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To amend sections 1309.613, 1309.625, 2716.03, | 1 |
2716.11, and 4710.01, to enact new sections | 2 |
4710.02, 4710.03, and 4710.99 and section 4710.04, | 3 |
and to repeal sections 4710.02, 4710.03, and | 4 |
4710.99 of the Revised Code to modify the Secured | 5 |
Transactions Law relating to notice of the | 6 |
location for the disposition of collateral that is | 7 |
given to certain persons and to reduce the amount | 8 |
of damages recoverable by a debtor or secondary | 9 |
obligor in an action against a person found in | 10 |
violation of the Secured Transactions Law; | 11 |
relative to property subject to garnishment held | 12 |
by a judgment debtor's employer or another person; | 13 |
relative to engaging in the business of debt | 14 |
adjusting for debtors, to specify contribution | 15 |
limits and auditing and insurance coverage duties, | 16 |
to require timely disbursement of debtor funds, | 17 |
and to provide penalties, including a criminal | 18 |
penalty, for a violation; and to eliminate | 19 |
previous provisions regulating entities engaging | 20 |
in the business of debt pooling. | 21 |
Section 1. That sections 1309.613, 1309.625, 2716.03, | 22 |
2716.11, and 4710.01 be amended and new sections 4710.02, 4710.03, | 23 |
and 4710.99 and section 4710.04 of the Revised Code be enacted to | 24 |
read as follows: | 25 |
Sec. 1309.613. (A) Except in a consumer-goods transaction, | 26 |
all of the following rules apply to a notification of disposition | 27 |
of collateral and to a disposition of collateral: | 28 |
(1) The contents of a notification of disposition are | 29 |
sufficient if the notification: | 30 |
(a) Describes the debtor and the secured party; | 31 |
(b) Describes the collateral that is the subject of the | 32 |
intended disposition; | 33 |
(c) States the method of intended disposition; | 34 |
(d) States that the debtor is entitled to an accounting of | 35 |
the unpaid indebtedness and states the charge, if any, for an | 36 |
accounting; and | 37 |
(e) States the time and place, by identifying the place of | 38 |
business or address or by providing other information that, in | 39 |
each case, reasonably describes the location, of a public | 40 |
disposition or the time after which any other disposition is to be | 41 |
made. | 42 |
(2) Whether the contents of a notification that lacks any of | 43 |
the information specified in division (A)(1) of this section are | 44 |
nevertheless sufficient is a question of fact. | 45 |
(3) The contents of a notification providing substantially | 46 |
the information specified in division (A)(1) of this section are | 47 |
sufficient, even if the notification includes: | 48 |
(a) Information not specified by that division; or | 49 |
(b) Minor errors that are not seriously misleading. | 50 |
(4) A particular phrasing of the notification is not | 51 |
required. | 52 |
(B) The following form of notification and the form appearing | 53 |
in division (B) of section 1309.614 of the Revised Code, when | 54 |
completed, each provides sufficient information: | 55 |
56 |
To: (Name of debtor, obligor, or other person to whom the | 57 |
notification is sent) | 58 |
From: (Name, address, and telephone number of secured party) | 59 |
Name of Debtor(s): (Include only if debtor(s) are not an | 60 |
addressee) | 61 |
(FOR A PUBLIC DISPOSITION:) | 62 |
We will sell (or lease or license, as applicable) the | 63 |
(describe collateral) to the highest qualified bidder in public as | 64 |
follows: | 65 |
Day and Date:............. | 66 |
Time:..................... | 67 |
Place:.................... | 68 |
(FOR A PRIVATE DISPOSITION:) | 69 |
We will sell (or lease or license, as applicable) the | 70 |
(describe collateral) privately sometime after (day and date). | 71 |
You are entitled to an accounting of the unpaid indebtedness | 72 |
secured by the property that we intend to sell (or lease or | 73 |
license, as applicable) (for a charge of $.........). You may | 74 |
request an accounting by calling us at (telephone number)." | 75 |
Sec. 1309.625. (A) If it is established that a secured party | 76 |
is not proceeding in accordance with this chapter, a court may | 77 |
