HOUSE BILL NO. 4891

A bill to amend 1975 PA 148, entitled

"Debt management act,"

by amending section 6 (MCL 451.416), as amended by 2014 PA 362.

the people of the state of michigan enact:

Sec. 6. (1) If it the department receives a license application under this act and approves the fees and surety bond, the department shall investigate the applicant's responsibility, experience, character, and general fitness. If the result of the investigation warrants a belief that the applicant will operate the business fairly, honestly, and as required under this act, the department shall issue a license. The investigation of the applicant shall must at least include the investigation of the following, as applicable:

(a) If the applicant is a corporation, its the applicant's officers and directors.

(b) If the applicant is a partnership, its the applicant's partners.

(c) If the applicant is an association, its the applicant's officers.

(d) If the applicant is a limited liability company, its the applicant's manager or managers.

(e) If the applicant is any other legal entity, its the applicant's manager or other person designated to control the operation of that legal entity.

(2) The department shall not issue a license if the investigation reveals 1 or more of the following:

(a) That an individual investigated under subsection (1) meets any of the following:

(i) Was ever convicted of a crime involving moral turpitude including forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or any other similar offense.

(ii) Violated or failed to comply with this act or a rule promulgated under this act.

(iii) Had a license to engage in the business of debt management revoked or suspended for any reason other than failure to pay licensing fees in this state or another state.

(iv) Defaulted in the payment of money collected for others, including the discharge of debts through bankruptcy proceedings. The director may, in his or her the director's discretion, waive this restriction if provided with evidence of justifiable cause for the bankruptcy, plus convincing evidence of the fitness of the bankrupt party to carry out his or her the bankrupt party's functions under this act.

(b) An individual applicant is not at least 18 years of age or older and a citizen of the United States.

(c) An applicant that is a partnership, corporation, limited liability company, association, or other legal entity required by statute to obtain authority to do business in this state has not been granted authority to do business in this state.

(d) The applicant is an employee or owner of a collection agency as defined in section 901 of the occupational code, 1980 PA 299, MCL 339.901, or of a process serving business or in any manner is affiliated with a collection agency or process serving business. The director may, in his or her the director's discretion, waive this restriction on a showing of sufficient safeguards in the operation of the collection agency.

(3) If an applicant is an individual, the applicant must provide evidence to the director that the applicant is certified as a certified counselor before the director grants a license to the applicant under this act. If an applicant is a person that is not an individual, each counselor who is employed by that person shall become a certified counselor within the first 180 days of his or her that counselor's employment.

(4) As used in this section:

(a) "Collection agency" means a person that is directly engaged in collecting or attempting to collect a claim owed or due or asserted to be owed or due to another person, or, subject to subdivision (b), repossessing or attempting to repossess a thing of value owed or due or asserted to be owed or due to another person, arising out of an expressed or implied agreement. Collection agency includes an individual who, in the course of collecting, repossessing, or attempting to collect or repossess, represents that individual as a collection or repossession agency, or a person that performs collection activities. Collection agency includes a person that furnishes or attempts to furnish a form or a written demand service that is represented to be a collection or repossession technique, device, or system to be used to collect or repossess claims, if the form contains the name of a person other than the creditor in a manner that indicates that a request or demand for payment is being made by a person other than the creditor even though the form directs the debtor to make payment directly to the creditor rather than to the other person whose name appears on the form. Collection agency includes a person that uses a fictitious name or the name of another in the collection or repossession of claims to convey to the debtor that a third person is collecting or repossessing or has been employed to collect or repossess the claim. Collection agency does not include a person whose collection activities are confined and are directly related to the operation of a business other than that of a collection agency, such as, but not limited to, any of the following:

(i) A regular employee who collects amounts for 1 employer if all collection efforts are carried on in the name of the employer.

(ii) A state or nationally chartered bank that collects the bank's own claims.

(iii) A trust company that collects the trust company's own claims.

(iv) A state or federally chartered savings and loan association that collects the association's own claims.

(v) A state or federally chartered credit union that collects the credit union's own claims.

(vi) A licensee under the regulatory loan act, 1939 PA 21, MCL 493.1 to 493.24.

(vii) An abstract company that is engaged in an escrow business.

(viii) A licensed real estate broker or salesperson if the claims the broker or salesperson are collecting are related to or in connection with the broker's or salesperson's real estate business.

(ix) A public officer or person that is acting under a court order.

(x) An attorney who is handling a claim or collection on behalf of a client and in the attorney's own name.

(xi) A forwarding agency that, acting on behalf of a creditor or lender, forwards a claim, collection, or repossession to a collection agency.

(b) "Collecting or attempting to collect a claim", "repossessing or attempting to repossess a thing of value", and "collection activities" do not include any of the following activities of a claim forwarder or remarketer in accordance with a contract with a creditor:

(i) Forwarding repossession assignments on behalf of the creditor to a collection agency for repossessing or attempting to repossess a thing of value owed or alleged to be owed on a claim.

(ii) Under the authorization of a creditor and on the creditor's behalf, providing or procuring the services of an auction or other remarketer in connection with the disposition or preparation for disposition of a thing of value that was previously repossessed by a creditor or by another person on behalf of the creditor.

(iii) Communicating with a creditor or the collection agency regarding the performance of any of the activities described in subparagraph (i) or (ii).

Enacting section 1. This amendatory act does not take effect unless House Bill No. 4887 (request no. H02604'25) of the 103rd Legislature is enacted into law.