Senate Bill S9084

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9084
 
                             I N  S E N A T E
 
                              April 22, 2024
                                ___________
 
 Introduced  by Sen. KAVANAGH -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer 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
 article  twelve-C of the banking law, if such person or entity [solicits
 budget planning business within this state and, in connection with  such

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11886-01-3
              

 S. 9084                             2

 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.