order or restrain collection, enforcement, or disposition of | 78 |
collateral on appropriate terms and conditions. | 79 |
(B) Subject to divisions (C), (D), and (F) of this section, a | 80 |
person is liable for damages in the amount of any loss caused by a | 81 |
failure to comply with this chapter. Loss caused by a failure to | 82 |
comply may include loss resulting from the debtor's inability to | 83 |
obtain, or increased costs of, alternative financing. | 84 |
(C) Except as provided in section 1309.628 of the Revised | 85 |
Code: | 86 |
(1) A person who, at the time of the failure, was a debtor, | 87 |
was an obligor, or held a security interest in or other lien on | 88 |
the collateral may recover damages under division (B) of this | 89 |
section for its loss; and | 90 |
(2) If the collateral is consumer goods, a person who was a | 91 |
debtor or a secondary obligor at the time a secured party failed | 92 |
to comply with sections 1309.601 to 1309.628 of the Revised Code | 93 |
may recover for that failure in any event an amount not less than | 94 |
the credit service charge plus ten per cent of the principal | 95 |
amount of the obligation or the time-price differential plus ten | 96 |
per cent of the cash price | 97 |
(D) A debtor whose deficiency is eliminated under section | 98 |
1309.626 of the Revised Code may recover damages for the loss of | 99 |
any surplus. However, a debtor or secondary obligor whose | 100 |
deficiency is eliminated or reduced under section 1309.626 of the | 101 |
Revised Code may not recover otherwise under division (B) of this | 102 |
section for noncompliance with sections 1309.601 to 1309.628 of | 103 |
the Revised Code relating to collection, enforcement, disposition, | 104 |
or acceptance. Regardless of whether the debtor's or secondary | 105 |
obligor's deficiency is eliminated or reduced under section | 106 |
1309.626 of the Revised Code, any damages recovered by the debtor | 107 |
or secondary obligor under division (C) of this section shall be | 108 |
reduced by the amount that the sum of the secured obligation, | 109 |
expenses, and attorney's fees exceeds the proceeds of collection, | 110 |
enforcement, disposition, or acceptance. | 111 |
(E) In addition to any damages recoverable under division (B) | 112 |
of this section, the debtor, consumer obligor, or person named as | 113 |
a debtor in a filed record, as applicable, may recover five | 114 |
hundred dollars in each case from a person that: | 115 |
(1) Fails to comply with section 1309.208 of the Revised | 116 |
Code; | 117 |
(2) Fails to comply with section 1309.209 of the Revised | 118 |
Code; | 119 |
(3) Files a record that the person is not entitled to file | 120 |
under division (A) of section 1309.509 of the Revised Code; | 121 |
(4) Fails to cause the secured party of record to file or | 122 |
send a termination statement as required by division (A) or (C) of | 123 |
section 1309.513 of the Revised Code; | 124 |
(5) Fails to comply with division (B)(1) of section 1309.616 | 125 |
of the Revised Code and whose failure is part of a pattern, or | 126 |
consistent with a practice, of noncompliance; or | 127 |
(6) Fails to comply with division (B)(2) of section 1309.616 | 128 |
of the Revised Code. | 129 |
(F) A debtor or consumer obligor may recover damages under | 130 |
division (B) of this section and, in addition, five hundred | 131 |
dollars in each case from a person who, without reasonable cause, | 132 |
fails to comply with a request under section 1309.210 of the | 133 |
Revised Code. A recipient of a request under section 1309.210 of | 134 |
the Revised Code who never claimed an interest in the collateral | 135 |
or obligations that are the subject of a request under that | 136 |
section has a reasonable excuse for failure to comply with the | 137 |
request within the meaning of this division. | 138 |
(G) If a secured party fails to comply with a request | 139 |
regarding a list of collateral or a statement of account under | 140 |
section 1309.210 of the Revised Code, the secured party may claim | 141 |
a security interest only as shown in the list or statement | 142 |
