New Mississippi Requirement for LLCs

IMPORTANT NEW FILING REQUIREMENT

LIMITED LIABILITY COMPANIES

MUST FILE ANNUAL REPORTS STARTING IN 2011

Pursuant to Section 79-29-215 Miss. Code Ann. (1972), all limited liability companies operating in Mississippi will be required to file an Annual Report with the Secretary of State beginning in 2011.

What are the deadlines for filing my LLC’s 2010 Annual Report?

The new LLC Annual Reporting Forms will be available to the public on Monday, Jan. 3, 2011, on the Secretary of State’s web site at www.sos.ms.gov. The deadline for completing the report is April 15, 2011.

How will I access my LLC’s information?

Each LLC should use their Mississippi business identification number to access their information. Your company’s business ID number can be found on your company’s webpage on the Secretary of State’s website.

What is the cost to file the Annual Report?

For Mississippi LLCs, there is no cost for online filing. The process for completing the form online will involve filling out the necessary information and hitting “submit.” As an alternative, the form may be printed out, completed, and mailed in to the Secretary of State’s office at P.O. Box 136, Jackson, MS 39205.

There is a $250 annual fee for out-of-state or ‘foreign’ LLCs. There is no online filing allowed for these LLCs. Foreign LLCs must complete the form online, print it out and submit it with their $250 annual fee to the Secretary of State’s office at P.O. Box 1020, Jackson, MS 39215-1020.

What information will be required on the Annual Report?

A sample LLC Annual Report can be found here: http://www.sos.ms.gov/links/business/LLC%20Info/Sample%20LLC%20AR%20with%20watermark.pdf

What if I do not have computer or internet access?

For those without computer or internet access, a paper copy of the LLC Annual Report form may be completed and mailed to the Secretary of State’s office by the deadline of April 15, 2011. You may have a blank copy of the form mailed or faxed to you by calling (601) 359-1633.

Massachusetts Branch Licensing Change

Contrary to statutory language (209 CMR §18.07(1)), it has been the longstanding position of the Massachusetts Division of Banks that collection agencies with a presence in the state of Massachusetts are not required to license out-of-state branch locations. Although there has been no official statement changing this position, recent conversations with leadership within the Massachusetts Division of Banks have shown that there is no longer consensus on this position.



In that regard, it is our position that effective immediately all locations from which Massachusetts debtors are contacted must hold a valid license with the Massachusetts Division of Banks. For questions or issues related to this change contact Cornerstone Support at (770) 587-4595 or email us at info@cornerstonesupport.com.

Finding Optimal E&O Insurance for Your Agency

by Matt Pridemore, Vice President

In recent months I have received hundreds of phone calls and emails from agency owners (3^rd party, debt buyer, attorney) faced with significant price or coverage issues related to their E&O policy. Fortunately, there are insurance solutions that specifically deal with the unique needs of the collection industry.

Price Issues:

It is common for agency owners to face a situation where their insurance policies are not renewed or where their premiums are high and their current agent has limited options for them. The renewal premiums make the coverage unaffordable and their current broker is unable or unwilling to provide them with options. If your broker is simply submitting a renewal application to your current carrier, demand that they do more. Introducing competition into your annual renewal process will provide you the assurance that you are paying a fair market price/premium for your particular policy needs. If your current broker still is unable or unwilling to market your account to multiple insurance providers find someone who will.

Coverage Issues:

Unfortunately, it is equally common for agency owners to select a vendor who is willing to market their account to multiple insurance providers, but lacks the experience necessary to understand the risks specific to the collection industry. In my experience, collection agencies many times rely on their insurance broker/agent and do not always read the policy in its entirety to understand what is covered and what is not. I have seen a number of policy forms over the years that specifically excluded FDCPA, TCPA or FCRA violations.

Here is an example of how an agency that understands your industry and places accounts with multiple carriers can help:

I recently assisted a large collection law firm that for years had been struggling to find a policy that appropriately addressed their specific operational risks. While they are indeed a law firm and it is imperative that they are covered for legal malpractice claims, they also maintained a significant collection floor that carried risk more closely resembling that of a standard 3^rd party collection agency. The standard lawyer’s professional liability (LPL) policy did not do a very good job of addressing both areas of risk.

That is where we came in. We were able to assist them in obtaining an errors & omissions policy form that appropriately addressed their specific operational risks. Their firm also provided legal services outside of debt collection, so we assisted them in obtaining a secondary LPL policy for those risks. Both policies combined to form a better risk management strategy for the firm, helping them to address and settle claims more efficiently.

It is easy to service an account when everything is going well. You need to be certain that you have partnered with a vendor that can take care of you when the times get tough. In my opinion, that is when we truly earn your business anyway.

Cornerstone Support is the premier licensing and insurance provider to the collection industry. If you have any questions regarding state licensing or insurance please email info@cornerstonesupport.com or call (770) 587-4595.

