S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7892
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               July 19, 2023
                                ___________
 
 Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
   tee on Consumer Affairs and Protection
 
 AN ACT to amend the general business law, in relation to budget planning
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Section 455 of the general  business  law,  as  amended  by
 chapter 629 of the laws of 2002, subdivision 1 as amended by chapter 456
 of  the  laws of 2006 and subdivision 4 as amended by chapter 549 of the
 laws of 2013, is amended to read as follows:
   § 455. Definitions. 1. (A) Budget planning, as used in  this  article,
 means the making of a contract between a person or entity engaged in the
 business  of  budget  planning  with a particular debtor whereby (i) the
 debtor agrees to pay a sum or sums of money in any manner  or  form  and
 the person or entity engaged in the business of budget planning distrib-
 utes, or supervises, coordinates or controls the distribution of, or has
 a  contractual  relationship with another person or entity that distrib-
 utes, or supervises, coordinates or controls such distribution  of,  the
 same  among certain specified creditors in accordance with a plan agreed
 upon and (ii) the debtor agrees to pay to such person or entity, or such
 other person or entity that distributes, or supervises,  coordinates  or
 controls  such  distribution  of,  a  sum or sums of money, any valuable
 consideration for such services or for any other  services  rendered  in
 connection  therewith. A PERSON OR ENTITY MAY BE ENGAGED IN BUDGET PLAN-
 NING REGARDLESS OF WHETHER THEY  DIRECTLY  HANDLE  OR  SUPERVISE  DEBTOR
 FUNDS  FOR  DISBURSEMENT.    USE  OF  A THIRD-PARTY TO HOLD AND DISBURSE
 DEBTOR FUNDS SHALL NOT EXEMPT A PERSON OR ENTITY FROM  QUALIFYING  AS  A
 BUDGET PLANNER.  DEBT RELIEF AND DEBT SETTLEMENT SHALL QUALIFY AS BUDGET
 PLANNING.
   (B)  For  the  purposes  of  this article, a person or entity shall be
 considered as engaged in the business of budget planning  in  New  York,
 and  subject to this article and the licensing and other requirements of
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11886-01-3
              

 A. 7892                             2
 
 article twelve-C of the banking law, if such person or entity  [solicits
 budget  planning business within this state and, in connection with such
 solicitation,] IS LOCATED IN NEW YORK OR  enters  into  a  contract  for
 budget planning with an individual then resident in this state.
   2.  Person, as used in this article, shall not include a person admit-
 ted to practice law in this state, UNLESS A PRINCIPAL  PURPOSE  OF  SUCH
 PERSON'S BUSINESS IS BUDGET PLANNING.
   3. Entity, as used in this article, shall not include a firm, partner-
 ship,  professional  corporation,  or  other  organization,  all  of the
 members or principals of which are admitted  to  practice  law  in  this
 state,  UNLESS  A  PRINCIPAL PURPOSE OF SUCH ENTITY'S BUSINESS IS BUDGET
 PLANNING.
   4. Person or entity as used in this article shall not include a chari-
 table corporation as defined in paragraph (a) of section one hundred two
 (Definitions) of the not-for-profit corporation law of this state, or an
 entity incorporated in another state and having a similar not-for-profit
 status, licensed by the superintendent, to engage  in  the  business  of
 budget planning as defined in this section.
   5.  Any attorney licensed to practice law in this state who is engaged
 in budget planning AS A PRINCIPAL PURPOSE OF THEIR  PRACTICE  shall  (a)
 negotiate  directly  with  creditors on behalf of the client; (b) ensure
 that all moneys received from the client are deposited in the attorney's
 account maintained  for  client  funds;  (c)  pay  creditors  from  such
 account;  and  (d) offer budget planning services through the same legal
 entity that the attorney uses to practice law.
   6. BUDGET PLANNING SHALL NOT INCLUDE THE PROVISION OF LEGAL ADVICE  BY
 A  LICENSED  ATTORNEY  IN CONNECTION WITH A CASE UNDER THE UNITED STATES
 BANKRUPTCY CODE.
   § 2. Section 457 of the general business law, as  amended  by  chapter
 629 of the laws of 2002, is amended to read as follows:
   § 457. Penalty. 1. Whoever either individually or as officer, director
 or  employee  of  any person, firm, association or corporation, violates
 any of the provisions of the preceding section  shall  be  guilty  of  a
 misdemeanor for each such violation.
   2.  WHERE A VIOLATION OF THIS SECTION IS ALLEGED TO HAVE OCCURRED, THE
 ATTORNEY GENERAL MAY APPLY IN THE NAME OF THE PEOPLE OF THE STATE OF NEW
 YORK TO A COURT OF COMPETENT JURISDICTION BY ACTION OR SPECIAL  PROCEED-
 ING  FOR  AN ORDER ENJOINING OR RESTRAINING COMMISSION OR CONTINUANCE OF
 THE ALLEGED UNLAWFUL ACTS. IN ANY SUCH PROCEEDING AGAINST  A  PERSON  OR
 ENTITY  WHO HAS ENGAGED IN BUDGET PLANNING WITHOUT A LICENSE UNDER ARTI-
 CLE TWELVE-C OF THE BANKING LAW OR IN VIOLATION OF THE  REQUIREMENTS  OF
 THAT ARTICLE, THE COURT SHALL IMPOSE A CIVIL PENALTY IN AN AMOUNT NOT TO
 EXCEED  TEN THOUSAND DOLLARS PER EACH DEBTOR ENROLLED OR THREE TIMES THE
 AMOUNT OF DEBT ENROLLED FOR BUDGET PLANNING, WHICHEVER IS  GREATER  AND,
 WHERE  APPROPRIATE,  ORDER RESTITUTION TO AGGRIEVED PARTIES, INCLUDING A
 REFUND OF ALL FEES PAID BY A DEBTOR TO AN UNLICENSED BUDGET PLANNER.
   § 3. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.