included in the request as against a person who is reasonably | 143 |
misled by the failure. | 144 |
Sec. 2716.03. (A) Subject to the limitation on the | 145 |
commencement of proceedings contained in division (B) of section | 146 |
124.10 of the Revised Code, a proceeding in garnishment of | 147 |
personal earnings may be commenced after a judgment has been | 148 |
obtained by a judgment creditor by the filing of an affidavit in | 149 |
writing made by the judgment creditor or the judgment creditor's | 150 |
attorney setting forth all of the following: | 151 |
(1) The name of the judgment debtor whose personal earnings | 152 |
the judgment creditor seeks to garnish; | 153 |
(2) That the affiant has good reason to believe and does | 154 |
believe that the person, partnership, limited liability company, | 155 |
or corporation named in the affidavit as the garnishee is an | 156 |
employer of the judgment debtor
who | 157 |
of the judgment debtor that are not exempt under section 2329.66 | 158 |
of the Revised Code; | 159 |
(3) That the demand in writing, as required by section | 160 |
2716.02 of the Revised Code, has been made; | 161 |
(4) That the payment demanded in the notice required by | 162 |
section 2716.02 of the Revised Code has not been made, and a | 163 |
sufficient portion of the payment demanded has not been made to | 164 |
prevent the garnishment of personal earnings as described in | 165 |
section 2716.02 of the Revised Code; | 166 |
(5) That the affiant has no knowledge of any application by | 167 |
the judgment debtor for the appointment of a trustee so as to | 168 |
preclude the garnishment of the judgment debtor's personal | 169 |
earnings; | 170 |
(6) That the affiant has no knowledge that the debt to which | 171 |
the affidavit pertains is the subject of a debt scheduling | 172 |
agreement of a nature that precludes the garnishment of the | 173 |
personal earnings of the judgment debtor under division (B) of | 174 |
this section. | 175 |
(B) No proceeding in garnishment of personal earnings shall | 176 |
be brought against a judgment debtor for the collection of a debt | 177 |
that is the subject of an agreement for debt scheduling between | 178 |
the judgment debtor and a budget and debt counseling service, | 179 |
unless any payment to be made by the judgment debtor, or by a | 180 |
budget and debt counseling service to the judgment creditor under | 181 |
the agreement for debt scheduling between the judgment debtor and | 182 |
the budget and debt counseling service, is due and unpaid for more | 183 |
than forty-five days after the date on which the payment became | 184 |
due, or unless the judgment creditor previously was notified by | 185 |
the service that the debt scheduling agreement between the | 186 |
judgment debtor and the service was terminated. | 187 |
(C) Upon a court's issuance of an order of garnishment of | 188 |
personal earnings following a judgment creditor's filing of an | 189 |
affidavit under this section and compliance with section 2716.04 | 190 |
of the Revised Code, the garnishee and the judgment debtor shall | 191 |
be notified of the proceeding in garnishment of personal earnings | 192 |
in accordance with sections 2716.05 and 2716.06 of the Revised | 193 |
Code. | 194 |
(D) As used in this chapter: | 195 |
(1) A "budget and debt counseling service" or "service" means | 196 |
a corporation organized under Chapter 1702. of the Revised Code | 197 |
for the purpose of counseling consumers with respect to their | 198 |
financial obligations and assisting them in dealing with their | 199 |
creditors. | 200 |
(2) "Debt scheduling" means counseling and assistance | 201 |
provided to a consumer by a budget and debt counseling service | 202 |
under all of the following circumstances: | 203 |
(a) The counseling and assistance is manifested in an | 204 |
agreement between the consumer and the service under which the | 205 |
consumer regularly pays that portion of the consumer's income to | 206 |
the service that has been determined not to be required for the | 207 |
maintenance of health or the essentials of life. | 208 |
(b) The payments are made to the service until the debts of | 209 |
