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only the CC list of an e-Tag to see if the

Commission is included. If an Intra-

Balancing Authority exception were

created, Balancing Authorities with

validation responsibilities would first

need to check the market and physical

segments of an e-Tag to see if they met

additional criteria, and then check to

see if the Commission is included on

the CC list. Likewise, e-Tag Authors

would have to develop additional

procedures to ensure an Intra-Balancing

Authority exception was appropriately

implemented.

5. Balancing Authorities

a. Comments

34. OATI states that Order No. 771

creates certain obligations on

‘‘Balancing Authorities’’ and notes that

multiple Balancing Authorities can be

listed on a single e-Tag. OATI seeks

clarification that the Final Rule refers to

the Balancing Authority serving as the

Sink Balancing Authority and providing

e-Tag Authority Services for the

particular e-Tag transaction, rather than

to other Balancing Authorities that may

be listed on the e-Tag.

b. Commission Determination

35. Order No. 771 imposes certain

requirements on Balancing Authorities

located within the United States with

respect to ensuring Commission access

to e-Tags.

In response to OATI’s

question, we clarify that the

requirements on Balancing Authorities

to ensure Commission access to e-Tags

relate only to the Sink Balancing

Authority on an e-Tag and not to other

Balancing Authorities that may be

included on an e-Tag.

The Commission orders:

The Commission hereby grants

rehearing in part, and denies rehearing

in part, as discussed in the body of the

order.

OATI at 6.

See Order No. 771, FERC Stats & Regs ¶ 31,339

at P 39; 18 CFR 366.2(d).

See, e.g., NAESB Wholesale Electric Quadrant

(WEQ) Business Practice Standards (Coordinate

Interchange) requirement 004–1 (‘‘All requests to

implement bilateral Interchange * * * between a

Source BA and Sink BA, where one or both BAs are

located in either the Eastern or Western

Interconnection, shall be accomplished by the

submission of a completed and accurate RFI) to the

Sink BA’s registered e-Tag Authority Service’’) and

requirement 004–2 (‘‘Until other means are adopted

by NAESB, the primary method of submitting the

RFI shall be an e-Tag communicated to and

managed by the Sink BA’s registered e-Tag

authority service using protocols compliant with

the Version 1.8.1 Electronic Tagging Functional

Specification.’’ (Emphasis added.)). See NAESB

Wholesale Electric Quadrant (WEQ) Business

Practice Standards (Version 003), published July 31,

2012.

By the Commission.

Nathaniel J. Davis, Sr.,

Deputy Secretary.

[FR Doc. 2013–05856 Filed 3–13–13; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF JUSTICE

28 CFR Part 58

[Docket No EOUST 102]

RIN 1105–AB17

Application Procedures and Criteria for

Approval of Nonprofit Budget and

Credit Counseling Agencies by United

States Trustees

AGENCY

: Executive Office for United

States Trustees (‘‘EOUST’’), Justice.

ACTION

: Final rule.

SUMMARY

: This final rule (‘‘rule’’) sets

forth procedures and criteria United

States Trustees shall use when

determining whether applicants seeking

to become and remain approved

nonprofit budget and credit counseling

agencies (‘‘credit counseling agencies’’

or ‘‘agencies’’) satisfy all prerequisites of

the United States Code, as implemented

under this rule. Under the current law,

an individual may not be a debtor under

title 11 of the United States Code, unless

during the 180-day period preceding the

date of filing a bankruptcy petition, the

individual receives adequate counseling

from a credit counseling agency that is

approved by the United States Trustee.

The current law enumerates mandatory

prerequisites and minimum standards

applicants seeking to become approved

credit counseling agencies must meet.

Under this rule, United States Trustees

will approve applicants for inclusion on

publicly available agency lists in one or

more federal judicial districts if an

applicant establishes it meets all the

requirements of the United States Code,

as implemented under this rule. After

obtaining such approval, a credit

counseling agency shall be authorized to

provide credit counseling in a federal

judicial district during the time the

agency remains approved.

EOUST intends to add to its

regulations governing credit counseling

agencies, two new provisions not

previously included in the proposed

rule on this subject. A new section

58.17(c)(11) will require agencies to

notify the United States Trustee of

certain actions pursuant to 11 U.S.C.

111(g)(2) or other consumer protection

statutes, such as an entry of judgment or

mediation award, or the agency’s entry

into a settlement order, consent decree,

or assurance of voluntary compliance.

The second provision will amend

section 58.20(j) to require an agency to

assist an individual with limited

English proficiency by expeditiously

directing the individual to an agency

that can provide counseling in the

language of the individual’s choice.

Because these provisions were not

discussed in the proposed rule

published on February 1, 2008, EOUST

will publish another Notice of Proposed

Rulemaking requesting public comment

with respect to these two provisions.

DATES

: Effective Date: This rule is

effective April 15, 2013.

ADDRESSES

: EOUST, 441 G Street NW.,

Suite 6150, Washington, DC 20530.

FOR FURTHER INFORMATION CONTACT

Doreen Solomon, Assistant Director for

Oversight on (202) 307–2829 (not a toll-

free number), Wendy Tien, Deputy

Assistant Director for Oversight on (202)

307–3698 (not a toll-free number), or

Larry Wahlquist, Office of the General

Counsel on (202) 307–1399 (not a toll-

free number).

SUPPLEMENTARY INFORMATION

: On July 5,

2006, EOUST published an interim final

rule entitled Application Procedures

and Criteria for Approval of Nonprofit

Budget and Credit Counseling Agencies

and Approval of Providers of a Personal

Financial Management Instructional

Course by United States Trustees

(‘‘Interim Final Rule’’). 71 FR 38,076

(July 5, 2006). Due to the necessity of

quickly establishing a regulation to

govern the credit counseling application

process, EOUST promulgated the

Interim Final Rule rather than a notice

of proposed rulemaking (‘‘proposed

rule’’). On February 1, 2008, at 73 FR

6,062, EOUST published a proposed

rule on this topic in an effort to

maximize public input, rather than

publishing a final rule after publication

of the Interim Final Rule. Before the

comment period closed on April 1,

2008, EOUST received forty seven

comments. The comments received and

EOUST’s responses are discussed

below. This rule finalizes the proposed

rule with changes that, in some cases,

reduce the burden on credit counseling

agencies while maintaining adequate

protections for consumers.

This rule implements the credit

counseling sections of the Bankruptcy

Abuse Prevention and Consumer

Protection Act of 2005 (‘‘BAPCPA’’),

Public Law 109–8, 119 Stat. 23, 37, 38

(April 20, 2005), which are codified at

11 U.S.C. 109(h) and 111. Effective

October 17, 2005, an individual may not

be a debtor under title 11 of the United

States Code unless during the 180-day

period preceding the date of filing a

bankruptcy petition, the individual

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receives adequate counseling from an

approved credit counseling agency. 11

U.S.C. 109(h)(1) and 111; see also H.R.

Rep. 109–31, pt. 1 at 2 (providing that

the Bankruptcy Code ‘‘requires debtors

to receive credit counseling before they

can be eligible for bankruptcy relief so

that they will make an informed choice

about bankruptcy, its alternatives, and

consequences’’).

Section 111(b) of title 11, United

States Code, governs the approval by

United States Trustees of credit

counseling agencies for inclusion under

11 U.S.C. 111(a)(1) on publicly available

agency lists in one or more United

States district courts. Section 111 of title

11 provides that, in applicable

jurisdictions, a United States Trustee

may approve an application to become

an approved credit counseling agency

only after the United States Trustee has

thoroughly reviewed the applicant’s (a)

qualifications, and (b) services. 11

U.S.C. 111(b)(1). A United States

Trustee has statutory authority to

require an applicant to provide

information with respect to such review.

Id. EOUST reserves the right to publish

on its public Web site non-confidential

business information relating to credit

counseling agencies, including contact

information, counseling services

provided, language support services

offered, and fees charged for services.

After completing that thorough

review, a United States Trustee may

approve a credit counseling agency only

if the agency establishes that it fully

satisfies all requisite standards. 11

U.S.C. 111(b). Among other things, an

applicant must establish it will (a)

provide qualified counselors, (b)

maintain adequate provision for

safekeeping and payment of client

funds, (c) provide adequate counseling

with respect to client credit problems,

and (d) deal responsibly and effectively

with other matters relating to the

quality, effectiveness, and financial

security of the services it provides. 11

U.S.C. 111(c)(1).

This rule will implement those

statutory requirements. By doing so, the

rule will help clients obtain adequate

counseling from competent credit

counseling agencies, and help safeguard

their funds. It also will provide an

appropriate mechanism by which

entities can apply under section 111 of

title 11 to become approved credit

counseling agencies, and will enable

such applicants to attempt to meet their

burden of establishing that they should

be approved by United States Trustees

under 11 U.S.C. 111.

Summary of Changes in Final Rule

The final rule modifies the proposed

rule by making it: (1) Less burdensome

on credit counseling agencies; and (2)

by providing technical or clarifying

modifications. The modifications are

summarized according to their

classification below. A parenthetical

reference to the regulatory text has been

added to assist the reader in locating the

relevant provisions of the rule. In

addition, where applicable, a reference

to the comment providing a more

detailed explanation of these changes is

included:

Modifications To Make the Final Rule

Less Burdensome on Credit Counseling

Agencies

• The definition of ‘‘material change’’

has been revised to eliminate staff other

than the management or counselors of

an agency (§ 58.12(b)(27)—comment #

B9).

• An agency is not required to

negotiate an alternative payment

schedule with creditors regarding

unsecured consumer debt as provided

in 11 U.S.C. 502(k). Instead, if an agency

does not provide this service, the agency

shall disclose that it may refer clients to

other approved agencies that do provide

this service, and that clients may incur

additional fees in connection with such

referrals (§ 58.20(l)(9)—comment # B24).

• An agency may disclose to clients

and potential clients that, to the extent

it is approved as a provider of a

personal financial management

instructional course pursuant to 11

U.S.C. 111(d), the United States Trustee

has reviewed those debtor education

services (§ 58.20(l)(11)—comment #

B23).

• The reference to ‘‘any applicable

law’’ in the prohibition that an agency

take no action to limit clients from

bringing claims against the agency as

provided in 11 U.S.C. 111(g)(2) has been

deleted (§ 58.20(p)(6)—comment # B27).

• The rule has been revised to add a

rebuttable presumption that a client

lacks the ability to pay the counseling

fee if the client’s current household

income is less than 150 percent of the

poverty guidelines updated periodically

in the Federal Register by the U.S.

Department of Health and Human

Services under the authority of 42

U.S.C. 9902(2), as adjusted from time to

time, for a household or family of the

size involved in the fee determination

(§ 58.21(b)(1)—comment # B31).

• The United States Trustee is

required to review the basis for the

mandatory fee waiver policy one year

after the effective date of the rule, and

then periodically, but not less

frequently than every four years

(§ 58.21(b)(2)—comment # B31).

• The requirement that, for an agency

to send a credit counseling certificate to

a client’s attorney, the client must make

the request in writing to the agency has

been deleted (§ 58.22(a)—comment #

B32).

• The rule has been revised to delete

the requirement that agencies attach a

budget analysis to the credit counseling

certificate (§ 58.22(b)—comment # B34).

• The requirement that an agency

provide original signatures on

certificates, in recognition of electronic

filing in the bankruptcy courts and the

technology used to generate certificates,

has been deleted (§ 58.22(l)(2)—

comment # B35).

• The rule has been amended to set

forth new procedures for approved

agencies that cease to offer debt

repayment plan (DRP) services to new

clients. This amendment reduces the

burden on approved agencies that make

the business decision to cease offering

DRP services to new clients, but

continue to provide services to existing

clients by enabling them to decrease

their bonding and insurance

requirements. In other words, an agency

must continue to meet the rule’s current

bonding and insurance requirements

with respect to existing plans only. An

approved agency that neither offers DRP

services to new clients nor continues to

service existing plans, having

transferred those plans to other agencies

or obtained a waiver from EOUST

pursuant to the rule (as set forth in

§ 58.23(f)), is not subject to the bonding

and insurance requirements (§ 58.23(d),

(f)—comment # B40).

