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State Banking Commissioner Howard F. Pitkin Announces
Schedule of Fees for Debt Negotiators Under New Public Act

September 28, 2009

Connecticut State Banking Commissioner Howard Pitkin today issued a schedule of the maximum fees that a debt negotiator may charge for specific services pursuant to section 32(b) of Public Act 09-208. The legislation, An Act Concerning Consumer Credit Licensees, makes a number of changes regarding consumer credit licensees.

The act expands upon the definition of a licensed debt adjuster to include for-profit entities.  It defines debt negotiation, which includes debt settlement, foreclosure rescue, and short sales, and creates a new license for debt negotiators that tracks the same licensing requirements as debt adjusters with regard to application procedures, requirements, and enforcement.  The act also imposes additional consumer protection requirements upon all debt adjusters.

“In preparation for this law taking effect, the agency has put together this release to inform the industry of their new responsibilities,” commented Commissioner Pitkin. “It is important to note that as of October 1, it will be a violation of state law to provide certain debt negotiation services, including debt settlement, loan modifications and foreclosure rescue, without a license.”

Information and applications for companies seeking to obtain the debt negotiation license is available on the Department of Banking’s website, at, or by calling the Consumer Credit Division, at 860-240-8200, or toll-free 1-800-831-7225.

Additionally, if you are a Connecticut resident that is dealing with a debt adjuster or debt negotiator, please contact the Department of Banking to find out if the company or individual is licensed. 

The following are the maximum fees that debt negotiators may charge for their services:

A debt negotiator of unsecured debt may charge the debtor a reasonable one-time initial or set-up fee in an amount not to exceed fifty dollars ($50).

A debt negotiator of unsecured debt may charge a monthly service fee not to exceed eight dollars ($8) for each creditor that is listed in the debt negotiation service contract.  The total service fee charged to a debtor may not exceed forty dollars ($40) per month.

A debt negotiator of unsecured debt may collect total aggregate fees including the initial fee and service fees, not to exceed ten percent (10% ) of the amount by which the consumer’s debt is reduced as part of each settlement as agreed to in the debt negotiation service contract as each settlement is achieved.  A debt negotiator may not charge more than ten percent (10%) of the amount by which the consumer’s debt is reduced on the basis that the consumer has entered into a debt negotiation contract for joint obligations of a consumer and a consumer’s spouse or other member of the consumer’s household.

A debt negotiator of secured debt, including Short Sales and Foreclosure Rescue Services, may impose a fee upon the mortgagor or debtor for performing debt negotiation services not to exceed five hundred dollars ($500).  Such fee shall only be collectable upon the successful completion of all services stated in the debt negotiation service contract.  Nothing herein shall prohibit any person from receiving compensation from the mortgagee or its assignees.

“I am hopeful that this information will prove useful to the industry and the citizens of Connecticut,” concluded Commissioner Pitkin. “If you have any additional questions related to this new law, please contact the Department of Banking at 1-800-831-7225 and we will do our best to assist you.”