The Uniform Consumer Credit Code

by Matt Pridemore, Vice President

Cornerstone Support has established a reputation over time as the premier licensing service provider to the collection industry. The nature of the services that we provide and the volume of organizations we serve has uniquely positioned Cornerstone in the ARM Industry. While we are not a law firm and do not provide legal advice, we find ourselves at the forefront of legislative changes and/or enforcement trends related to state licensing.

One of the more recent enforcement trends pertains to the language in various states' uniform consumer credit code ("UCCC"). While UCCC is generally intended to regulate consumer credit, the statutory language seems to include those in the ARM Industry in certain specific circumstances. Below are relevant excerpts for your review. While this may not be an exhaustive list, it represents the statutes we have found to be enforced at this time.

Kansas Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and directly or indirectly, including through the use of servicing contracts or otherwise, undertaking collection of payments from or enforcement of rights against debtors arising from supervised loans from Kansas consumers.

A Supervised Loan is defined in Kansas as a consumer loan including a loan made pursuant to open end credit to which the annual percentage rate exceeds 12% per year.

Because debt buyers take assignment of the loan they are required to obtain this license if they purchase Kansas "supervised loans."

Read KS Statute 16a-2-301 Here

Oklahoma Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans from Oklahoma consumers.

A Supervised Loan is defined in Oklahoma as a consumer loan in which the rate of the loan finance charge exceeds 10% per year.

Because debt buyers take assignment of the loan they are required to obtain this license if they purchase Oklahoma "supervised loans."

Read OK Statute 14A O.S. 1-101 Here


South Carolina Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans from South Carolina consumers.

A Supervised Loan is defined in South Carolina as a consumer loan in which the rate of the loan finance charge exceeds 12% per year. Please note that a supervised loan does not include a mortgage loan.

Because debt buyers take assignment of the loan they are required to obtain this license if they purchase South Carolina "supervised loans."

Read SC Title 37 Ch 3 Here


West Virginia Regulated Consumer Loan License - Debt Buyers:
A Regulated Consumer Loan License is required for any business that engages in making a regulated consumer loan or taking assignment of and undertaking direct collection of payments from or enforcement of rights against consumers arising from regulated consumer loans.

A Regulated Consumer Loan is defined in West Virginia as a consumer loan, including a loan made pursuant to a revolving loan account, in which the rate of the loan finance charge exceeds 18% per year, except where the loan qualifies for federal law preemption from state interest rate limitations, including federal law bank parity provisions, or where the lender is specifically permitted by state law to make the loan at the rate without a requirement the lender hold a regulated consumer lender license

Because debt buyers take assignment of the loan they are required to obtain this license if they purchase West Virginia "regulated consumer loans."

Read WV Statute 46A-4-101 Here


Wisconsin Consumer Credit Transaction License - Collection Agencies and Debt Buyers:
A Consumer Credit Transaction License is required for any business that engages in making or soliciting consumer credit transactions or directly collects payments from or enforcement of rights against customers arising from such transactions, wherever made.

A Consumer Credit Transaction is defined in Wisconsin as a consumer transaction between a merchant and a customer in which real or personal property, services or money is acquired on credit and the customer's obligation is payable in installments or for which credit a finance charge is or may be imposed, whether such transaction is pursuant to an open-end credit plan or is a transaction involving other than open-end credit. The term includes consumer credit sales, consumer loans, consumer leases and transactions pursuant to open-end credit plans.

Read WI Chapters 421 & 426 Here


Wyoming Supervised Loan License - Debt Buyers:
A Supervised Loan License is required for any business that engages in making supervised loans or taking assignment of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans from Wyoming consumers.

A Supervised Loan is defined in Wyoming as a consumer loan in which the rate of the loan finance charge exceeds 10% per year.

Because debt buyers take assignment of the loan they are required to obtain this license if they purchase Wyoming "supervised loans."

Read WY Statute 40-14-342 Here


Should you have any questions or issues concerning these matters or should you wish to engage Cornerstone Support's assistance in obtaining these licenses/registrations, contact a Cornerstone Support licensing consultant today at 770-587-4595 or e-mail us at info@cornerstonesupport.com

Pending Licensing Legislation

Every week, the licensing specialists of Cornerstone Support are interacting with regulators in all 50 states, hundreds of collection agencies, and other industry professionals across the country. One of the many benefits of this constant communication is that we are quickly aware of new legislation that is passed or even simply being discussed. There are currently several states that are developing new legislation that, if passed, will directly affect licensing and registration for agencies, attorneys, and debt buyers all over the country. We’ve compiled the latest info below on several jurisdictions so that you can be prepared for the pending changes ahead.