Technical or Clarifying Modifications

• The definition of ‘‘client’’ has been

revised to mean an individual who both

seeks and receives counseling services

from an approved agency, rather than an

individual who only seeks but does not

receive such services (§ 58.12(b)(11)—

comment # B4).

• The definition of ‘‘criminal

background check’’ has been revised to

require an agency to obtain background

checks for a counselor in each state

where the counselor has resided or

worked during the preceding five years

(§ 58.12(b)(14)—comment # B25).

• The definition of ‘‘limited English

proficiency’’ has been revised to be

consistent with that used by the Civil

Rights Division of the Department of

Justice (§ 58.12(b)(26)—comment # B8).

• The definition of ‘‘material change’’

has been amended to include a change

in language services provided by the

agency. Agencies are already required to

inform the United States Trustee of the

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languages they provide when applying

for approval. This clarification

emphasizes the importance of notifying

the United States Trustee whenever an

agency adds or removes a language from

its available services (§ 58.12(b)(27)).

• A new definition, ‘‘potential

client,’’ has been added to describe an

individual who seeks, but does not

receive, counseling services from an

approved agency (§ 58.12(b)(31)—

comment # B12).

• The rule has been amended to

clarify that when disclosing its fee

policy, an agency must disclose its

policy, if any, concerning fees

associated with generating a credit

counseling certificate prior to rendering

any counseling services (§ 58.20(l)(1)—

comment # B22).

• The rule has been amended to

clarify that the requirement that an

agency disclose its policy on fees prior

to offering services includes Internet

based credit counseling. In other words,

an agency that publishes information on

the Internet concerning its fees must

include its policy enabling clients to

obtain counseling for free or at reduced

rates based upon the client’s lack of

ability to pay. This is not an additional

burden on agencies as the proposed rule

requires agencies to disclose their fee

polices prior to providing services; the

final rule makes it clear that this

requirement includes Internet based

credit counseling (§ 58.20(l)(2)).

• The rule has been amended to

clarify that an agency’s duty to disclose

its fee policy before providing

counseling services includes disclosing

the agency’s policy to provide free

bilingual instruction to any limited

English proficient client. This is not an

additional burden on agencies as the

proposed rule requires agencies to

disclose their fee polices prior to

providing services; the final rule makes

it clear that this requirement includes

disclosing agencies’ fee policies

regarding services for limited English

proficient individuals (§ 58.20(l)(3)).

• The rule has been amended to

clarify that an agency’s duty to maintain

records regarding limited English

proficiency individuals includes

maintaining records regarding the

methods of delivery of counseling

services, the types of languages and

methods of delivery requested by clients

and potential clients, the number of

clients served, and the number of

referrals made to other agencies.

Because the proposed rule already

requires agencies to maintain records

regarding the delivery of services to

limited English proficiency individuals,

this is not an additional burden in the

final rule. Rather, the final rule makes

clearer what is expected of agencies in

terms of record-keeping for limited

English proficient individuals

(§ 58.20(o)(5)).

• The rule has been amended to

clarify that Internet and automated

telephone counseling are not complete

until the client has engaged in

interaction with a counselor following

the automated portion of the counseling

(§ 58.22(a)—comment # B33).

• The rule has been amended to

clarify that certificates must bear not

only the date, but also the time and the

time zone when counseling services

were completed by the client

(§ 58.22(n)(3)—comment # B36).

• The rule has been amended to

correct non-substantive stylistic,

numbering and typographical errors.

Discussion of Public Comments

EOUST received forty seven

comments on the proposed rule. Many

of the comments contained several sub-

comments. EOUST appreciates the

comments and has considered each

comment carefully. EOUST’s responses

to the comments are discussed below,

either in the ‘‘General Comments’’

section or in the ‘‘Section-by-Section

Analysis.’’

A. General Comments

1. Cost of the Rule to Credit Counseling

Agencies

Comment: EOUST received several

comments that the rule will make it

more expensive for credit counseling

agencies to operate and that they will

pass the costs on to clients.

Response: EOUST recognizes that the

rule may cause agencies to incur

additional costs, but those costs are

minimal. Additionally, the extra costs

for such measures as procedures to

verify a debtor’s identity, the

requirement that agencies provide

additional counseling after completion

or termination of a debt repayment plan

at no additional cost to the debtor, and

mandatory disclosure of the agency’s fee

policy, are sufficiently important to

protect consumers to warrant the extra

costs to the agency.

2. Mandatory Nature of Credit

Counseling

Comment: EOUST received one

comment that credit counseling should

not be mandatory.

Response: Pursuant to the BAPCPA,

Congress specifically requires

individual debtors to complete credit

counseling before filing bankruptcy.

This requirement is codified at 11

U.S.C. 109(h). EOUST does not have the

authority to waive this statutory

requirement.

3. Micro-Management of Agency’s Day-

to-Day Operations

Comment: One comment stated that

the power to ensure a credit counseling

agency’s compliance with the statute

and regulations should not become a

micro-management of the agency’s day-

to-day operations.

Response: EOUST concludes that the

rule obtains the appropriate balance

between ensuring compliance with the

law and preserving a credit counseling

agency’s operational autonomy.

4. Preemption

Comment: One comment noted that

the rule omits language stating that

nothing in the rule preempts state law,

and requested that such preemption

language be restored.

Response: The omission of the

preemption language does not constitute

an expression, from the standpoint of

EOUST, that the rule preempts state law

to the extent of any conflict between the

rule and state law. No inference should

be drawn from the omission.

B. Comments on Specific Subsections of

the Proposed Rule

1. Use of the Terms Accreditation and

Certification [§ 58.12(b)(1), (b)(2) and

(b)(13)]

Comment: EOUST received two

comments that the rule erroneously uses

the terms accreditation and certification

interchangeably, when accreditation

refers to organizations and certification

refers to individuals.

Response: EOUST has reviewed the

rule carefully and found no instances

where accreditation was used to refer to

individuals and certification was used

to refer to organizations. In a few

instances, an agency representative

must sign a certification attesting to a

particular fact or facts; these instances,

however, do not use the term

erroneously.

2. Definition of Adequate Counseling—

Repayment Plans [§ 58.12(b)(3)]

Comment: One comment stated that

the definition for adequate counseling

should be revised to ensure counseling

includes offering repayment plans when

clients qualify.

Response: This change is

unnecessary. The definition of

‘‘adequate counseling’’ includes

counseling services, which explicitly

provide consumers the opportunity to

participate in repayment plans.

3. Adequate Counseling—Alternatives

to Bankruptcy [§ 58.12(b)(3)]

Comment: One comment

recommended adequate counseling be

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revised to require counselors to detail

the nature of alternatives to bankruptcy

if they exist.

Response: This change is

unnecessary. The definition of

‘‘adequate counseling’’ includes

counseling services, which requires

counselors to explain, among other

things, all reasonable alternatives to

resolve a client’s credit problems.

Alternatives to bankruptcy should be

discussed with clients as a matter of

course.

4. Definition of Client [§ 58.12(b)(11)]

Comment: One comment stated that

the definition of ‘‘client’’ is too broad,

and should not include a person who

merely inquires about services.

Response: EOUST concurs and has

adopted this technical modification by

revising the definition of ‘‘client’’ to

include only individuals who both seek

and receive services from an approved

credit counseling agency. The term

‘‘client’’ does not include ‘‘potential

clients,’’ who are defined separately as

those who seek, but do not receive,

counseling services from an approved

agency. An individual may be both a

client of the agency from which he or

she seeks and ultimately receives

counseling services, and a potential

client of other agencies from whom he

or she seeks, but ultimately does not

receive, counseling services.

5. Definition of Counseling Services—

Generally [§ 58.12(b)(12)]

Comment: Several comments objected

to the proposed rule’s definition of

‘‘counseling services’’ to the extent it

individualizes the services, asserting

that these requirements exceed the

scope of the prepetition briefing

requirements in 11 U.S.C. 109(h). The

comments argued that 11 U.S.C. 109(h)

mandates only a group briefing

outlining opportunities for available

credit counseling and does not require

individuals to obtain counseling per se.

They urged that EOUST narrow the

definition of ‘‘counseling services’’ to

parallel the statutory requirements

imposed by 11 U.S.C. 109(h).

Response: Upon review of 11 U.S.C.

109(h) and 111(c), the purposes

underlying the BAPCPA, and the

relevant case law, EOUST has

determined that the ‘‘briefing’’

described in 11 U.S.C. 109(h) and the

credit counseling described in the

proposed rule are synonymous.

Accordingly, EOUST declines to amend

the proposed rule to limit the definition

of ‘‘counseling services’’ to exclude

credit counseling sessions. Furthermore,

EOUST has determined that, for 11

U.S.C. 109(h) to be consistent with 11

U.S.C. 111(c), counseling services must

address the individual client’s financial

circumstances. Section 111(c)(2)(E)

requires ‘‘adequate counseling with

respect to a client’s credit problems that

includes an analysis of such client’s

current financial condition, factors that

caused such financial condition, and

how such a client can develop a plan to

respond to the problems without

incurring negative amortization of

debt.’’ 11 U.S.C. 111(c)(2)(E).

Accordingly, the proposed rule’s

requirement that ‘‘counseling services’’

include a written analysis of each

client’s current financial condition is

consistent with the statutory mandate.

EOUST does not require that such

analysis take any particular written

form; for example, the agency may

convey the written analysis via

electronic mail.

To the extent 11 U.S.C. 109(h)

authorizes ‘‘group’’ briefings, EOUST

interprets the statute to permit couples

to attend credit counseling sessions

jointly. This interpretation is consistent

with 11 U.S.C. 111(c) and

accommodates spouses who intend to

file joint petitions. Furthermore, EOUST

permits group credit counseling

sessions by telephone, provided that

each individual client also receives

adequate individualized counseling

with respect to his or her credit

problems, including an analysis of such

client’s current financial condition, the

factors that caused such financial

condition, and how such a client can

develop a plan to respond to the

problems without incurring negative

amortization of debt, consistent with the

requirements of 11 U.S.C. 111(c)(2)(E).

6. Definition of Counseling Services—

Length of Time [§ 58.12(b)(12)]

Comment: EOUST received several

comments that a minimum length

requirement of 60 minutes for a credit

counseling session is too long, that such

a minimum length requirement will

increase costs, and that EOUST lacks

the authority to specify a minimum

length of time for a counseling session.

Response: The rule does not require

all counseling sessions to last 60

minutes. Section 58.12(b)(12) states the

counseling services ‘‘are typically of at

least 60 minutes in duration.’’ This

requirement means that most counseling

sessions should last approximately 60

minutes, but that, in some instances,

less or more time may be appropriate.

7. Definition of Counseling Services—

Written Analysis [§ 58.12(b)(12)]

Comment: EOUST received one

comment that a written analysis should

not be required and that electronic or

verbal analysis should be sufficient.

Response: Written analysis is

necessary to protect consumers and to

verify that the agency provided a

substantive analysis of the consumer’s

financial situation. The agency may

provide the client this analysis via

email, but it must be written.

8. Definition of Limited English

Proficiency [§ 58.12(b)(26)]

Comment: EOUST received one

comment seeking revision of this

definition to clarify its meaning.

Response: EOUST concurs that a

technical modification is necessary and

has revised the definition of the term to

match that used by the Civil Rights

Division of the Department of Justice, as

set forth in Notice, Guidance to Federal

Financial Assistance Recipients

Regarding Title VI, Prohibition Against

National Origin Discrimination

Affecting Limited English Proficient

Persons, 67 FR 41,455 (June 18, 2002).

Though the wording is slightly different,

the meaning of limited English

proficiency is essentially the same, i.e.

individuals who do not speak English as

their primary language or who have

difficulty understanding English.

9. Definition of Material Change

[§ 58.12(b)(27)]

Comment: One comment stated that

staff changes should be deleted from the

definition of material change since the

requirement is unnecessarily

burdensome.

