Connecticut is making it harder for unscrupulous debt negotiators who make grandiose claims that they’ll dramatically reduce debt or stave off home foreclosure.
Under legislation recently passed by the state House and Senate, debt negotiation and adjustment companies will be prohibited from charging up-front fees before completing their services and will be forced to evaluate and notify consumers of the likelihood of success in saving their home or reducing their debt.
The legislation, which is awaiting Gov. M. Jodi Rell’s approval, applies to both nonprofit and for-profit entities. It requires a written contract with all fees and services, and a consumer’s right to rescind within three days.
Additionally, debt adjusters would be required to provide credit counseling and budgeting assistance, evaluate the debtor’s ability to meet the anticipated payment plan, and confirm that creditors will accept the payment plan and schedule.
State Rep. Ryan Barry, D-Manchester, who is a co-chair on the banks committee, said the legislation is meant to protect individuals weighed down by household and consumer debt.
“Use of debt negotiators by those in financial difficulty has escalated in this troubled economy,” Barry said. “And while there are many credible credit counselors, the number of predatory so-called debt fixers has also proliferated. You see them lined up in the back of courtrooms during foreclosure cases like ambulance chasers ready to pounce on unsuspecting and vulnerable people.”
Barry said consumers facing unmanageable debt are easy prey for misleading debt counselors who demand upfront fees and often never deliver on credit relief. Legitimate debt reducers arbitrate between debtors and creditors to change the terms of a debt and reduce monthly payments by lowering the interest rate or eliminating fees and finance charges.
Under the recently passed legislation, which originated out of Barry’s committee, payments made by consumers to a debt adjustment company must be remitted to creditors in a timely fashion, a protection designed to keep money flowing to creditors so that consumers will not be assessed late fees and interest. The bill also requires regular financial statements to consumers of account activity.
Finally, debt collection companies will be required to register with the state Banking Department, pay a license fee and post a surety bond.
Additions At Wethersfield Bank
Just days after naming Dean Morgan as its new chief executive, Wethersfield-based Connecticut River Community Bank announced several new additions to its top-level management team.
Annette Larabee, senior vice president, has been promoted to senior loan officer and will continue her role in business development along with overseeing the management and day-to-day operation of the Bank’s loan department.
Richard Liljedahl has joined the bank as vice president and loan officer and will be working at the bank’s new West Hartford center office. Liljedahl will be responsible for business development, specifically commercial loan origination.
Joseph Pishtey has been named senior vice-president of retail banking and his responsibilities will include branch administration, retail business development, and marketing.
Additionally, Marla Bogaert has joined the bank as vice president of administration to provide support to the management team, including human resources, marketing, auditing assistance and facility management.
Liljedahl, who has over 25 years of experience in commercial real estate, worked previously with Connecticut National Bank, Hayden, Tolzmann & Associates, Konover & Associates and Net Lease Capital Advisors.
Pishtey, with over 35 years of banking experience in credit, cash management, business development and operations, formerly worked at Bank of America.
Bogaert was senior vice president of retail banking with Maritime Bank & Trust in Essex and, prior to that, was vice president and branch manager of the Essex office of Chester Bank.
Morgan said the senior management additions “are the direct result of our continuing growth and success as a community bank.”
In 2008, Connecticut River Community Bank, which opened in November 2002, posted record operating earnings of $419,701 compared to a net loss of $7,254 for 2007.
During the first quarter the bank posted a net income of $30,045, a decrease from the $86,456 reported in the year ago period.
Greg Bordonaro is a Hartford Business Journal staff writer.
