This summary outlines the main purpose, key provisions, affected parties, and procedural/timeline aspects of House Bill 1265 from the 2026 Mississippi Regular Session. The bill aims to extend the repeal date and reorganize the Mississippi Debt Management Services Act.
Section 1: Repealer Date Extension
- Amends Section 81-22-31 to extend the repealer of Sections 81-22-1 through 81-22-28 from July 1, 2026 to July 1, 2030.
- Purpose: provide more time to regulate and refine the act.
Sections 2–16: Reenactment and modernization of DMAs
- The bill brings forward and maintains the core text of the Mississippi Debt Management Services Act (81-22-1 through 81-22-28) for possible amendment, preserving structure and definitions while updating provisions as needed.
Definitions and scope (Section 3)
- Clarifies terms:
- Commissioner: Commissioner of Banking and Consumer Finance.
- Debt management service and debt management service provider definitions (with specific activities enumerated).
- Several exemptions where certain parties are not considered DMSPs (e.g., licensed attorneys, certain financial institutions, bona fide trade associations, nonprofit counseling, etc.).
- Third-party payment processor: defined with inclusion/exclusion criteria.
Licensing and licensure requirements (Section 4)
- Requires a license for any entity acting as a DMSP for Mississippi residents.
- Initial license fee: $750.
- Annual renewal fee: $475 (due by December 31 each year).
- Grounds for license denial and suspension are tied to financial soundness, insurance, education, character, and fitness.
Bonding and financial assurances (Section 5)
- Requires a surety bond of $50,000 or cash/deposits in lieu.
- Bond/cash serves to ensure faithful performance and satisfaction of judgments.
Escrow, funds handling, and recordkeeping (Sections 6, 9, 15)
- Escrow funds must be kept in federally insured accounts within two business days of receipt.
- Funds held for consumers must be segregated and remitted to creditors within 15 business days.
- Prohibits commingling consumer funds with operator funds.
- Detailed recordkeeping requirements; six-year retention for each consumer’s records.
Consumer agreements and disclosures (Sections 7, 8)
- Written consumer agreements required before services; must include detailed terms, fees, and third-party disclosures.
- Agreement must identify creditors, fees, and provide a cancellation right.
- Notation about disclosure of escrow account information to the commissioner.
Fees and charges (Section 8)
- Caps on typical DMSP charges:
- Maintenance fee: up to $30/month after a free initial counseling session.
- One-time setup: up to $75.
- Credit report cost: up to $15 for an individual report, $25 for joint.
- Educational products/courses: up to $50 (educational, not mandatory for service).
- Bankruptcy counseling: up to $50 for nonprofit credit counseling agencies approved by U.S. Trustees.
Consumer reporting and quarterly statements (Section 9)
- Requires quarterly written reports to consumers detailing funds received and disbursements to creditors.
- Requires maintenance of separate consumer records for six years after final transaction.
Compliance, enforcement, and examinations (Sections 11–13)
- Commissioner has authority to investigate, regulate, and enforce; penalties up to $500 per violation.
- Civil actions by consumers permitted; enforcement options include injunctions, suspensions, or license revocation.
Licensee operations and examinations (Section 16)
- Provisions governing use of third-party payment processors, including bonds/assets for processors and notice requirements.
- Department may examine third-party processors linked to licensees.
General administration and penalties
- Violations may lead to penalties, license suspension/revocation, and civil actions by consumers.
- The department may incur additional staffing and resources to enforce the act.
