Bill Expands Debt Management, Settlement Services Signed Into Law By Gov. Newsom
SB 985 passed unanimously in Senate, Assembly
By Evan Symon, August 22, 2024 2:45 am
A bill that grants nonprofit financial counseling agencies a one-time adjustment to their fee schedule so they may continue to provide debt management and settlement services to Californians was signed into law by Governor Gavin Newsom this week.
Senate Bill 985, authored by Senator Rosilicie Ochoa Bogh (R-Yucaipa), would specifically provide as a criteria for exemption from the Proraters Law that the nonprofit community service organization receives from a debtor no more than a one-time sum not to exceed $100 for education and counseling combined in connection with debt management or debt settlement services and not to exceed 15% of the money disbursed monthly or $75 per month, whichever is less. The bill would also revise and recast the requirement for exemption from the Proraters Law that a nonprofit community service organization has as one of its principal functions counseling on consumer credit problems and family budgets to specify that the counseling is via in-person, telephone, and virtual communication. The bill would also increase the surety bond requirement described above from $25,000 to $100,000. By narrowing the scope of nonprofit community service organizations that are exempt from the Proraters Law, a willful violation of which is punishable as a misdemeanor, SB 985 would impose a state-mandated local program.
In layman’s terms, nonprofit financial counseling agencies would get a one-time adjustment to their fee schedule so they can continue providing debt management and settlement services, as well as give all consumers access to credit counseling services.
Senator Ochoa Bogh wrote the bill because many Californians don’t have access to financial counseling at a time when consumer debt is at an all-time high. By adding in a one-time adjustment, non-profit agencies can expand services to all Californians. SB 985 also adjusts the agencies fees for only the second time since 1983.
SB 985 received little opposition since being introduced earlier this year, and unanimously passed every committee meeting and every floor vote. This included a 39-0 Senate vote in April and a 72-0 Senate vote earlier this month. The bill was on the Governor’s desk for only a few weeks before being signed earlier this week and being confirmed on Wednesday.
SB 985 signed into law
“I am grateful that my legislative colleagues and the Governor recognized the important role financial proficiency plays in the lives of all Californians,” said Senator Ochoa Bogh in a statement on Wednesday. “Restructuring credit card debt and learning how to manage debt are important parts of financial literacy. SB 985 will enable nonprofit agencies to continue expanding their services, helping more Californians, especially those in underserved communities, achieve financial freedom.”
Financial Counseling Association of America (FCAA) President Martin Lynch added that “With the passage of SB 985, the nonprofit members of the FCAA and NFCC will be able to continue the invaluable work we do helping Californians who are struggling with their family’s budget, wondering which steps to take to resolve their difficulties without destroying their credit. Many California families are struggling, but many of the nonprofit agencies that want to help have been struggling, too. SB 985 will allow us to continue providing services to the families and individuals whose debts are overwhelming their budget. Our free counseling helps people understand their options and find safe solutions to their financial problems.”
The bill marked one of only a handful of “easy” bills to sign into law by the Governor because of their bipartisan support. Other bills coming up are more divisive and have created conflict throughout the year.
“There’s a lot of bills where more centrist Democrats and Republicans are fighting off more liberal and Progressive Democrats,” explained “Dana,” a Capitol Staffer, to the Globe on Wednesday. “And Newsom, trying to be a more moderate Democrat, is caught in the middle, especially on upcoming crime bills. But, for now, he still has many of these bills that are easy to sign off on that doesn’t piss off anybody. SB 985 is a good example. Helping more people with debt management and settlement services to more people without any real cost? You’d be an idiot to veto it.”
SB 985 went into effect after being signed by the Governor.
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