Response: EOUST agrees that this

requirement may be overly burdensome.

Not every change in staff requires

EOUST notification. The purpose of this

requirement is to ensure that EOUST

remains aware of changes in key

personnel. Because the definition of

‘‘material change’’ already specifies

notification for changes in management,

the rule has been modified to change

‘‘staff’’ to ‘‘counselors’’ and thereby

reduce the burden on credit counseling

agencies.

10. Definition of Median Family Income

Comment: One comment noted that

the rule defines the term ‘‘median

family income,’’ but then does not use

it in the rule.

Response: EOUST has deleted the

definition of median family income

from the rule.

11. Definition of Nonprofit

[§ 58.12(b)(29)]

Comment: EOUST received one

comment suggesting that the definition

of ‘‘nonprofit’’ require that the credit

counseling agency has been approved

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by the IRS for tax purposes under

section 501(c)(3) of the Internal Revenue

Code.

Response: 11 U.S.C. 111 requires a

credit counseling agency to be organized

as a nonprofit entity, but does not

require tax exempt status. Organization

as a nonprofit entity is a matter of state

law, and nonprofit organizations do not

necessarily qualify for 501(c)(3) tax-

exempt status, which is a matter of

federal law. When determining whether

an agency constitutes a nonprofit entity,

EOUST takes into consideration

whether an agency has been approved

or rejected for 501(c)(3) status, and

requires an agency to notify EOUST if

501(c)(3) status is revoked, but tax-

exempt status is not required under the

statute to operate as a nonprofit entity.

12. Definition of Potential Client

[§ 58.12(b)(31)]

Comment: One comment stated that

the rule refers to the term ‘‘potential

client’’ numerous times, but does not

define the term.

Response: EOUST concurs that a

technical modification is necessary and

has added a definition of ‘‘potential

client’’ in the final rule. A ‘‘potential

client’’ is an individual who seeks, but

does not receive, counseling services

from an approved agency. An individual

may be both a client of the agency from

which he or she seeks and ultimately

receives counseling services, and a

potential client of other agencies from

whom he or she seeks, but ultimately

does not receive, counseling services.

13. Definition of Referral Fees

[§ 58.12(b)(33)]

Comment: One comment stated that

the definition of referral fees contains a

loophole that would allow an entity to

charge a referral fee merely by calling it

something else.

Response: EOUST has deleted the

definition of ‘‘locator,’’ eliminating any

concerns that a loophole exists in the

definition of referral fees. The revised

definition of ‘‘referral fees’’ prohibits the

transfer or passage of any money or

other consideration between an agency

and another entity as consideration or in

exchange for the referral of clients for

counseling services. The sole exception

is for fees paid under a fair share

agreement, as defined elsewhere in the

rule.

14. Disclosure of Revocation of 501(c)(3)

Status [§§ 58.17(c), 58.24(c)(3) and (d)]

Comment: EOUST received several

comments that an agency should not

have to disclose to EOUST when the IRS

revokes its tax-exempt status because

the statute does not require tax-exempt

status. Accordingly, revocation does not

bear on the credit counseling agency’s

qualifications as an approved credit

counseling agency.

Response: The review process to

ensure the approval of only qualified

nonprofit credit counseling agencies

requires consideration of changes in an

agency’s 501(c)(3) status. While it is true

that tax-exempt status is not required for

approval, any revocation of that status is

relevant in determining an agency’s

initial or ongoing qualifications and

fitness for approval. In particular, if the

IRS revoked an agency’s nonprofit status

due to a determination that the agency

is operating for profit, such a

determination may disqualify the

agency. Accordingly, revocation of an

agency’s 501(c)(3) tax-exempt status,

though not dispositive, may bear on the

agency’s qualification and fitness for

approval by the United States Trustee.

15. Prohibition on Legal Advice

[§§ 58.12(b)(25), 58.20(b)]

Comment: Several comments

expressed concern about the rule’s

reference to 11 U.S.C. 110(e)(2) when

defining legal advice. Some of the

comments stated that 11 U.S.C.

110(e)(2)’s definition of legal advice is

overly broad when applied to credit

counselors because it includes

bankruptcy procedures and rights.

Because counselors are expected to

explain the basic principles of

bankruptcy to clients in the course of

providing counseling services, the

comments expressed concern that the

very act of counseling could cause

counselors to give ‘‘legal advice’’ in

violation of the rule’s prohibition.

Another comment supported an

absolute ban on the provision of legal

advice by counselors.

Response: Because of the differences

among the states concerning the

definition of the unauthorized practice

of law, and the resulting difficulty in

defining ‘‘legal advice,’’ EOUST

concluded the most appropriate

approach is to adopt the definition

Congress provided in 11 U.S.C.

110(e)(2). EOUST is sensitive to the

concern that a counselor’s explanation

of bankruptcy principles to clients may

be considered ‘‘legal advice,’’ but

interprets 11 U.S.C. 110(e)(2) to mean

that counselors shall not advise clients

concerning the application of

bankruptcy laws, principles, or

procedures to a particular individual’s

circumstances, may not recommend that

a particular individual should proceed

in bankruptcy, and may not describe

how bankruptcy laws, principles, or

procedures would affect a particular

individual’s case in the event of a

bankruptcy filing. Rather, the counselor

may explain basic bankruptcy

principles and how such procedures are

applied generally.

16. Board Directors [§ 58.20(c) and (d)]

Comment: EOUST received one

comment that board directors should

not be classified as debt relief agencies.

EOUST also received one comment that

attorneys who practice bankruptcy law

or whose firms practice bankruptcy law

should not be allowed to serve as

directors or officers of a credit

counseling agency.

Response: Board directors, as such,

are not classified as debt relief agencies

unless they meet the definition of debt

relief agencies in 11 U.S.C. 101(12A).

Furthermore, so long as attorneys meet

the requirements of 11 U.S.C. § 111 and

this rule, which require directors,

officers and board members to be

independent and not to receive any

remuneration based on the credit

counseling services performed by the

agency, EOUST declines to adopt a

blanket rule prohibiting attorneys who

practice bankruptcy from serving in

positions of authority in a credit

counseling agency.

17. Counselor Qualifications [§ 58.20(f)]

Comment: One comment supported

the rule’s requirements concerning

counselor qualifications and another

comment expressed the opinion that the

requirements need to be strengthened.

Yet another comment stated the rule

failed to allow for a training period for

inexperienced counselors.

Response: The counselor qualification

requirements are meant to ensure that

counselors possess sufficient expertise

in financial matters to provide

substantive counseling to consumers.

Accordingly, inexperienced counselors

either must complete a financial course

of study or must work a minimum of six

months in a related area to ensure they

are qualified to act as counselors. Based

upon experience administering the

Interim Final Rule and its interactions

with agencies, EOUST concluded the

requirements enunciated in this rule are

sufficient to ensure that counselors will

be qualified to counsel consumers.

18. Verification of Identity [§ 58.20(h)]

Comment: EOUST received two

comments concerning identity

verification. One expressed the opinion

that verification of client identity in the

context of Internet and telephone

counseling is impossible, and another

questioned why no comparable

verification is required for in-person

counseling.

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Response: Establishing an

individual’s identity in the context of

telephone and Internet counseling may

pose difficulties. This does not,

however, obviate identity verification

requirements. Indeed, many agencies

already have implemented effective

identity verification procedures. For in-

person counseling, an individual may

present his or her driver’s license, or

similar photo identification, to establish

his or her identity. Because the

counselor is physically present and can

confirm that the photo in the driver’s

license matches the client, this

identification procedure is sufficient for

in-person counseling. In the case of

Internet and telephone counseling the

individual is not in the counselor’s

physical presence and additional

measures are necessary to confirm the

individual’s identity.

19. Toll-Free Telephone Numbers

[§ 58.20(i)]

Comment: One comment stated that

credit counseling agencies should not be

required to provide toll-free telephone

numbers to all callers.

Response: Telephone counseling

commonly lasts 60 to 90 minutes. For

individuals experiencing financial

difficulties, the cost of such a phone call

may constitute an undue burden. This

cost should be borne by the credit

counseling agency, which can spread

the cost among many different clients.

20. Special Needs [§ 58.20(k)]

Comment: One comment stated that

‘‘special needs’’ should be a defined

term.

Response: The term ‘‘special needs’’ is

in the public vernacular and commonly

refers to people with disabilities. No

further clarification is necessary.

21. Disclosures—Debt Repayment Plans

(DRPs) [§ 58.20(l)]

Comment: EOUST received one

comment that credit counseling

agencies should disclose the percentage

of all clients participating in DRPs, and

the percentage of clients who complete

DRPs.

Response: Credit counseling agencies

currently are required to report to

EOUST the number of clients enrolled

in a DRP and the number of clients who

completed a DRP in Appendix E to the

credit counseling application. This

appendix must be submitted to EOUST

twice a year.

22. Disclosures—Additional Fees

[§ 58.20(l)(1)]

Comment: EOUST received one

comment requesting clarification of the

requirement that, when an agency

charges a separate fee for the certificate

in addition to counseling, the client

must consent in writing. The comment

sought clarification in the case of

telephone and Internet counseling, and

suggested that clients be able to consent

verbally or electronically in such cases.

Response: EOUST concludes that the

rule should not have specific

instructions for circumstances that arise

infrequently as most agencies do not

charge a separate fee for the issuance of

the certificate. Accordingly, the rule has

been amended to strike the specific and

additional instructions for credit

counseling agencies that charge separate

fees for certificates (§ 58.22(g) of the

proposed rule). Instead, the final rule

requires the general disclosures to

include disclosure of all fees, including

any additional fees for certificates. This

is not an additional burden on agencies

as the proposed rule, and Interim Final

Rule, already require agencies to

disclose their fee policy before

rendering services.

23. Mandatory Disclosures [§ 58.20(l)]

Comment: EOUST received two

comments concerning the number of

mandatory disclosures. One comment

stated that the number of mandatory

disclosures is excessive and should be

reduced to avoid confusing clients; the

comment suggested deleting paragraphs

58.20(l)(4), (5), and (7) as unnecessary,

and allowing mandatory disclosures

made pursuant to paragraphs (6), (8),

and (12) to be given during the

counseling session rather than before.

Another comment, however,

recommended adding complaint

procedures.

EOUST also received a comment

recommending that, to the extent a

credit counseling agency is also

approved as a provider of a personal

financial management instructional

course pursuant to 11 U.S.C. 111(d), the

agency be able to state that the United

States Trustee has reviewed those

services.

Response: While there are a number

of disclosures, they are necessary to

protect consumers. Section 111(c)(2)(D)

requires the inclusion of paragraphs (4),

(5) and (6). 11 U.S.C. 111(c)(2)(D).

Paragraph (7) alerts consumers that

agencies do not accept or give referral

fees to increase consumer confidence in

the integrity of the credit counseling

industry. Paragraphs (8) and (12) inform

consumers that the agency must provide

a certificate promptly, and that a

certificate will be provided only if the

individual completes the credit

counseling. This disclosure is

particularly important to eliminate

misunderstandings between the agency

and client, and to make clear to clients

that they must complete credit

counseling before receiving a credit

counseling certificate.

Though the proposed rule did not

prohibit agencies from informing

consumers that they were also, where

applicable, approved debtor education

providers, the rule did not expressly

allow it. To reduce a restriction on

agencies, paragraph (l)(11) has been

revised to permit a credit counseling

agency to disclose that, to the extent

that an agency is also approved as a

provider of a personal financial

management instructional course

pursuant to 11 U.S.C. 111(d), the United

States Trustee has reviewed those

debtor education services.

Credit counseling agencies already are

obligated to develop complaint

procedures. Requiring disclosure of

such procedures before providing

services is not necessary, especially

since additional disclosures could

dilute the effectiveness of those already

required.

24. Section 502(k) [§ 58.20(l)(9)]

Comment: Several comments objected

to the requirement that agencies provide

each client the opportunity to have the

agency negotiate an alternative payment

schedule as contemplated in 11 U.S.C.

