Section 140.10  Office Records

 

a)         Required Files

 

1)         Every licensee shall keep the following records or their equivalent in accord with generally accepted accounting principles as approved by the Department of Financial and Professional Regulation-Division of Financial Institutions (Division):

 

A)        Client File

 

B)        Client Activity Record

 

C)        Payment Detail Report

 

D)        Index System

 

2)         If a computerized system is in use, licensee shall maintain a permanent file of back-up computer media for the end of each month.

 

3)         All books and records shall be kept current and available for examination by the Division.

 

b)         Client File

The client file shall contain the following: the original contract, a listing of total debtor income, a list of creditors including the balance owed to each and monthly payments due and a copy of the agreed-upon debt management plan.

 

c)         Client Activity Record

The Client Activity Record shall contain the original entry and be a permanent record, and shall show the debtor's account number, name, address, date of contract, total indebtedness, monthly receipts, any fees charged, amounts disbursed to creditors and the estimated term of the contract to satisfy the amount owed.

 

1)         If a contract is cancelled by  a licensee or debtor and a fee is claimed but not paid, the debtor activity record shall show the reason for cancellation and the amount of any fee claimed to be owed.

 

2)         If legal action is taken to collect an unpaid fee, the client activity record shall include a copy of the judgment or action taken.

 

3)         A separate file of all litigation accounts shall be maintained in the office of the licensee.

 

d)         Payment Detail Report

An individual Payment Detail Report shall be maintained for each debtor, including the account number, name and address, date of contract, total indebtedness, terms of payment and any fees charged.  The report shall also show the monthly total of all receipts, disbursements, undisbursed or reserve funds and the distribution of any prorated fee.

 

1)         A file shall be kept containing the paid or canceled Payment Detail Reports for a period of 5 years, showing the receipts and disbursement in full and the total amount of fees collected.  In a non-computerized system, adding machine tapes verifying the receipts against all disbursements, including total fees, shall be attached to each client file.

 

2)         The entries on the Payment Detail Report shall correspond with the receipt of periodic statements given to the debtor and shall reflect the disbursement made to creditors showing the net and gross amount.

 

3)         In a non-computerized system, all entries shall be made in ink and no erasures whatsoever may made on the report.  In case of error, a line should be drawn in ink through the improper  entry and the correct entry made on the following line.  No entries shall be masked, covered or rendered illegible.

 

e)         Index System

An alphabetical index system shall be kept indicating name and address of clients, account number, date of contract and total indebtedness.

 

(Source:  Amended at 35 Ill. Reg. 6350, effective March 29, 2011)

 

Section 140.20  Bank Account

 

a)         A separate trust bank account shall be maintained for the purpose of depositing customer's receipts and making disbursements to creditors or transferring earned fees to the general account.  Funds shall be deposited within one business day after receipt.

 

b)         Trust account bank statements and cancelled checks shall be retained at the office of the licensee for a period of 3 years.

 

c)         Copies of the original trust account bank statement and canceled checks, either in hard copy, microfilm, microfiche, or by other electronic means, shall be kept at the office of the licensee, at licensee's headquarters, or at an off-site storage facility for a period of 5 years.

 

(Source:  Amended at 22 Ill. Reg. 12550, effective July 6, 1998)

 

Section 140.30  Dual Business (Repealed)

 

(Source:  Repealed at 35 Ill. Reg. 6350, effective March 29, 2011)

 

Section 140.40  License

 

a)         For purposes of determining an applicant's qualifications for a license, the Division shall find an applicant financially responsible if it has a positive net worth.  Net worth means total assets minus total liabilities.

 

b)         An applicant shall possess at least 6 months of relevant business experience.

 

c)         In order to determine the applicant's general fitness and character, the Director of the Division of Financial Institutions with the authority delegated by the Secretary (Director) may require applicants to submit at least 2 letters of recommendation from persons familiar with the applicant or the applicant's business.

 

d)         Any applicant applying for a license shall submit the required bond, the application for license and all required information at the time of application for a license.

 

(Source:  Amended at 35 Ill. Reg. 6350, effective March 29, 2011)

 

Section 140.50  General Operations

 

a)         The licensee shall explain clearly and distinctly to each customer exactly the services to be rendered and the fees to be paid.

 

b)         If, after analyzing the debtor's total income and expenses, it is determined that a payment plan should be developed, the licensee shall create a Debt Management Plan (DMP) that is considered feasible and practical to allow a payment of funds by the debtor for distribution to debtor's creditors as may be mutually agreed upon.

 

1)         The licensee shall seek to obtain the consent of a majority of the creditors to accept the terms of the payment plan.  Creditor acceptance may be determined by acceptance of a payment without written objection.

 

2)         The debtor has the right to cancel the Debt Management Plan at any time by notifying the licensee, in writing, of debtor's desire to discontinue.

 

3)         The cancellation will take effect on the first day of the month following receipt of the cancellation notice from the debtor.