Florida

Florida S.B. 2724 has been proposed, which would require an application to be submitted to the Office of Insurance Regulation. The application would be required to include everything from business and residential addresses to branch addresses to fingerprints for all control persons. Read the bill in its entirety at http://www.flsenate.gov/cgi-bin/view_page.pl?Tab=session&Submenu=1&FT=D&File=sb2724.html&Directory=session/2010/Senate/bills/billtext/html/

South Carolina

South Carolina H. 4228 currently sits in the House Committee on Labor, Commerce, and Industry. If passed, the state will establish debt collection licensing requirements. The proposed enactment date is 9-1-10. To track the progress of this bill, go to http://www.scstatehouse.gov/sess118_2009-2010/bills/4228.htm.

New York

New York S.B. 7071 has been proposed by Senator Eric Schneiderman to the Senate Consumer Protection Committee. If passed, it will require debt collection agencies to be licensed by the state, will require bonding, and will allow for penalties as well. As the bill stands now, it will take effect 180 days after being passed into law. To track this bill, go to http://assembly.state.ny.us/leg/?default_fld=&bn=SB7071%09%09&Summary=Y&Text=Y

West Virginia

West Virginia H.B. 4308 is currently being considered for legislation. This bill would broaden the definition of “debt collector” to include any private debt collection agencies, public agencies engaged in debt collection, and the employees of any public or private debt collection agency. It also proposes increased criminal penalties for fraudulent or misleading collection activities. Read the full bill at http://www.legis.state.wv.us/bill_Status/bills_text.cfm?billdoc=hb4308%20intr.htm&yr=2010&sesstype=RS&i=4308

Maryland Licensing Requirement and Deadline

On May 5, 2010, the Maryland Office of the Commissioner of Financial Regulation issued an Advisory Notice stating that "a Consumer Debt Purchaser that collects consumer claims through civil litigation is a 'collection agency' under Maryland law, and required to be licensed as such." The Advisory is in response to a June 2007 letter, in which certain consumer debt buyers claimed confusion as to whether they were required to be licensed as a collection agency when collecting claims through civil litigation.

Under the clarified conditions, Consumer Debt Purchasers are required to apply for a Maryland Collection Agency License on or before August 31, 2010 to avoid action.

Call Cornerstone Support at 770-587-4595 to discuss any questions or concerns with one of our licensing experts.

Myths and Misconceptions of Bonding and Insurance

by Matt Pridemore, Vice President

Collection Advisor published an article in the January/February 2010 edition entitled “New $350,000 Credit Line Required for Bonds Holds Agency Hostage.” The author implies that there has been a radical shift in the underwriting requirements for collection agency bonds. Agencies will now be required to post collateral in the form of a line/letter of credit to guarantee the required state license bonds. He goes on to state that "if you can find a surety company that will write your bond without a letter of credit, you will have done well."

The article specifically addresses the writer’s experience or knowledge of the ACA’s bond program, and while I cannot speak to the actions of the ACA, I can speak with authority to the current state of underwriting as it relates to collection agency bonds. I write thousands of collection agency bonds for hundreds of collection agencies through multiple highly rated surety companies. In my experience there have been no significant changes in underwriting requirements and, more importantly, no noticeable change in the appetite of the surety companies to write these bonds.

The trick is to select a vendor that not only understands this industry and specializes in collection agency bonds, but also has access to and regularly uses multiple surety companies. The right broker in most circumstances should have enough leverage with the surety company to avoid a situation that would require the “mad scrambles” referenced in the Collection Advisor article. But that is not enough; they should also have access to other surety companies including high risk providers so that they can fully market your account and provide you with all of your available options. While posting collateral with your current provider is an option in some situations, it is usually not the only option and rarely the best option.

Sadly, this story rings true with other commercial insurance products as well – especially E&O insurance. I receive hundreds of phone calls and emails from agency owners who are facing significant price or coverage issues with their E&O policy, and they’re looking for options.

Price Issues:
It is not uncommon for agency owners to face a situation where either their insurance policies are not renewed, or the renewal premiums make the coverage unaffordable and their current broker is unable or unwilling to provide them with options. If your broker is simply submitting a renewal application to your current carrier, demand that they do more. Introducing competition into your annual renewal process will provide you the assurance that you are paying a fair market price/premium for your particular policy needs. If your current broker is still unable or unwilling to market your account to multiple insurance providers, find someone who can and will.

Coverage Issues:
Unfortunately, it is equally common for agency owners to select a vendor who is willing to market their account to multiple insurance providers, but who lacks the experience necessary to understand the risks specific to the collection industry. In my experience, collection agencies many times rely on the experience of their insurance broker/agent and do not always read the policy to understand what specifically is covered or excluded. I have seen a number of policy forms which specifically exclude FDCPA, TCPA or FCRA violations.

It is easy to service an account when everything is going well. You need to be certain that you have partnered with a vendor that can take care of you when the times get tough and you need alternatives. In my opinion, that is when your business is truly earned.

Cornerstone Support is the premier licensing and insurance provider to the collection industry. If you have any questions regarding state licensing or insurance, please email info@cornerstonesupport.com or call (770) 587-4595.