502(k). The comments stated that this is

often unnecessary, will increase costs,

and will possibly subject the agencies to

additional state regulation.

Response: EOUST concurs and has

modified the rule to reduce the burden

on agencies. Sections 109, 111, and

502(k) do not confer upon debtors the

absolute right to negotiate alternative

repayment schedules with creditors, nor

do they require agencies to negotiate

alternative payment schedules on behalf

of clients. Agencies who, in their

business discretion, decide not to

provide this service and wish to refer

clients to another agency for negotiation

of alternative payment schedules must

refer clients to other approved agencies

that provide the service. Accordingly,

the rule has been revised to eliminate

the requirement that agencies offer this

service and instead requires agencies to

disclose whether or not they provide

this service and any additional fees

clients may incur upon referral to

another approved agency.

25. Background Checks [§ 58.20(n)]

Comment: EOUST received several

comments concerning background

checks. One comment stated that

agencies should be able to choose

between state and federal criminal

background checks for counselors due

to cost. Another comment stated the FBI

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background check should encompass

the counselor’s entire criminal history,

and, where only the state background

check is available, the background

check should encompass all states

where the counselor lived during the

preceding two years, rather than the

past five years. Two comments

recommended that EOUST require

criminal background checks of all

employees.

Response: EOUST recognizes that

agencies incur costs associated with

conducting background checks. The cost

of complying with the background

check requirement, however, is

warranted because counselors are privy

to clients’ private financial information,

and, in some cases, handle client funds.

A five-year state history, encompassing

all states where the counselor has

resided or worked, as opposed to a two-

year history, is necessary to ensure that

the counselor has not committed any

crimes involving fraud, dishonesty, or

false statements within the recent past.

Investigation of the preceding two years

is insufficient to ensure an individual

qualifies as a counselor. The final rule

clarifies the proposed rule’s five-year

background check requirement to mean

agencies should conduct a state

background check for each state in

which a counselor has either lived or

worked during the preceding five years.

However, EOUST declines to require

criminal background checks of all

employees. Such a requirement would

place an undue burden on agencies and

is unwarranted for employees, such as

clerical and janitorial staff, who have no

substantive contact with consumers or

client funds. Furthermore, the final

rule’s background check is designed to

strike an appropriate balance ensuring

consumers are protected without

imposing too high a burden on

individuals attempting to reintegrate

into society. See Letter from Eric H.

Holder, Jr., Att’y Gen., Dep’t of Justice,

to State Attorneys General (Apr. 18,

2011) (concerning collateral

consequences of criminal convictions)

(on file with the Department of Justice,

Civil Rights Division). Maintaining this

balance, section 58.20(n)(2) of this rule

generally prohibits credit counseling

agencies from employing as a counselor

a person who has been convicted of a

felony or crime of dishonesty, but

allows for waiver of this prohibition by

the United States Trustee if

circumstances warrant a waiver. Written

requests for waivers of this prohibition

should be directed to the EOUST.

26. Recordkeeping Requirements

[§ 58.20(o)]

Comment: EOUST received several

comments concerning recordkeeping

requirements. A number of comments

sought to limit the recordkeeping

requirements to actual clients only, as

opposed to actual and potential clients;

in addition, one comment sought to

reduce the retention period for hard

copies of signed certificates from the

two years set forth in the rule to 180

days.

Response: Certain recordkeeping

requirements, such as the requirement

to maintain records concerning the

numbers of potential clients who seek

counseling in languages other than

English, are necessary to advance the

underlying purpose of the statute and to

assist the EOUST in ensuring that

counseling services are available to the

broadest range of consumers.

Accordingly, the final rule retains most

recordkeeping requirements regarding

‘‘potential clients,’’ but eliminates the

recordkeeping requirements as to

‘‘potential clients’’ in two instances—

namely, concerning ethical obligations

of directors, officers, trustees, and

supervisors concerning the financial

decisions potential clients make after

requesting counseling services, and the

prohibition of bundling or tying

agreements as to potential clients. In

those instances, the reference to

‘‘potential clients’’ does not advance a

legitimate regulatory objective.

The requirement that agencies retain

hard copies of signed certificates for two

years has been deleted. The final rule no

longer requires agencies to provide

original signatures on certificates in

recognition of electronic filing in the

bankruptcy courts and the technology

used to generate certificates. Copies of

such certificates shall be retained for

180 days from the date of issuance.

27. Additional Minimum Requirements

[§ 58.20(p)6)]

Comment: One comment objected to

the rule’s requirement that agencies take

no action to limit clients from bringing

claims against agencies ‘‘under any

applicable law, including but not

limited to 11 U.S.C. § 111(g)(2).’’ The

comment expressed the opinion that the

phrase ‘‘any applicable law’’ exceeds

the scope of section 111(g)(2).

Response: To reduce the burden on

credit counseling agencies, the rule has

been amended to strike the reference to

‘‘any applicable law.’’

28. Advertising [§ 58.20(p)(8)]

Comment: EOUST received one

comment suggesting that the phrase

‘‘approval does not endorse or assure

the quality of an Agency’s services’’

should be deleted. The comment

claimed advertising is protected speech

and the quoted phrase raises doubts in

the mind of the consumer concerning

the meaning of approval.

Response: This disclaimer is

necessary to inform consumers that,

although the agency is approved to issue

credit counseling certificates, such

approval does not constitute a

government guarantee or endorsement

of the quality of the agency’s services.

This disclaimer protects consumers who

otherwise might infer that approval

means all agency actions automatically

carry the approval or endorsement of

the federal government. In addition,

after obtaining approval, a credit

counseling agency may change its

business practices or employ

unqualified counselors and EOUST may

not learn of these changes in quality

immediately. Finally, advertising

constitutes commercial speech and is

subject to regulations that directly

advance a substantial governmental

interest, provided there exists a

reasonable fit between the regulations

and the governmental interest. As

EOUST has a substantial interest in

ensuring that the public is not misled

regarding the meaning of agency

approval, and as the disclaimer is

narrowly tailored to advance EOUST’s

interest without otherwise controlling or

otherwise limiting the content of a

credit counseling agency’s

advertisements, the disclaimer is

reasonable.

29. Exposure to Commercial Advertising

and Sale of Personal Information

[§ 58.20(p)(10)]

Comment: One comment stated the

protections in § 58.20(p)(10) are

insufficient, and that agencies should

not be permitted to market any services

or sell any information to consumers.

Response: No change is necessary. As

written, the rule prohibits agencies from

marketing any product during the

counseling services. In addition, the

rule strictly forbids agencies from

selling a consumer’s information

without the consumer’s prior written

consent. Strengthening this prohibition

by prohibiting agencies from selling a

consumer’s information, even when the

consumer consents, would infringe on

the rights of consumers to make

informed decisions and to consent

voluntarily to commercial agreements.

30. Fees [§ 58.21(a)]

Comment: EOUST received numerous

comments regarding the determination

of reasonable fees. Comments spanned

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suggestions for the dollar amount of a

reasonable fee, ranging from $60 to

$100; to suggestions that a fee, to be

reasonable, should be charged per

counseling session regardless of

whether one debtor or a married couple

attends the session; to suggestions that

the proposed $50 reasonable fee is

unreasonable and should be adjusted for

regional variations; to suggestions that

the EOUST should review the amount of

the reasonable fee annually, rather than

every four years. A number of comments

stated that the establishment of a fixed

reasonable fee runs afoul of the market

economy, and that competition will

keep fees low while taking regional

variations and cost changes into

account. One comment expressed the

concern that the proposed reasonable

fee and fee waiver requirements would

render it unable to cover the costs of

providing counseling services. Another

comment criticized the determination

that fees in excess of $50 per client were

unreasonable, stating that, if EOUST

places limits on reasonable counseling

fees, EOUST should limit all other fees

incurred in a bankruptcy case,

including, without limitation, attorney’s

fees, filing fees, and court fees.

Response: EOUST has considered

carefully the comments concerning both

the amount of a reasonable fee and the

policies underlying the establishment of

a fixed fee, both in the context of the

policies underlying the statute and

taking into account the experiences of

approved agencies since passage of the

Interim Final Rule, and has determined:

(a) Fees in excess of $50 per person are

not presumptively reasonable; (b)

EOUST shall review the amount of the

presumptively reasonable fee one year

after the effective date of the rule, and

then periodically, but not less

frequently than every four years; (c)

agencies may request permission to

charge a larger fee, which EOUST will

consider on a case-by-case basis; and (d)

whether a credit counseling agency

charges fees for a counseling session per

individual or per couple is within the

business discretion of the agency.

EOUST acknowledges that local

variations in income, cost of living,

overhead, inflation, and other factors

may influence and lead to inter-agency

differences in determining the

reasonableness of counseling fees.

However, based on EOUST’s experience

with approved agencies, the $50

presumptively reasonable fee

adequately incorporates the costs

associated with complying with the

statute and rule, taking into account the

requirement that agencies operate as

nonprofit entities, and taking into

account the increasing prevalence of

telephone and Internet counseling, both

of which are associated with lower costs

than in-person counseling. The rule

permits agencies to exceed the

presumptively reasonable fee after

receiving approval from EOUST by

demonstrating, at a minimum, that its

costs for delivering the counseling

services justify the requested fee. The

agency bears the burden of establishing

that its proposed fee is reasonable. Such

requests may occur at the time of the

agency’s annual re-application for

approval to provide counseling services,

or at any other time the agency deems

necessary. Agencies that have

previously submitted requests to charge

more than $50, and have been granted

permission to do so, will not be required

to resubmit such requests if the agency

continues to charge that fee in the same

amount. Of course, any new requests

must be submitted to EOUST for

approval. EOUST does not have

authority to approve fees for attorneys

or other professionals in the same

manner as credit counseling agencies,

and lacks authority to limit such

professional fees and court costs.

31. Fee Waivers [§ 58.21(b)]

Comment: EOUST received numerous

comments concerning the requirement

that agencies offer counseling services at

a reduced cost, or waive the fee entirely,

for clients who are financially unable to

pay. The proposed rule requires

agencies to waive or reduce fees for

clients whose income is less than 150

percent of the poverty guidelines

updated periodically in the Federal

Health and Human Services under the

authority of 42 U.S.C. 9902(2), as

adjusted from time to time, for a

household or family of the size involved

in the fee determination (the ‘‘poverty

level’’).

While one comment expressed

concern that the association between the

poverty level and the determination of

a client’s ability to pay necessitated

further study and assessment of

financial impact on the agencies,

another comment objected to the use of

150 percent of the poverty level as a

mandatory fee waiver requirement,

arguing that the 150 percent standard

was unsustainable and would lead to

severe agency financial losses. One

comment cautioned that a nationwide

objective standard would unduly impact

agencies in areas with higher

concentrations of low income clients.

Another comment suggested permitting

or implementing a schedule of

discounts for clients whose incomes fall

below the poverty guidelines, but who

can afford to pay some amount, while

yet another comment suggested not only

that a client should bear the burden of

demonstrating inability to pay, but that

a client should affirmatively request the

fee waiver. One comment criticized

mandatory fee waivers as an ‘‘unfunded

mandate.’’

Response: Based on these comments

and EOUST’s existing fee waiver data,

EOUST has revised the rule to reduce

the burden on agencies while still

maintaining adequate protection for

consumers. EOUST acknowledges that

standardization may not take into

account local differences, and may have

a disparate impact on agencies located

in geographic areas of concentrated low

income. Although a credit counseling

agency may apply to EOUST to increase

its counseling fee, such fee increases

ultimately shift the fee burden to those

clients more able to pay.

Furthermore, a mandatory fee waiver

for clients with income at or below 150

percent of the poverty level likely

would result in a substantial increase in

the number of fee waivers granted.

Although some commentators urged

EOUST to adopt rigid criteria requiring

agencies to offer services without

charge, such an inflexible rule would be

inconsistent with similar court practices

concerning waiver of court filing fees for

in forma pauperis debtors that do not

require the wholesale waiver of filing

fees for all debtors with incomes below

a certain income level. Under BAPCPA,

debtors earning less than 150 percent of

the poverty level are eligible to apply for

a waiver of the court filing fee and the

court determines whether an eligible

debtor has the ability to pay the filing

fee. Not all debtors who are eligible for

a waiver of the filing fee apply, and not

all debtors who apply are eligible.

