The legislature has put limits on the amounts credit card counseling services can charge their clients.
The new state law is triggered by a new federal law that says credit counseling services wanting to maintain their not for profit status cannot accept "contributions" for their services. The law says the percentage of "contributions" that finance each business declines in each of the next few years until it reaches 60% of the service’s budget. The state, in this bill, sets limits on charges these services can make to their clients. These services work with people who have severe credit problems and help them get lower interest rates, lower late and delinquency fees, and sets up a payment schedule to pay the now-consolidated debts. The bill says the services can charge no more than $50 to establish the plan and can charge no more than 8% of each monthly payment or $35 a month, whichever is greater. . They also most have a $100,000 bond.
Senate Sponsor Delbert Scott, who calls credit card companies "terrible," says the $50 will not be charged until the payback plan is approved by the client. The bill also provides that some of the charges can be waived by the counseling services.
Senator Jolie Justus of Kansas city says anybody can do, individually, what these services do in reducing interest rates, cutting or eliminating late or delinquency fees, and establishing payment schedules. But most people don’t want to do that.