the consumer that are the subject of the agreement are fully | 210 |
retired. | 211 |
(c) The service has sent written notice, by certified mail, | 212 |
return receipt requested, or by regular mail evidenced by a | 213 |
properly completed and stamped certificate of mailing by regular | 214 |
mail, to the creditors of the consumer that are disclosed by the | 215 |
consumer to the service. The notice shall contain all of the | 216 |
following: | 217 |
(i) A statement of the consumer's intent to participate in | 218 |
debt scheduling; | 219 |
(ii) A summary of the consumer's income, proposed itemized | 220 |
budget, schedule of creditors, and proposed debt retirement plan; | 221 |
(iii) A statement of the particular creditor's duty to | 222 |
respond, in writing, to the service regarding the consumer's | 223 |
participation in debt scheduling within fifteen days after | 224 |
receiving the notice. | 225 |
(d) The debts of the consumer that are the subject of the | 226 |
agreement for debt scheduling are determined as follows: | 227 |
(i) Any debt owed to a creditor that was notified of the | 228 |
consumer's intent to participate is a subject of the agreement if | 229 |
the creditor responds to the service and enters into an agreement | 230 |
with the service, pursuant to which the creditor agrees not to | 231 |
attempt to collect the debts of the consumer as long as the | 232 |
consumer regularly pays to the service the amount previously | 233 |
agreed upon by the service and the consumer, and no payment to be | 234 |
made by the judgment debtor to the service or by the service to | 235 |
the creditor is due and unpaid for more than forty-five days after | 236 |
the date on which the payment became due, as long as the debt | 237 |
scheduling agreement between the consumer and the service has not | 238 |
been terminated, and as long as the service regularly pays to the | 239 |
creditor a mutually acceptable amount that is either the amount | 240 |
agreed upon by the service and the creditor on the date they | 241 |
entered into their original agreement or an amount agreed upon by | 242 |
both the service and the creditor on a date after the date of the | 243 |
original agreement. | 244 |
(ii) Any debt owed to a creditor that was notified of the | 245 |
consumer's intent to participate is a subject of the agreement if | 246 |
the creditor does not respond to the service and state the | 247 |
creditor's objection, in writing, to the consumer's participation | 248 |
in debt scheduling within fifteen days after receiving notice of | 249 |
the consumer's intention to do so; however, no debt that is | 250 |
subject to a lien or security interest of any type, other than a | 251 |
judgment lien or execution lien, shall be a subject of the | 252 |
agreement unless the creditor specifically assents, in writing, to | 253 |
the debt being a subject of the agreement. The creditor shall be | 254 |
considered to have entered into an agreement of the type described | 255 |
in division (D)(2)(d)(i) of this section, and the amount to be | 256 |
regularly paid by the service to the creditor shall be an amount | 257 |
determined to be reasonable by the service or an amount agreed | 258 |
upon by both the service and the creditor on a date after the | 259 |
expiration of the fifteen-day period. | 260 |
(iii) Any debt owed to a creditor that was not notified of | 261 |
the consumer's intent to participate, or a debt owed to a creditor | 262 |
that was notified of the consumer's intent to participate and that | 263 |
responded to the service and stated its objection, in writing, to | 264 |
the consumer's participation in debt scheduling within fifteen | 265 |
days after receiving notice of the consumer's intention to do so, | 266 |
is not a subject of the agreement. | 267 |
(e) The service agrees that, if the consumer fails to make a | 268 |
payment under the agreement within forty-five days of its due date | 269 |
or if the agreement is terminated, the service will notify each | 270 |
creditor that is owed a debt that is subject to the agreement of | 271 |
the failure or termination by regular mail within two business | 272 |
days of the failure or termination, and the service provides that | 273 |