Fewer than two percent of debtors

ultimately obtain a waiver of court filing

fees. In comparison, based on available

data from 2005, approximately 30

percent of chapter 7 debtors are eligible

to apply for a waiver of the court filing

fee. If EOUST were to require agencies

to adopt a mandatory fee waiver policy

with respect to all such debtors, some

agencies could suffer severe financial

losses that would render them unable to

provide services, reducing capacity to

serve the overall debtor population. As

of July 2009, according to self-reporting

by approved credit counseling agencies,

without the proposed mandatory fee

waiver, 10.8 percent of certificates were

issued at no cost, with another 22.1

percent issued at reduced cost.

In response to these concerns, EOUST

has adopted a rebuttable presumption of

a mandatory fee waiver or fee reduction

policy for clients whose income is less

than the poverty level, based on the in

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forma pauperis standard set forth in 28

U.S.C. 1930(f)(1). Under this rebuttable

presumption policy, instead of waiving

the fee entirely, an agency may charge

a client a reduced fee if the agency

determines that the client does, in fact,

have the ability to pay some of the fee;

the amount may be determined using a

sliding scale, of the agency’s design, that

takes into account the client’s financial

circumstances. If the agency determines

that the client has the ability to pay

some of the fee, there is no minimum

amount by which the agency should

reduce the fee; the amount of fee

reduction is entirely dependent upon

the client’s ability to pay as determined

by the client’s financial circumstances.

This rebuttable presumption satisfies

the statutory mandate that counseling

services be provided without regard to

a client’s ability to pay the fee while

taking into account the agency’s need to

generate sufficient income from fees to

cover operational costs. Accordingly,

this policy establishes a uniform,

objective standard by which agencies,

clients, and EOUST can evaluate client

entitlement to a fee waiver or a fee

reduction depending on each particular

client’s ability to pay.

Furthermore, because agencies obtain

personal financial information from

clients in the context of performing the

analysis of the client’s financial

condition required by 11 U.S.C.

111(c)(2)(E), a fee waiver or fee

reduction policy based on a comparison

of the client’s household income against

the poverty level can be performed with

ease. Having just reviewed the client’s

financial information, a credit

counseling agency is in the best position

to make a determination whether the

client is eligible for a fee waiver or fee

reduction. The agency makes the

determination of whether to grant the

fee waiver or fee reduction when the

agency is counseling the client; the

agency need not consult with EOUST

before making its determination. EOUST

will review an agency’s fee waiver

policies and statistics during the

agency’s annual review or during a

quality of service review. Finally,

because the poverty level is updated

periodically and takes into account the

client’s household size, this policy

accounts for nationwide changes in the

cost of living over time.

Establishing a presumptively

mandatory but rebuttable fee waiver or

fee reduction policy for clients whose

household income falls at or below 150

percent of the poverty level recognizes

agencies’ need to generate sufficient

income from fees to cover operational

costs in light of the statutory mandate.

To the extent a credit counseling agency

believes the fee waiver policy set forth

in the rule adversely impacts its

financial viability, the agency may

apply to EOUST to increase its fee. The

agency shall demonstrate that its costs

of delivering counseling services

(including opportunity costs associated

with waived or foregone fees) justify the

proposed fee. The rates of both full and

partial fee waivers based on client

income levels, and the mechanisms by

which agencies implement the

rebuttable presumption, are subject to

EOUST scrutiny during the annual

application review for each approved

agency and during quality of service

reviews to assess compliance with 11

U.S.C. 111 and this final rule.

To permit EOUST to periodically

evaluate the cost and business impact of

this mandatory fee waiver policy on

clients and agencies, and determine

whether agencies are applying the

mandatory fee waiver policy uniformly

and fairly, the rule has been amended to

add a new section, § 58.21(b)(2),

requiring the United States Trustee to

review the basis for the mandatory fee

waiver policy one year after the effective

date of the rule, and then periodically,

but not less frequently than every four

years. When reviewing the basis for the

mandatory fee waiver or fee reduction

policy, EOUST may consider the impact

on both agencies and clients by

evaluating data from agencies

concerning the counseling fees,

increases to such fees, and rates of total

and partial fee waiver. By retaining the

mandatory, objective fee waiver policy

but requiring its periodic review,

EOUST advances the statutory mandate

that counseling services be provided

without regard to the client’s ability to

pay, while enabling EOUST to revisit

the objective standard in light of agency

operational costs and impact on clients.

The reasonableness of agency

determinations will continue to be

subject to EOUST oversight during the

application process, during on-site

reviews, and in the course of resolving

specific complaints.

32. Delivery of Certificates—to Whom

[§ 58.22(a)]

Comment: EOUST received several

comments concerning delivery of

certificates to a client’s attorney. The

proposed rule required a client to

authorize, in writing, the delivery of the

credit counseling certificate to the

client’s attorney. The comments

expressed the opinion that requiring a

client to provide written consent to a

credit counseling agency is inefficient,

particularly when the client receives

counseling by telephone or Internet. In

such instances, the comments provide

that mail transmission of written

consent to a credit counseling agency

delays the delivery of the certificate.

Rather than requiring written consent,

the rule should permit the client to

verbally authorize the agency to send

the certificate to the client’s attorney.

Response: EOUST agrees that written

consent to deliver a certificate to a

client’s attorney is unnecessary and

unduly impedes the efficiency of

telephone and Internet counseling.

Accordingly, the rule has been revised

to permit verbal authorization to send a

certificate to a client’s attorney. In the

case of Internet counseling, electronic

mail authorization or an electronic

affirmation (such as a radio button or a

box on a web page) is sufficient.

33. Delivery of Certificates—Time

[§ 58.22(a) and (c)]

Comment: Several comments objected

to the requirement that a credit

counseling agency deliver the certificate

to a client within one business day of

completion of counseling; three

comments suggested that agencies

should have three business days to

deliver the certificate. Several

comments expressed uncertainty about

the meaning of the word ‘‘deliver.’’

Some comments suggested that three

business days were necessary to

complete delivery by mail, while others

suggested that electronic mail is an

appropriate delivery method.

One comment also sought

clarification about when Internet

counseling is ‘‘complete’’ and suggested

that completion should be defined

specifically. The comment noted that, in

the case of Internet counseling, agencies

and clients are uncertain whether

counseling is considered complete

when the client finishes the online

course or whether further interaction

with a counselor is necessary.

Response: The requirement that a

credit counseling agency send the

certificate to a client within one

business day accords the agency

adequate time and is commercially

reasonable. The term ‘‘deliver’’ has been

changed to ‘‘send’’ to encompass a wide

range of transmission methods. To the

extent a credit counseling agency is

unable to send the certificate within the

specified time because of extenuating

circumstances, such as problems with

generating or printing the certificate,

illness of the counselor, or other

circumstances beyond the agency’s

control, EOUST can evaluate such

incidents on a case-by-case basis.

The rule also has been revised to

clarify that, in the case of Internet

counseling and automated telephone

counseling, counseling is not complete

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until the client has engaged in

interaction with a counselor, whether by

electronic mail, live chat, or telephone,

following the automated portion of the

counseling session. Personal interaction

has utility as a means of verifying and

confirming client identity, and is

necessary to meet the statutory

objectives set forth in 11 U.S.C.

111(c)(2)(E) that agencies assess each

client’s current financial condition, the

factors that caused such financial

condition, and how the client can

develop a plan to respond to those

problems.

34. Certificates—Budget Analysis

[§ 58.22(b)]

Comment: Two comments objected to

the requirement that the budget analysis

the counselor prepares for the client be

attached to the certificate. One comment

suggested that, because of the nature of

prebankruptcy counseling, data

contained in such a budget analysis may

be unreliable and, if filed with the

bankruptcy court, may prejudice the

debtor client. Another comment

expressed the opinion that requiring

attachment of the budget analysis to the

certificate may violate client privacy.

Response: EOUST agrees that 11

U.S.C. 109 and 521 do not require the

agency to attach the budget analysis to

the credit counseling certificate.

Accordingly, the final rule deletes this

requirement and reduces the burden on

credit counseling agencies.

35. Certificates—Original Signature

[§ 58.22(l)(2)]

Comment: Several comments objected

to the requirement that certificates

generated for electronic filing must be

generated in paper form as well and

must bear the original signature of the

counselor. The comments criticized the

requirement as expensive and time-

consuming, and noted that the rule

contains precautions against creation of

forged or fraudulent certificates.

Response: EOUST agrees and has

reduced the burden on credit counseling

agencies by deleting the requirement

that, when a certificate is generated for

electronic filing with the court, the

agency must provide the client a paper

certificate bearing the counselor’s

original signature as well.

36. Certificates—Time of Completion

[§ 58.22(n)(3)]

Comment: One comment noted that

certificates should contain not only the

date but also the time that counseling

was completed.

Response: EOUST concurs that a

technical modification is necessary and

has revised the rule to require

certificates to contain both the date and

the time that counseling was completed;

the time must include the time zone.

This technical modification does not

impose an additional burden as the

proposed rule required certificates to

contain the date of completion.

Including the time and time zone is a

minor modification to the date on the

certificate.

37. Certificates—Legal Name [§ 58.22(o)]

Comment: EOUST received several

comments concerning the display of two

names on the certificate when a third

party (such as an attorney-in-fact acting

under a valid power of attorney)

completes counseling on behalf of the

client. The comment expressed doubt

that a certificate can display two names

rather than one. Several comments

expressed the opinion that, rather than

leaving open the possibility that a third

party can complete counseling on behalf

of the client under certain

circumstances, the rule expressly

should prohibit third parties from taking

counseling on behalf of clients.

Response: Certificates may display

more than one name (e.g., John Doe, as

Attorney-In-Fact for Jane Doe). No

clarification is necessary to permit such

a display, and the display of both names

removes the need for agencies to engage

in legal analysis concerning the proper

party to list on the certificate, while

providing full disclosure to courts and

other parties concerning the client’s

participation in counseling.

Furthermore, EOUST declines to

prohibit third parties from completing

counseling on behalf of a client under

appropriate circumstances, such as

under a valid power of attorney

sufficient to authorize the individual to

file a bankruptcy petition on behalf of

a client. To the extent state law

authorizes powers of attorney, EOUST

does not object to the completion of

counseling by duly authorized

attorneys-in-fact on behalf of clients.

38. Fees—Additional Counseling

[§ 58.22(p)]

Comment: EOUST received a

comment that, if a client seeks pre-

bankruptcy counseling from an

approved agency and enters into a DRP,

and then the client decides to file for

bankruptcy more than 180 days after the

initial counseling session, the agency

should be entitled to additional

compensation for further counseling

services.

Response: EOUST disagrees and no

change has been made to the rule.

Because the pursuit of alternatives to

bankruptcy is one of the principal goals

of the BAPCPA, debtors who pursued

bankruptcy alternatives in the spirit of

the BAPCPA, such as DRPs, should not

be penalized for doing so by paying

twice for credit counseling. Rather,

agencies must provide additional

counseling sufficient to enable the client

to comply with the statutory

requirement at no additional cost to the

client.

39. Debt Repayment Plans [§ 58.23(d),

(e) and (f)]

Comment: One comment expressed

uncertainty why the rule includes

financial requirements (including

bonding and insurance requirements)

for agencies offering DRPs.

Response: Because DRPs are an

alternative to bankruptcy and require a

credit counseling agency to handle

client funds, EOUST seeks to ensure

that agencies offering DRPs safeguard

client funds and fulfill fiduciary

obligations toward clients. Accordingly,

the rule contains financial bonding and

insurance requirements for any agency

offering DRPs to protect client funds

and to ensure that disbursements on

behalf of clients are made.

40. Surety Bond Percentage [§ 58.23(d)

and (f)]

Comment: EOUST received two

comments suggesting that the surety

bond percentage should be higher for

first time applicants.