 

c)         When a contract is paid-in-full or satisfied, a statement shall be issued promptly to the debtor showing that the obligation has been satisfied. Licensee shall retain a copy of the contract marked "Paid" or "Satisfied" in the client file.

 

1)         If the debtor terminates payment to the licensee for a period exceeding 30 days, the licensee shall not consider pro rata fees as having been earned beyond 30 days following the next monthly contract date.

 

2)         The licensee is prohibited from charging a penalty for cancellation by either the debtor or the licensee except as provided in Section 12 of the Act.

 

d)         Every contract between a licensee and debtor shall:

 

1)         List every debt to be prorated, with the creditor's name, and disclose the total of all such debts;

 

2)         Disclose in precise terms the rate and amount of the licensee's charge;

 

3)         Disclose the approximate number and amount of installments required to pay the debts in full;

 

4)         Disclose the name and address of the licensee and of the debtor;

 

5)         Contain such other provisions or disclosures as the Director shall determine is necessary for the protection of the debtor and the proper conduct of business by a licensee;

 

6)         Disclose the right of the debtor to cancel at any time;

 

7)         Inform the debtor of any relationship that exists between the licensee and any creditor.

 

e)         All contracts shall be originated at the office of the licensee or its agent.

 

f)         When adjustments are needed to change the indebtedness listed in the contract, the licensee may execute a new contract using the revised figures or use a rider form executed in accordance with instructions provided in the rider.

 

g)         All legal documents and other forms that a debtor shall be required to sign shall be filed with the Director prior to use.

 

h)         A licensee shall deliver a copy of any contract, agreement, or Debt Management Plan between the licensee and the debtor to the debtor immediately after the debtor executes it, and the debtor's copy shall be executed by the licensee.

 

i)          A calendar month is the period from the given date in one month to the same numbered date in the following month and if there is no same numbered date in the following month, to the last date in the following month.  Not more than one  month's service fee may be considered earned in any calendar month.  A calendar month commences on the anniversary date of the contract.

 

j)          A licensee shall deliver a receipt to the debtor for each cash payment.

 

k)         The licensee shall make distribution to the debtor's creditors within 30 days after initial receipt of funds, and thereafter distributions shall be made to creditors within 30 days after receipt, less fees and costs, unless the reasonable payment of one or more of the debtor's obligations requires that such funds be held for a longer period to accumulate a certain sum, but in any case not to exceed an additional 30 days, or as authorized by the contract.

 

l)          At least once each 3 months, the licensee shall render an accounting to the debtors which shall itemize the total amount received from the debtor, the total amount paid to each creditor, the total amount which any creditor has agreed to accept as payment in full on any debt owed him by the debtor, the amount of charges deducted, and any amounts held in reserve.  A licensee shall render such an accounting to a debtor within 5 days after receipt of a written demand.

 

(Source:  Amended at 35 Ill. Reg. 6350, effective March 29, 2011)

 

Section 140.60  Fees

 

a)         A printed schedule of fees charged by a licensee shall be given to the debtor prior to the initial counseling session.

 

b)         A licensee shall not charge any fee in excess of those provided in Section 12 of the Act.

 

(Source:  Amended at 22 Ill. Reg. 12550, effective July 6, 1998)

 

Section 140.70  Prohibited Activities

 

a)         A licensee shall not take:

 

1)         Any contract, promise to pay, or other instrument which has any blank spaces when signed by a debtor;

 

2)         Any negotiable instrument for the licensee's charges;

 

3)         Any note, wage assignment, real estate or chattel mortgage, or other security to secure the licensee's charges;

 

4)         Any confession of judgement or power of attorney to confess judgement against the debtor or to appear for the debtor in a judicial proceedings;

 

5)         Any real or personal property as security for payment of a fee;

 

6)         Concurrent with the signing of the contract or as part of the application for the contract a release of any obligation to be performed on the part of the licensee.

 

b)         A licensee shall not take an appointment as attorney in fact or power of attorney.

 

c)         Licensees shall not take any legal instrument from the debtor other than the service contract and authorized rider.

 

d)         The licensee shall not accept a fee directly, or indirectly, from any person or other entity in exchange for referring potential customers.

 

e)         No fees shall be paid directly, or indirectly, to an attorney, lending institutions, or any other source for the referral of customers.

 

f)         A licensee shall not solicit or require a debtor to purchase, or agree to purchase, any policy of insurance.

 

g)         A licensee shall not lend money or extend credit or include in the contract any debts not established prior to the execution of the contract.

 

h)         No advance of the licensee's funds on the debtor's behalf shall be made by a licensee to any creditor or to the debtor.

 

(Source:  Amended at 22 Ill. Reg. 12550, effective July 6, 1998)

 

Section 140.80  Advertising

 

a)         Advertising shall not be false, misleading or deceptive [205 ILCS 665/13].   No statement shall be permitted that states or implies that no financial problem is too great for the licensee to solve.  No statement shall be permitted that states or implies that the licensee will use his own cash to pay the debtor's accounts. All advertisements shall contain the phrase, "we do not lend money".

