Fee Under Debt Management Services Contract; Charge for Cancellation or Default; When Contract Effective; Letter of Continuation; Excessive Charge - Mich. Comp. Laws Section 451.428
Legal Research Home > Michigan Laws > Securities, Real Estate, And Debt Management > Fee Under Debt Management Services Contract; Charge for Cancellation or Default; When Contract Effective; Letter of Continuation; Excessive Charge - Mich. Comp. Laws Section 451.428
(1) A licensee may charge a reasonable fee under a debt management services contract. The fees and charges of the licensee shall not exceed 15% of the amount of the debt to be liquidated during the express term of the contract. The licensee may require the debtor to make an initial payment of not more than $25.00, which is part of the fees and charges of the licensee. The initial payment may be deducted from the amount of a subsequent fee that is amortized, if any.
(2) Except for a cancellation described in subsection (3), for which a licensee may not collect the additional fee described in this subsection, in the event of cancellation or default on the performance of the contract by the debtor before its successful completion, the licensee may collect $25.00 in addition to fees and charges of the licensee previously received. This $25.00 fee is not subject to the 15% limitation on fees and charges of the licensee in subsection (1).
(3) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee.
(4) If a debtor fails to make a payment to a licensee within 60 days after the date a payment is due under a contract, the contract is considered canceled by the debtor. A debtor may file a letter of continuation of a contract even if the debtor did not make a payment within 60 days after a payment was due. All of the following apply to a letter of continuation of a contract:
(a) A debtor may file only 1 letter of continuation with a licensee for any contract.
(b) A letter of continuation must contain a detailed explanation of the reason or reasons for the missed payment or payments.
(c) A contract for which a letter of continuation that meets the requirements of this subsection is filed remains in effect and subject to cancellation for any future failure to make a payment or payments as described in this subsection.
(d) A contract between a licensee and a debtor shall clearly provide for 1 letter of continuation by a debtor.
(e) A debtor may not file a letter of continuation with a licensee at the beginning of a contract.
(5) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person who violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.
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Last modified: March 17, 2013