Response: EOUST declines to adopt

this requirement, finding that the

current bonding requirements are

sufficient for all applicants, including

first-time applicants. However, EOUST

has determined that DRP client

protection may continue to be

necessary, under certain circumstances,

in the event an approved credit

counseling agency ceases to offer DRP

services to individuals who received

counseling from such agency pursuant

to 11 U.S.C. 109(h). Although such

agencies need not maintain EOUST

approved bonds and insurance if they

transfer their existing DRP clients to

other approved agencies within a

specified period of time, to the extent

such agencies continue to service the

DRP accounts of these existing clients

after ceasing to offer DRP services to

new clients, they must continue to

maintain sufficient bonding and

insurance requirements to protect client

funds and to ensure that disbursements

on behalf of clients are made for the life

of those clients’ DRP terms.

Executive Order 12866

This rule has been drafted and

reviewed in accordance with Executive

Order 12866, ‘‘Regulatory Planning and

Review,’’ section 1(b), The Principles of

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Regulation. The Department has

determined that this rule is a

‘‘significant regulatory action.’’

Accordingly, this rule has been

reviewed by the Office of Management

and Budget (‘‘OMB’’).

The Department has also assessed

both the costs and benefits of this rule

as required by section 1(b)(6) and has

made a reasoned determination that the

benefits of this regulation justify its

costs. The costs considered in this

regulation include the required costs for

the submission of an application. Costs

considered also include the cost of

establishing and maintaining the

approved list in each federal judicial

district. In an effort to minimize the

burden on applicants, the application

keeps the number of items on the

application to a minimum.

The costs to an applicant of

submitting an application will be

minimal. The anticipated costs are the

photocopying and mailing of the

requested records, along with the

salaries of the employees who complete

the applications. Based upon the

available information, experience with

the credit counseling industry, and

informal communications with credit

counseling agencies, EOUST anticipates

that the cost for submitting an

application should equal approximately

$500 per application for agencies. This

cost is not new. It is the same cost that

credit counseling agencies incurred

when applying under the Interim Final

Rule.

Agencies that offer DRPs also must

obtain a surety bond in the amount of

either (1) two percent of the agency’s

disbursements made during the twelve

months immediately prior to the

submission of the application from all

trust accounts attributable to the federal

judicial districts (or, if not feasible to

determine, the states) in which the

agency seeks approval from the United

States Trustee; or (2) equal to the

average daily balance maintained for the

six months immediately prior to

submission of the application in all trust

accounts attributable to the federal

judicial districts (or, if not feasible to

determine, the states) in which the

agency seeks approval from the United

States Trustee. In addition, credit

counseling agencies that offer debt

repayment plans must obtain employee

fidelity insurance in a face amount

equal to 50 percent of the surety bond.

Credit counseling agencies are entitled

to receive a credit for any state surety

bond or employee fidelity insurance

already obtained.

Although credit counseling agencies

may charge a fee for providing the credit

counseling services in accordance with

this rule, agencies must provide credit

counseling without regard to a client’s

ability to pay the fee. Based upon the

available information, current practice

of many credit counseling agencies,

experience with the credit counseling

industry, and communications with

credit counseling agencies, EOUST

presumes $50 to be a reasonable fee for

credit counseling. The United States

Government Accountability Office, after

conducting a study on credit

counseling, found that $50 was the

typical rate charged by credit counseling

agencies and that industry observers

and consumer advocates considered this

amount to be reasonable.

The amount presumed to be

reasonable for credit counseling fees

will be reviewed one year after the

effective date of this rule and then

periodically, but not less frequently

than every four years. The amount

presumed to be reasonable will be

published by notice in the Federal

Web site. In addition, all credit

counseling agencies must waive or

reduce the fee if the client demonstrates

a lack of ability to pay the fee, which

shall be presumed if the client’s current

household income is less than 150

percent of the poverty level, as adjusted

from time to time, for a household or

family of the size involved in the fee

determination. A credit counseling

agency may rebut this presumption if it

determines, based on income

information provided by the client in

connection with counseling services,

that the client is able to pay the fee in

a reduced amount. Please refer to the

Regulatory Flexibility Act section for

more analysis on the surety bond and

insurance requirements, and for a

discussion on fees and fee waivers.

Additionally, credit counseling

agencies will incur de minimus

recordkeeping costs. For instance, an

agency will be required to maintain

various records, such as records on

which it relied in submitting its

application; copies of the semi-annual

reports; financial statements; ordinary

business records; records on counseling

services provided in languages other

than English; fees; fee waiver and fee

reduction statistics; complaints; and

records enabling the agency to issue

replacement certificates. All of these

records combined should not equal

more than a few pages or megabytes of

information. Moreover, the increased

specificity in this rule regarding records

retention requirements reduce the

burden on agencies because the Interim

Final Rule required agencies to maintain

business records, but did not specify

which records needed to be kept, nor for

how long. With implementation of this

rule, agencies no longer need to keep

every record for an unspecified amount

of time in case such records are

requested during an annual review or

quality of service review.

The number of credit counseling

agencies that ultimately will apply for

approval is unknown, though EOUST

currently has approved approximately

170 agencies. The annual hour burden

on agencies is estimated to be 10 hours.

This estimate is based on consultations

with individuals in the credit

counseling industry, and experience

with credit counseling agencies who

completed the initial applications.

EOUST consulted with the Federal

Trade Commission and with the Internal

Revenue Service in drafting this rule

and concludes that the rule does not

have an adverse effect upon either

agency.

The benefits of this rule include the

development of standards that increase

consumer protections, such as a limit on

the presumption of reasonable fees, the

requirement that agencies provide

adequate disclosures concerning

agencies’ policies, and the preservation

of clients’ rights under 11 U.S.C. 502(k).

This rule also provides for greater

supervision by the United States Trustee

to ensure agencies employ proper

procedures to safeguard client funds.

These benefits justify its costs in

complying with Congress’ mandate that

a list of approved credit counseling

agencies be established. Public Law

109–8, § 106(e)(1).

Executive Order 13132

This rule will not have a substantial

direct effect on the States, on the

relationship between the national

government and the States, or on the

distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 13132,

it is determined that this rule does not

have sufficient federalism implications

to warrant the preparation of a

Federalism Assessment.

Paperwork Reduction Act

The information collection

requirements contained in this rule have

been approved by OMB in accordance

with the Paperwork Reduction Act of

1995, 44 U.S.C. §§ 3501 to 3520, and

assigned OMB control number 1105–

0084 for form EOUST–CC1, the

‘‘Application for Approval as a

Nonprofit Budget and Credit Counseling

Agency.’’ The Department notes that full

notice and comment opportunities were

provided to the general public through

the Paperwork Reduction Act process,

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and that the applications and associated

requirements were modified to take into

account the concerns of those who

commented in this process.

Regulatory Flexibility Act

In accordance with the Regulatory

Flexibility Act, 5 U.S.C. 605(b), the

Director has reviewed this rule and, by

approving it, certifies that, although it

will affect a substantial number of small

entities, the rule will not have a

significant economic impact upon them.

In 2006, when EOUST conducted a

survey of the 119 credit counseling

agencies that were approved at the time

of the survey, 98 agencies responded to

the survey, and 82 (or 84 percent) of

those agencies qualified as small

businesses under the Small Business

Administration’s guidelines. See 13 CFR

§ 121.201. Of the 82 agencies that

qualified as small businesses, 91 percent

of them reported that the cost to obtain

a surety bond and insurance in

accordance with specifications

enunciated in the proposed rule

amounted to less than one percent of

gross revenue. Additionally, 90 percent

of the agencies that qualified as small

businesses reported that the cost was

less than one percent of total

expenditures. For the remaining ten

percent of agencies, only three agencies

reported the surety bond and insurance

requirements equaled more than two

percent of gross revenue; five reported

that they equaled more than two percent

of total expenditures, only one of which

reported the surety bond and insurance

requirements equaled three percent of

gross revenue and expenditures. From

this data, it is apparent that the surety

bond and insurance requirements do not

impose a significant economic impact

on a substantial number of small

entities.

This rule also sets forth guidance

concerning the reasonable fee a credit

counseling agency may charge (a

presumptively reasonable fee of $50),

and the criteria for determining fee

waiver eligibility (presumed eligibility

at household income of 150 percent of

the poverty level). EOUST sought to

establish formal guidance concerning

fees, fee waivers and fee reductions

based on a client’s ‘‘ability to pay the

fee’’ using objective criteria, taking into

account the potential financial impact

on the agencies as well as the needs of

clients. 11 U.S.C. 111(c)(2)(B).

After carefully evaluating the credit

counseling industry, EOUST based its

fee guidance on current industry

practice. Nearly 90 percent of approved

credit counseling agencies charge $50 or

less. According to a U.S. Government

Accountability Office (‘‘GAO’’) report in

2007, the mean fee for credit counseling

among all agencies was $47. See U.S.

Gov’t Accountability Office, GAO–07–

203, Bankruptcy Reform: Value of Credit

Counseling Requirement is Not Clear 30

(2007) (the ‘‘GAO Report’’). As of 2011,

the mean fee for credit counseling

among all agencies is $48. Among the

ten largest credit counseling agencies

(by certificate volume), nearly all charge

$50 or less in fees. Only one of the ten

largest agencies charges more than $50

(the agency in question charges $55 for

counseling in person with a $10

discount for counseling by Internet).

Three of the ten largest agencies charge

substantially less than $50: one charges

$36; another charges $30 ($50 for

telephone counseling); and yet another

charges $25. According to EOUST

records, fee policies have not changed

among the ten largest agencies since

2006.

In 2011, EOUST took a random

sampling of ten credit counseling

agencies that were not among the ten

largest agencies to determine these

agencies’ fees. Of these ten agencies,

nine charge $50 and the other agency

charges $25. Accordingly, a $50

presumptively reasonable fee not only

strikes an appropriate balance between

the financial condition of prospective

debtors and the financial viability of

approved credit counseling agencies,

but constitutes general practice in the

credit counseling industry. Thus,

establishing a presumptively reasonable

fee of $50 does not impose a significant

economic impact on credit counseling

agencies. Rather, it embodies a fee

structure already widespread in the

industry.

Regarding fee waivers, similar to the

requirement to charge ‘‘reasonable’’ fees,

the requirement to waive fees when a

client cannot pay is mandated by

statute. 11 U.S.C. 111(c)(2)(B). With

respect to the development of the fee

waiver standard, the GAO undertook a

study concerning, among other things,

the incidence of fee waivers based on

ability to pay. The GAO noted that the

Interim Final Rule did not provide

specific guidance on the criteria

agencies should use to determine a

client’s ability to pay. See GAO Report

at 29–32. The GAO noted variations in

the rate of fee waivers and

recommended that EOUST adopt clearer

guidance to agencies to reduce

uncertainty among agencies concerning

appropriate fee waiver criteria, to

improve transparency concerning

EOUST’s assessment of fee waiver

policies, and to increase the availability

of fee waivers by setting clear minimum

benchmarks for ability to pay. Id. at 32,

40–41.

Among the ten largest credit

counseling agencies, eight use

household income at or below 150

percent of the poverty level as the

threshold for determining eligibility for

a fee waiver. One agency considers the

debtor’s income, housing status, and

existence of severe hardship. The other

agency uses household income at or

below 100 percent of the poverty level

as the threshold for determining

eligibility for a fee waiver. In 2011,

EOUST took a random sampling of ten

credit counseling agencies that were not

among the ten largest agencies to

determine these agencies’ fee waiver

policies. Seven of the agencies use the

150 percent of poverty level standard;

one uses the in forma pauperis or pro

bono standard without specifying 150

percent; one uses 125 percent of the

poverty level; and one uses 100 percent

of the poverty level as the threshold for

determining eligibility for a fee waiver.

In the proposed rule, EOUST

proposed a bright-line standard

establishing entitlement to a fee waiver

for clients with household income equal

to or less than 150 percent of the

poverty level. That standard was based

on the in forma pauperis standard set

forth in 28 U.S.C. 1930(f)(1), which

permits the bankruptcy court to waive

filing fees for eligible individuals. The

proposed rule standard did not grant

agencies the discretion to determine

whether clients otherwise were able to

pay the fees.