notice in accordance with the agreement. | 274 |
Sec. 2716.11. A proceeding for garnishment of property, | 275 |
other than personal earnings, may be commenced after a judgment | 276 |
has been obtained by a judgment creditor by the filing of an | 277 |
affidavit in writing made by the judgment creditor or the judgment | 278 |
creditor's attorney setting forth all of the following: | 279 |
(A) The name of the judgment debtor whose property, other | 280 |
than personal earnings, the judgment creditor seeks to garnish; | 281 |
(B) That the affiant has good reason to believe and does | 282 |
believe that the person named in the affidavit as the garnishee | 283 |
284 | |
judgment debtor that is not exempt under the law of this state or | 285 |
the United States; | 286 |
(C) A description of the property. | 287 |
Sec. 4710.01. As used in | 288 |
289 |
(A) "Person" includes individuals, partnerships, | 290 |
associations, | 291 |
(B) "Debt | 292 |
business | 293 |
management | 294 |
oneself out, by words of similar import, as providing services to | 295 |
debtors in
the management of their debts, | 296 |
297 | |
following: | 298 |
(1) To effect the adjustment, compromise, or discharge of any | 299 |
account, note, or other indebtedness of the debtor; | 300 |
(2) To receive from the debtor and disburse to | 301 |
debtor's creditors any money or other thing of value. | 302 |
(C) "Resides" means to live in a particular place on a | 303 |
temporary or a permanent basis. | 304 |
Sec. 4710.02. (A) Subject to division (C) of this section, a | 305 |
person engaged in debt adjusting shall do both of the following: | 306 |
(1) Unless specifically instructed otherwise by a debtor, | 307 |
disburse to the appropriate creditors all funds received from the | 308 |
debtor, less any contributions not prohibited by division (B) of | 309 |
this section, within thirty days of receipt of the funds from the | 310 |
debtor; | 311 |
(2) Maintain a separate trust account for the receipt of any | 312 |
funds from debtors and the disbursement of the funds to creditors | 313 |
on behalf of the debtors. | 314 |
(B) If contributions for engaging in debt adjusting are | 315 |
accepted, directly or indirectly, no person engaged in debt | 316 |
adjusting shall do any of the following: | 317 |
(1) Accept a contribution exceeding seventy-five dollars from | 318 |
a debtor residing in this state for an initial consultation or | 319 |
initial set up; | 320 |
(2) Accept a consultation contribution exceeding one hundred | 321 |
dollars per calendar year from a debtor residing in this state; | 322 |
(3) Accept a periodic contribution from a debtor residing in | 323 |
this state, which contribution exceeds eight and one-half per cent | 324 |
of the amount paid by the debtor each month for distribution to | 325 |
the debtor's creditors or thirty dollars, whichever is greater. | 326 |
(C) Division (A) or (B) of this section does not prohibit a | 327 |
person engaged in debt adjusting for a debtor who is residing in | 328 |
this state from charging the debtor a reasonable fee for | 329 |
insufficient funds transactions that is in addition to | 330 |
contributions not prohibited by division (B) of this section. | 331 |
(D) Any person that engages in debt adjusting, annually, | 332 |
shall arrange for and undergo an audit conducted by an | 333 |
independent, third party, certified public accountant of the | 334 |
person's business, including any trust funds deposited and | 335 |
distributed to creditors on behalf of debtors. Both of the | 336 |
following apply to an audit described in this division: | 337 |
(1) The person shall file the results of the audit and the | 338 |
auditor's opinion with the consumer protection division of the | 339 |
attorney general. | 340 |
(2) The attorney general shall make available a summary of | 341 |
the results of the audit and the auditor's opinion upon written | 342 |
request of a person and payment of a fee not exceeding the cost of | 343 |
copying the summary and opinion. | 344 |
(E) A person engaged in debt adjusting shall obtain and | 345 |
maintain at all times insurance coverage for employee dishonesty, | 346 |
