counseling (NFCC) - A national membership organization representing tax exempt consumer credit counseling organizations.
Association of Credit Counseling Professionals (ACCPros) - A credit counseling agency trade association enriching its members and consumers through best practices, integrity and compliance.






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