Subsequently, EOUST received and

considered comments to the proposed

rule. EOUST agreed that

implementation of the proposed

standardized fee waiver raised some

policy concerns. Because

standardization fails to take into

account local differences, disparate

impact on agencies may result when

agencies located in geographic areas of

concentrated low income individuals

are required to grant fee waivers at a

higher rate than those in more affluent

areas. Although an agency may apply to

EOUST to increase its counseling fee by

demonstrating that its costs of

delivering services (including

opportunity costs associated with

waived or reduced fees) justify the

proposed fee, increases in fees

ultimately shift the fee burden to those

clients more able to pay. As of July

2009, according to self-reporting by

approved credit counseling agencies,

without the proposed mandatory fee

waiver, 10.8 percent of certificates were

issued at no cost, with another 22.1

percent issued at reduced cost. In

comparison, based on available data

from 2005, approximately 30 percent of

chapter 7 debtors were eligible to apply

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for a waiver of the court filing fee

pursuant to the 150 percent in forma

pauperis standard. Based on this

analysis, EOUST concluded that if

agencies were subject to a mandatory fee

waiver policy with respect to all such

debtors based on the in forma pauperis

standard, some agencies might suffer

financial losses that would render them

unable to provide services, reducing

capacity to serve the overall potential

debtor population.

Accordingly, EOUST revised this rule

to include a rebuttable presumption to

the objective fee waiver standard. In

adopting the presumption, EOUST seeks

to balance the need for an objective fee

waiver standard and complying with 11

U.S.C. 111(c)(2)(B) with agencies’ need

to collect adequate fees for services

provided. Under the rebuttable

presumption, a client with household

income equal to or less than 150 percent

of the poverty level is presumptively

entitled to a fee waiver, but the agency

may determine, based on information it

receives during the counseling session,

that the client actually is able to pay the

fee in part. In that case, the agency may

charge the client a reduced fee, taking

into account the client’s actual ability to

pay. This rebuttable presumption

balances the need for an objective fee

waiver standard, consumer protection,

and the need to ensure agency

compliance with the Bankruptcy Code

with the agencies’ need to collect

adequate fees.

Additionally, although EOUST

considered indexing fee waivers to

client income, EOUST determined that

such an indexing system fails to take

into account the variation in ability to

pay for clients at the same income level.

For example, two clients may have

income at 150 percent of the poverty

level, but one client lives in a rent-free

home and has few expenses while the

other has significant expenses, such as

accumulated medical debts or child

support payments. An inflexible

indexing standard does not take into

account the individual’s actual ability to

pay the fee, as set forth in 11 U.S.C.

111(c)(2)(B). EOUST concluded that

each agency should determine each

client’s eligibility based on the client’s

individual financial circumstances.

Unfunded Mandates Reform Act of

This rule does not require the

preparation of an assessment statement

in accordance with the Unfunded

Mandates Reform Act of 1995, 2 U.S.C.

1531. This rule does not include a

federal mandate that may result in the

annual expenditure by State, local, and

tribal governments, in the aggregate, or

by the private sector, of more than the

annual threshold established by the Act

($100 million). Therefore, no actions

were deemed necessary under the

provisions of the Unfunded Mandates

Reform Act of 1995.

Small Business Regulatory Enforcement

Fairness Act of 1996

This rule is not a major rule as

defined by section 804 of the Small

Business Regulatory Enforcement

Fairness Act of 1996, 5 U.S.C. 801 et

seq. This rule will not result in an

annual effect on the economy of $100

million or more; a major increase in

costs or prices; or significant adverse

effects on competition, employment,

investment, productivity, and

innovation; or on the ability of United

States-based companies to compete with

foreign-based companies in domestic

and export markets.

Privacy Act Statement

Section 111 of title 11, United States

Code, authorizes the collection of this

information. The primary use of this

information is by the United States

Trustee to approve nonprofit budget and

credit counseling agencies. The United

States Trustee will not share this

information with any other entity unless

authorized under the Privacy Act, 5

U.S.C. 552a et seq. EOUST has

published a System of Records Notice

that delineates the routine use

exceptions authorizing disclosure of

information. 71 FR 59,818, 59,827

(October 11, 2006), JUSTICE/UST–005,

Credit Counseling and Debtor Education

Files and Associated Records.

Public Law 104–134 (April 26, 1996)

requires that any person doing business

with the federal government furnish a

Social Security Number or Tax

Identification Number. This is an

amendment to section 7701 of title 31,

United States Code. Furnishing the

Social Security Number and other data

is voluntary, but failure to do so may

delay or prevent action on the

application.

List of Subjects in 28 CFR Part 58

Administrative practice and

procedure, Bankruptcy, Credit and

debts.

Accordingly, for the reasons set forth

in the preamble, Part 58 of chapter I of

title 28 of the Code of Federal

Regulations is amended as follows:

PART 58—[AMENDED]

■ 1. The authority citation for Part 58

continues to read as follows:

Authority: 5 U.S.C. 301, 552; 11 U.S.C.

109(h), 111, 521(b), 727(a)(11), 1141(d)(3),

1202, 1302, 1328(g), 28 U.S.C. 509, 510, 586,

589b.

■ 2. Sections 58.12 through 58.14 are

added to read as follows:

§ 58.12 Definitions.

(a) The following definitions apply to

§§ 58.12 through and including 58.24 of

this Part and the applications and other

materials agencies submit in an effort to

establish they meet the requirements

necessary to become an approved

nonprofit budget and credit counseling

agency.

(b) These terms shall have these

meanings: (1) The term ‘‘accreditation’’

means the recognition or endorsement

that an accrediting organization bestows

upon an agency because the accrediting

organization has determined the agency

meets or exceeds all the accrediting

organization’s standards;

(2) The term ‘‘accrediting

organization’’ means either an entity

that provides accreditation to agencies

or provides certification to counselors,

provided, however, that an accrediting

organization shall:

(i) Not be an agency or affiliate of any

agency; and

(ii) Be deemed acceptable by the

United States Trustee;

(3) The term ‘‘adequate counseling’’

means the actual receipt by a client from

an approved agency of all counseling

services, and all other applicable

services, rights, and protections

specified in:

(i) 11 U.S.C. 109(h);

(ii) 11 U.S.C. 111; and

(iii) This part;

(4) The term ‘‘affiliate of an agency’’

includes:

(i) Every entity that is an affiliate of

the agency, as the term ‘‘affiliate’’ is

defined in 11 U.S.C. 101(2), except that

the word ‘‘agency’’ shall be substituted

for the word ‘‘debtor’’ in 11 U.S.C.

101(2);

(ii) Each of an agency’s officers and

each of an agency’s directors; and

(iii) Every relative of an agency’s

officers and every relative of an agency’s

directors;

(5) The term ‘‘agency’’ and the term

‘‘budget and credit counseling agency’’

shall each mean a nonprofit

organization that is applying under this

part for United States Trustee approval

to be included on a publicly available

list in one or more United States district

courts, as authorized by 11 U.S.C.

111(a)(1), and shall also mean,

whenever appropriate, an approved

agency;

(6) The term ‘‘application’’ means the

application and related forms, including

appendices, approved by the Office of

1995

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Management and Budget as form

EOUST–CC1, Application for Approval

as a Nonprofit Budget and Credit

Counseling Agency, as it shall be

amended from time to time;

(7) The term ‘‘approved agency’’

means an agency currently approved by

a United States Trustee under 11 U.S.C.

111 as an approved nonprofit budget

and credit counseling agency eligible to

be included on one or more lists

maintained under 11 U.S.C. 111(a)(1);

(8) The term ‘‘approved list’’ means

the list of agencies currently approved

by a United States Trustee under 11

U.S.C. 111, as currently published on

the United States Trustee Program’s

Internet site, which is located on the

United States Department of Justice’s

Internet site;

(9) The term ‘‘audited financial

statements’’ means financial reports

audited by independent certified public

accountants in accordance with

generally accepted accounting

principles as defined by the American

Institute of Certified Public

Accountants;

(10) The term ‘‘certificate’’ means the

certificate identified in 11 U.S.C.

521(b)(1) that an approved agency shall

provide to a client after the client

completes counseling services;

(11) The term ‘‘client’’ means an

individual who both seeks and receives

(or sought and received) counseling

services from an approved agency;

(12) The term ‘‘counseling services’’

means all counseling required by 11

U.S.C. 109(h) and 111, and this part

including, without limitation, services

that are typically of at least 60 minutes

in duration and that shall at a minimum

include:

(i) Performing on behalf of, and

providing to, each client a written

analysis of that client’s current financial

condition, which analysis shall include

a budget analysis, consideration of all

alternatives to resolve a client’s credit

problems, discussion of the factors that

caused such financial condition, and

identification of all methods by which

the client can develop a plan to respond

to the financial problems without

incurring negative amortization of debt;

and

(ii) Providing each client the

opportunity to have the agency

negotiate an alternative payment

schedule with regard to each unsecured

consumer debt under terms as set forth

in 11 U.S.C. 502(k) or, if the client

accepts this option and the agency is

unable to provide this service, the

agency shall refer the client to another

approved agency in the appropriate

federal judicial district that provides it;

(13) The term ‘‘counselor

certification’’ means certification of a

counselor by an accrediting organization

because the accrediting organization has

determined the counselor meets or

exceeds all the accrediting

organization’s standards for counseling

services or related areas, such as

personal finance, budgeting, or credit or

debt management;

(14) The term ‘‘criminal background

check’’ means a report generated by a

state law enforcement authority

disclosing the entire state criminal

history record, if any, of the counselor

for whom the criminal background

check is sought, for every state where

the counselor has resided or worked

during any part of the immediately

preceding five years. If a criminal

background check is not available for, or

is not authorized by state law in, each

of the states where the counselor has

resided or worked during any part of the

immediately preceding five years, the

agency shall instead obtain at least

every five years a sworn statement from

each counselor attesting to whether the

counselor has been convicted of a

felony, or a crime involving fraud,

dishonesty, or false statements;

(15) The term ‘‘debt repayment plan’’

means any written document suggested,

drafted, or reviewed by an approved

agency that either proposes or

implements any mechanism by which a

client would make payments to any

creditor or creditors if, during the time

any such payments are being made, that

creditor or those creditors would forbear

from collecting or otherwise enforcing

their claim or claims against the client;

provided, however, that any such

written document shall not constitute a

debt repayment plan if the client would

incur a negative amortization of debt

under it;

(16) The term ‘‘Director’’ means the

person designated or acting as the

Director of the Executive Office for

United States Trustees;

(17) The term ‘‘entity’’ shall have the

meaning given that term in 11 U.S.C.