depositor's forgery, and computer fraud in the amount of ten per | 347 |
cent of the monthly average for the immediate preceding six months | 348 |
of the aggregate amount of all deposits made with the person by | 349 |
all debtors. The insurance coverage shall comply with all of the | 350 |
following: | 351 |
(1) The insurance coverage is not less than one hundred | 352 |
thousand dollars. | 353 |
(2) The insurance coverage includes a deductible that does | 354 |
not exceed ten per cent of the face amount of the policy coverage. | 355 |
(3) The insurance coverage is issued by an insurer rated at | 356 |
least A- or its equivalent by a nationally recognized rating | 357 |
organization. | 358 |
(4) The insurance coverage provides that thirty days advance | 359 |
written notice be given to the consumer protection division of the | 360 |
attorney general before coverage is terminated. | 361 |
(F)(1) No person engaged in debt adjusting shall fail to | 362 |
comply with division (A) of this section or shall violate division | 363 |
(B) of this section. | 364 |
(2) No person engaged in debt adjusting shall fail to comply | 365 |
with divisions (D) and (E) of this section. | 366 |
Sec. 4710.03. Nothing in this chapter applies to any of the | 367 |
following: | 368 |
(A) The federal national mortgage association; the federal | 369 |
home loan mortgage corporation; a bank, bank holding company, | 370 |
trust company, savings and loan association, credit union, savings | 371 |
bank, or credit card bank, that is regulated by the office of the | 372 |
comptroller of currency, office of thrift supervision, federal | 373 |
reserve, federal deposit insurance corporation, national credit | 374 |
union administration, or division of financial institutions; or to | 375 |
subsidiaries of any of these entities; | 376 |
(B) Debt adjusting incurred in the practice of law in this | 377 |
state; | 378 |
(C) A person that incidentally engages in debt adjusting to | 379 |
adjust the indebtedness owed to that person; | 380 |
(D) A registrant as defined in section 1321.51 of the Revised | 381 |
Code; | 382 |
(E) A registrant or licensee as both are defined in section | 383 |
1322.01 of the Revised Code. | 384 |
Sec. 4710.04. (A) Any violation of division (F)(1) of | 385 |
section 4710.02 of the Revised Code is deemed an unfair or | 386 |
deceptive act or practice in violation of section 1345.02 of the | 387 |
Revised Code. A person injured by a violation of that division has | 388 |
a cause of action and is entitled to the same relief available to | 389 |
a consumer under section 1345.09 of the Revised Code, and all the | 390 |
powers and remedies available to the attorney general to enforce | 391 |
sections 1345.01 to 1345.13 of the Revised Code are available to | 392 |
the attorney general to enforce division (F)(1) of section 4710.02 | 393 |
of the Revised Code. | 394 |
(B) Any person who violates division (F)(2) of section | 395 |
4710.02 of the Revised Code, in addition to the penalties imposed | 396 |
by section 4710.99 of the Revised Code, shall be fined not more | 397 |
than ten thousand dollars for each violation. | 398 |
Sec. 4710.99. Whoever violates division (F) of section | 399 |
4710.02 of the Revised Code is guilty of a misdemeanor of the | 400 |
third degree for a first offense and a misdemeanor of the second | 401 |
degree for any subsequent offense. | 402 |
Section 2. That existing sections 1309.613, 1309.625, | 403 |
2716.03, 2716.11, and 4710.01 and sections Sec. 4710.02. , Sec. 4710.03. , and | 404 |
Sec. 4710.99. of the Revised Code are hereby repealed. | 405 |
Section 3. Section 2716.03 of the Revised Code is presented | 406 |
in this act as a composite of the section as amended by both Am. | 407 |
Sub. S.B. 144 and Am. Sub. S.B. 170 of the 122nd General Assembly. | 408 |
The General Assembly, applying the principle stated in division | 409 |
(B) of section 1.52 of the Revised Code that amendments are to be | 410 |
harmonized if reasonably capable of simultaneous operation, finds | 411 |
that the composite is the resulting version of the section in | 412 |
effect prior to the effective date of the section as presented in | 413 |
this act. | 414 |