Section 20. Surety bond standards; reporting requirements

A. Every licensee shall be bonded in a principal amount determined by the commissioner. The bond amount shall be equal to the licensee's average monthly volume of funds received from Virginia consumers under debt management plans during the preceding reporting period, rounded to the next highest multiple of $10,000, but not exceeding $350,000.

B. The amount of bond required of a new licensee shall be based upon the applicant's financial condition, capitalization, projected Virginia monthly volume of funds received under debt management plans, experience, and other factors deemed pertinent by the commissioner.

C. The minimum bond required shall be $25,000.

D. The form of the bond will be prescribed and provided by the commissioner. The required bond shall be filed with the bureau prior to issuance of a license and shall be maintained continuously thereafter.

E. When a licensee files a bond with the bureau, as required by § 6.2-2003 of the Code of Virginia, such bond shall be retained by the bureau notwithstanding the occurrence of any of the following events:

1. The person's license is surrendered, suspended, or revoked;

2. The licensee ceases offering debt management plans or providing debt pooling and distribution services; or

3. The licensee has distributed all consumers' funds to their creditors in accordance with their debt management plans.

F. A licensee shall maintain the coverage required by subdivision A 7 of § 6.2-2005 of the Code of Virginia in the amount of at least $250,000.

G. Licensees shall file a written report with the bureau within 45 days after the end of each reporting period. The report shall contain information regarding the volume of funds received from Virginia consumers under debt management plans and such other information as the commissioner may require concerning the licensee's business and operations. The commissioner may require additional reports as he deems necessary.

H. If the legal name of a licensee is changed, the licensee shall file with the bureau within 15 days a written notice of such change and a document effecting a change of name on its bond.

I. Within 15 days following the occurrence of any of the following events, a licensee shall file a written report with the commissioner describing the event and its expected impact upon the business of the licensee:

1. Bankruptcy, reorganization, or receivership proceedings are filed by or against the licensee.

2. Any local, state, or federal governmental authority institutes revocation, suspension, or other formal administrative, regulatory, or enforcement proceedings against the licensee.

3. Any local, state, or federal governmental authority (i) revokes or suspends the licensee's credit counseling license, license to provide debt management plans, or other license for a similar business; (ii) takes formal administrative, regulatory, or enforcement action against the licensee relating to its credit counseling, debt management plan, or similar business; or (iii) takes any other action against the licensee relating to its credit counseling, debt management plan, or similar business where the total amount of restitution or other payment from the licensee exceeds $20,000. A licensee shall not be required to provide the commissioner with information about such event to the extent that such disclosure is prohibited by the laws of another state.

4. Based on allegations by any local, state, or federal governmental authority that the licensee violated any law or regulation applicable to the conduct of its licensed credit counseling, debt management plan, or similar business, the licensee enters into, or otherwise agrees to the entry of, a settlement or consent order, decree, or agreement with or by such governmental authority.

5. The licensee surrenders its credit counseling license, debt management plan license, or other license for a similar business in another state in lieu of threatened or pending license revocation; license suspension; or other administrative, regulatory, or enforcement action.

6. The licensee is denied a credit counseling license, debt management plan license, or other license for a similar business in another state.

7. The licensee or any of its members, partners, directors, officers, principals, or employees is indicted or convicted of a felony.

8. The licensee's accreditation has expired or been suspended, revoked, or otherwise terminated.

9. Any funds held by the licensee are (i) seized by or on behalf of any court or governmental instrumentality or (ii) forfeited to or on behalf of any court or governmental instrumentality.

J. At least 15 days prior to selling or assigning any debt management plans to another person licensed under Chapter 20, a licensee shall file a written report with the commissioner that contains the following information:

1. A list of the licensee's debt management plans that are to be sold or assigned.

2. The name, address, telephone number, and email address of (i) a designated contact person for the licensee that will be selling or assigning the debt management plans and (ii) a designated contact person for the licensee that will be acquiring the debt management plans.

3. The date that the sale or assignment is scheduled to occur.

4. A copy of the agreement between the licensees.

5. A copy of the notification letter to be sent to consumers whose debt management plans are included in the sale or assignment.

K. The reports required by this section shall contain such additional information as the commissioner may reasonably require. The commissioner may also require any additional reports that he deems necessary.

Historical Notes

Derived from Volume 21, Issue 06, eff. November 15, 2004; amended, Virginia Register Volume 32, Issue 05, eff. December 1, 2015.

Statutory Authority

§§ 6.2-2013 and 12.1-13 of the Code of Virginia.