 

b)         Upon specific request by the Division, licensees shall forward to the Director the complete text of all advertising copy.

 

c)         All advertising shall contain the true name and address of the licensee.

 

(Source:  Amended at 35 Ill. Reg. 6350, effective March 29, 2011)

 

Section 140.90  Availability of Act and Rules and Regulations

 

A copy of the Debt Management Service Act and this Part shall be kept in each office and branch.

 

(Source:  Amended at 22 Ill. Reg. 12550, effective July 6, 1998)

 

Section 140.100  Examination

 

a)         The Director may make an examination of the office and records of each licensee and shall charge $400 for each examiner day or portion thereof.

 

b)         All communications shall be addressed to the Director, Division of Financial Institutions, to any address designated by the Director.  All fees shall be paid to the "Secretary of the Department of Financial and Professional Regulation".

 

c)         The Division may conduct an examination for the purpose of verifying that the licensee has taken necessary actions to correct violations to the Act and/or related rules and shall charge the licensee $550 for each examiner day or portion thereof, when the Director determines the verification examination must be performed on site at any facility of the licensee.

 

(Source:  Amended at 35 Ill. Reg. 6350, effective March 29, 2011)

 

Section 140.110  Revocation – Suspension – Surrender of License

 

a)         If it is determined that the Director had the authority to issue the suspension or revocation of a license pursuant to Section 10 of the Act, he or she may issue orders as may be reasonably necessary to correct, eliminate or remedy the situation.

 

b)         A licensee may surrender any license by delivering to the Director written notice that it thereby surrenders the license, but the surrender shall not affect the licensee's civil or criminal liability for acts committed prior to surrender, or affect the liability on its bond or bonds, or entitle the licensee to a return of any part of the annual license fee.

 

(Source:  Amended at 26 Ill. Reg. 14243, effective October 1, 2002)

 

Section 140.120  Hearing Procedures

 

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

 

(Source:  Amended at 46 Ill. Reg. 12514, effective July 8, 2022)

 

Section 140.130  Proof of Payment

 

Upon completion of the contract, the licensee shall mail a statement to the debtor stating that the account has been closed and listing the name and address of each creditor paid in full and names and addresses of any creditors remaining unpaid.

 

(Source:  Added at 22 Ill. Reg. 12550, effective July 6, 1998)

 

Section 140.140  Penalties

 

a)         The Director may penalize a licensee, or other person doing business without the required license, in an amount not exceeding $10,000 per violation, when in the opinion of the Director:

 

1)         the licensee, or other person has failed to comply with any provision of the Act or any order, decision, finding, rule, regulation, or direction of the Director lawfully made pursuant to the authority of the Act; or

 

2)         any fact or condition exists that, if it had existed at the time of the original application for the license, would have warranted the Director refusing to issue the license. [205 ILCS 665/16(c)]

 

b)         The Director may penalize a licensee, or other person, prior to a hearing.

 

c)         The Director shall serve notice of this penalty, including a statement of the reasons for the penalty, either personally or by certified mail, return receipt requested.  Service by mail shall be deemed completed if the notice is deposited in the U.S. mail.

 

d)         Within 10 days after service of the notice of penalty, the licensee or licensee's representative may request, in writing, a hearing.

 

e)         All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

 

(Source:  Amended at 46 Ill. Reg. 12514, effective July 8, 2022)

 

Section 140.150  Disposal of Records

 

a)         When disposing of records that contain personal information, including, but not limited to, social security numbers, driver's license numbers or non-driver identification card numbers, financial account numbers or codes, debit card numbers or codes, automated teller machine card numbers or codes, electronic serial numbers, or personal identification numbers, a debt settlement provider shall take all reasonable measures necessary to protect against unauthorized access to or use of the records.

 

b)         Licensees must implement policies and procedures to implement this Section and the measures that may be taken to comply with this Section include the following:

 

1)         implementing and monitoring compliance with policies and procedures that require the burning, pulverizing or shredding of paper documents containing personal information so that the personal information cannot practicably be read or reconstructed (for example, licensees must have a paper shredder at the licensed location or other location accessible to the licensee or contract with a third party to provide destruction or disposal of personal information);

 

2)         implementing and monitoring compliance with policies and procedures that require the destruction or erasure of electronic media and other nonpaper media containing personal information so that the personal information cannot practicably be read or reconstructed (for example, licensees must have the technological resources to destroy or erase electronic or other nonpaper media or contract with a third party to provide destruction or erasure of electronic or other nonpaper media);

 

3)         a licensee may enter into a written contract with a third party engaged in the business of record destruction to dispose of records containing personal information.

 

(Source:  Added at 35 Ill. Reg. 6350, effective March 29, 2011)