5-19-213. Bond required.
523 words·~2 min read·
/co/title-5-consumer-credit-code/article-19-debt-management-services/5-19-213·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Except as otherwise provided in section 5-19-214, a provider that is required to be registered under this part 2 shall file a surety bond with the administrator, which shall:
(1)Be in effect during the period of registration and for two years after the provider ceases providing debt-management services to individuals in this state; and
(2)Run to this state for the benefit of this state and of individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear.
(b)A surety bond filed pursuant to subsection
(a)of this section shall:
(1)Be in the amount of fifty thousand dollars or other larger or smaller amount that the administrator determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals, and any other factor the administrator considers appropriate;
(2)Be issued by a bonding, surety, or insurance company authorized to do business in this state and rated at least A by a nationally recognized rating organization; and
(3)Have payment conditioned upon noncompliance of the provider or its agent with this part 2.
(c)If the principal amount of a surety bond is reduced by payment of a claim or a judgment, the provider and the surety shall notify the administrator immediately and, within thirty days after notice by the administrator, the provider shall file a new or additional surety bond in an amount set by the administrator. The amount of the new or additional bond shall be at least the amount of the bond immediately before payment of the claim or judgment. If for any reason a surety terminates a bond, the surety shall provide written notice of the termination to the administrator immediately, and the provider shall immediately file a new surety bond in the amount of fifty thousand dollars or other amount determined pursuant to subsection
(b)of this section.
(d)The administrator or an individual may obtain satisfaction out of the surety bond procured pursuant to this section if:
(1)The administrator assesses expenses under section 5-19-232 (b)(1), issues a final order under section 5-19-233 (a)(2), or recovers a final judgment under section 5-19-233 (a)(4), (a)(5), or (d); or
(2)An individual recovers a final judgment pursuant to section 5-19-235 (a), (b), (c)(1), (c)(2), or (c)(4).
(e)If claims against a surety bond exceed or are reasonably expected to exceed the amount of the bond, the administrator, on the initiative of the administrator or on petition of the surety, shall, unless the proceeds are adequate to pay all costs, judgments, and claims, distribute the proceeds in the following order:
(1)To satisfaction of a final order or judgment under section 5-19-233 (a)(2), (a)(4), (a)(5), or (d);
(2)To final judgments recovered by individuals pursuant to section 5-19-235 (a), (b), (c)(1), (c)(2), or (c)(4), pro rata;
(3)To claims of individuals established to the satisfaction of the administrator, pro rata; and
(4)If a final order or judgment is issued under section 5-19-233 (a), to the expenses charged pursuant to section 5-19-232 (b)(1).