101(15);

(18) The term ‘‘fair share’’ means

payments by a creditor to an approved

agency for administering a debt

repayment plan;

(19) The terms ‘‘fee’’ and ‘‘fee policy’’

each mean the aggregate of all fees,

contributions, and payments an

approved agency charges clients for

providing counseling services; ‘‘fee

policy’’ shall also mean the objective

criteria the agency uses in determining

whether to waive or reduce any fee,

contribution, or payment;

(20) The term ‘‘final decision’’ means

the written determination issued by the

Director based upon the review of the

United States Trustee’s decision either

to deny an agency’s application or to

remove an agency from the approved

list;

(21) The term ‘‘financial benefit’’

means any interest equated with money

or its equivalent, including, but not

limited to, stocks, bonds, other

investments, income, goods, services, or

receivables;

(22) The term ‘‘governmental unit’’

shall have the meaning given that term

in 11 U.S.C. 101(27);

(23) The term ‘‘independent

contractor’’ means a person or entity

who provides any goods or services to

an approved agency other than as an

employee and as to whom the approved

agency does not:

(i) Direct or control the means or

methods of delivery of the goods or

services being provided;

(ii) Make financial decisions

concerning the business aspects of the

goods or services being provided; and

(iii) Have any common employees;

(24) The term ‘‘languages offered’’

means every language other than

English in which an approved agency

provides counseling services;

(25) The term ‘‘legal advice’’ shall

have the meaning given that term in 11

U.S.C. 110(e)(2);

(26) The term ‘‘limited English

proficiency’’ refers to individuals who:

(i) Do not speak English as their

primary language; and

(ii) Have a limited ability to read,

write, speak, or understand English;

(27) The term ‘‘material change’’

means, alternatively, any change:

(i) In the name, structure, principal

contact, management, counselors,

physical location, counseling services,

fee policy, language services, or method

of delivery of an approved agency; or

(ii) That renders inapplicable,

inaccurate, incomplete, or misleading

any statement an agency or approved

agency previously made:

(A) In its application or related

materials; or

(B) To the United States Trustee;

(28) The term ‘‘method of delivery’’

means one or more of the three methods

by which an approved agency can

provide some component of counseling

services to its clients, including:

(i) ‘‘In person’’ delivery, which

applies when a client primarily receives

counseling services at a physical

location with a credit counselor

physically present in that location, and

with the credit counselor providing oral

and/or written communication to the

client at the facility;

(ii) ‘‘Telephone’’ delivery, which

applies when a client primarily receives

counseling services by telephone; and

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(iii) ‘‘Internet’’ delivery, which

applies when a client primarily receives

counseling services through an Internet

Web site;

(29) The term ‘‘nonprofit’’ means,

alternatively:

(i) An entity validly organized as a

not-for-profit entity under applicable

state or federal law, if that entity

operates as a not-for-profit entity in full

compliance with all applicable state and

federal laws; or

(ii) A qualifying governmental unit;

(30) The term ‘‘notice’’ in § 58.24

means the written communication from

the United States Trustee to an agency

that its application to become an

approved agency has been denied or to

an approved agency that it is being

removed from the approved list;

(31) The term ‘‘potential client’’

means an individual who seeks, but

does not receive, counseling services

from an approved agency.

(32) The term ‘‘qualifying government

unit’’ means any governmental unit that,

were it not a governmental unit, would

qualify for tax-exempt status under 26

U.S.C. 501(c)(3), or would qualify as a

nonprofit entity under applicable state

law;

(33) The term ‘‘referral fees’’ means

money or any other valuable

consideration paid or transferred

between an approved agency and

another entity in return for that entity,

directly or indirectly, identifying,

referring, securing, or in any other way

encouraging any client or potential

client to receive counseling services

from the approved agency; provided,

however, that ‘‘referral fees’’ shall not

include fees paid to the agency under a

fair share agreement;

(34) The term ‘‘relative’’ shall have

the meaning given that term in 11 U.S.C.

101(45);

(35) The term ‘‘request for review’’

means the written communication from

an agency to the Director seeking review

of the United States Trustee’s decision

either to deny the agency’s application

or to remove the agency from the

approved list;

(36) The term ‘‘state’’ means state,

commonwealth, district, or territory of

the United States;

(37) The term ‘‘tax waiver’’ means a

document sufficient to permit the

Internal Revenue Service to release

directly to the United States Trustee

information about an agency;

(38) The term ‘‘trust account’’ means

an account with a federally insured

depository institution that is separated

and segregated from operating accounts,

which an approved agency shall

maintain in its fiduciary capacity for the

purpose of receiving and holding client

funds entrusted to the approved agency;

and

(39) The term ‘‘United States Trustee’’

means, alternatively:

(i) The Executive Office for United

States Trustees;

(ii) A United States Trustee appointed

under 28 U.S.C. 581;

(iii) A person acting as a United States

Trustee;

(iv) An employee of a United States

Trustee; or

(v) Any other entity authorized by the

Attorney General to act on behalf of the

United States under this part.

§ 58.13 Procedures all agencies shall

follow when applying to become approved

agencies.

(a) An agency applying to become an

approved agency shall obtain an

application, including appendices, from

the United States Trustee.

(b) The agency shall complete the

application, including its appendices,

and attach the required supporting

documents requested in the application.

original of the completed application,

including completed appendices and

the required supporting documents, to

the United States Trustee at the address

specified on the application form.

(d) The application shall be signed by

an agency representative who is

authorized under applicable law to sign

on behalf of the applying agency.

(e) The signed application, completed

appendices, and required supporting

documents shall be accompanied by a

writing, signed by the signatory of the

application and executed on behalf of

the signatory and the agency, certifying

the application does not:

(1) Falsify, conceal, or cover up by

any trick, scheme or device a material

fact;

(2) Make any materially false,

fictitious, or fraudulent statement or

representation; or

(3) Make or use any false writing or

document knowing the same to contain

any materially false, fictitious, or

fraudulent statement or entry.

(f) The United States Trustee shall not

consider an application, and it may be

returned if:

(1) It is incomplete;

(2) It fails to include the completed

appendices or all of the required

supporting documents; or

(3) It is not accompanied by the

certification identified in paragraph (e)

of this section.

(g) The United States Trustee shall not

consider an application on behalf of an

agency, and it shall be returned if:

(1) It is submitted by any entity other

than the agency; or

(2) Either the application or the

accompanying certification is executed

by any entity other than an agency

representative who is authorized under

applicable law to sign on behalf of the

agency.

(h) By the act of submitting an

application, an agency consents to the

release and disclosure of its name,

contact information, and non-

confidential business information

relating to the services it provides on

the approved list should its application

be approved.

§ 58.14 Automatic expiration of agencies’

status as approved agencies.

(a) Except as provided in § 58.15(c), if

an approved agency was not an

approved agency immediately prior to

the date it last obtained approval to be

an approved agency, such an approved

agency shall cease to be an approved

agency six months from the date on

which it was approved unless the

United States Trustee approves an

additional one year period.

(b) Except as provided in § 58.15(c), if

an approved agency was an approved

agency immediately prior to the date it

last obtained approval to be an

approved agency, such an agency shall

cease to be an approved agency one year

from the date on which it was last

approved to be an approved agency

unless the United States Trustee

approves an additional one year period.

■ 3. Sections 58.15 through 58.17 are

revised to read as follows:

§ 58.15 Procedures all approved agencies

shall follow when applying for approval to

act as an approved agency for an additional

one year period.

(a) To be considered for approval to

act as an approved agency for an

additional one year term, an approved

agency shall reapply by complying with

all the requirements specified for

agencies under 11 U.S.C. 109(h) and

111, and under this part.

(b) Such an agency shall apply no

later than 45 days prior to the expiration

of its six month probationary period or

annual period to be considered for

approval for an additional one year

period, unless a written extension is

granted by the United States Trustee.

complied with all prerequisites for

applying to act as an approved agency

for an additional one year period may

continue to operate as an approved

agency while its application is under

review by the United States Trustee, so

long as either the application for an

additional one year period is timely

submitted, or an agency receives a

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written extension from the United States

Trustee.

§ 58.16 Renewal for an additional one year

period.

If an approved agency’s application

for an additional one year period is

approved, such renewal period shall

begin to run from the later of:

(a) The day after the expiration date

of the immediately preceding approval

period; or

(b) The actual date of approval of such

renewal by the United States Trustee.

§ 58.17 Mandatory duty of approved

agencies to notify United States Trustees of

material changes.

(a) An approved agency shall

immediately notify the United States

Trustee in writing of any material

change.

(b) An approved agency shall

immediately notify the United States

Trustee in writing of any failure by the

approved agency to comply with any

standard or requirement specified in 11

U.S.C. 109(h) or 111, this part, or the

terms under which the United States

Trustee approved it to act as an

approved agency.

immediately notify the United States

Trustee in writing of any of the

following events:

(1) Notification by the Internal

Revenue Service or by a state or local

taxing authority that the approved

agency has been selected for audit or

examination regarding its tax-exempt

status, or any notification of a

compliance check by the Internal

Revenue Service or by a state or local

taxing authority;

(2) Revocation or termination of the

approved agency’s tax-exempt status by

any governmental unit or by any

judicial officer;

(3) Cessation of business by the

approved agency or by any office of the

agency, or withdrawal from any federal

judicial district(s) where the approved

agency is approved;

(4) Any investigation of, or any

administrative or judicial action brought

against, the approved agency by any

governmental unit;

(5) Termination or cancellation of any

surety bond or fidelity insurance;

(6) Any administrative or judicial

action brought by any entity that seeks

recovery against a surety bond or

fidelity insurance;

(7) Any action by a governmental unit

or a court to suspend or revoke the

approved agency’s articles of

incorporation, or any license held by the

approved agency, or any authorization

necessary to engage in business;

(8) A suspension, or action to

suspend, any accreditation held by the

approved agency, or any withdrawal by

the approved agency of any application

for accreditation, or any denial of any

application of the approved agency for

accreditation;

(9) A change in the approved agency’s

nonprofit status under any applicable

law;

(10) Any change in the banks or

financial institutions used by the

agency; and

(11) [reserved].

(d) An agency shall notify the United

States Trustee in writing if any of the

changes identified in paragraphs (a)

through (c) of this section occur while

its application to become an approved

agency is pending before the United

States Trustee.

(e) An approved agency whose name

or other information appears incorrectly

on the approved list shall immediately

submit a written request to the United

States Trustee asking that the

information be corrected.

■ 4. Sections 58.18 through 58.24 are

added to read as follows:

§ 58.18 Mandatory duty of approved

agencies to obtain prior consent of the

United States Trustee before taking certain

actions.

(a) By accepting the designation to act

as an approved agency, an agency agrees

to obtain approval from the United

States Trustee, prior to making any of

the following changes:

(1) Cancellation or change in the

amount of the surety bond or employee

fidelity bond or insurance;

(2) The engagement of an independent

contractor to provide counseling

services or to have access to, possession

of, or control over client funds;

(3) Any increase in the fees,

contributions, or payments received

from clients for counseling services or a

change in the agency’s fee policy;

(4) Expansion into additional federal

judicial districts;

(5) Any changes to the method of

delivery the approved agency employs

to provide counseling services; or

(6) Any changes in the approved

agency’s counseling services.

(b) An agency applying to become an

approved agency shall also obtain

approval from the United States Trustee

before taking any action specified in

paragraph (a) of this section. It shall do

so by submitting an amended

application. The agency’s amended

application shall be accompanied by a

contemporaneously executed writing,

signed by the signatory of the

application, that makes the

certifications specified in § 58.13(e).

transfer or assign its United States

Trustee approval to act as an approved

agency.

§ 58.19 Continuing requirements for

becoming and remaining approved

agencies.

(a) To become an approved agency, an

agency must affirmatively establish, to

the satisfaction of the United States

Trustee, that the agency at the time of

approval:

(1) Satisfies every requirement of this

part; and

(2) Provides adequate counseling to

its clients.

(b) To remain an approved agency, an

approved agency shall affirmatively

establish, to the satisfaction of the

United States Trustee, that the approved

agency:

(1) Has satisfied every requirement of

this part;

(2) Has provided adequate counseling

to its clients; and

(3) Would continue to satisfy both

paragraphs (b)(1) and (2) of this section

in the future.

§ 58.20 Minimum qualifications agencies

shall meet to become and remain approved

agencies.

To meet the minimum qualifications

set forth in § 58.19, and in addition to

the other requirements set forth in this

part, agencies and approved agencies

shall comply with paragraphs (a)

through (p) of this section on a

continuing basis:

(a) Compliance with all laws. An

agency shall comply with all applicable

laws and regulations of the United

States and each state in which the

agency provides counseling services

including, without limitation, all laws

governing licensing and registration.

(b) Prohibition on legal advice. An

agency shall not provide legal advice.

agency shall:

(1) Be lawfully organized and

operated as a nonprofit entity; and

(2) Have a board of directors, the

majority of which:

(i) Are not relatives;

(ii) Are not employed by such agency;

and

(iii) Will not directly or indirectly

benefit financially from the outcome of

the counseling services provided by

such agency.

(d) Ethical standards. An agency

shall:

(1) Not engage in any conduct or

transaction, other than counseling

services, that generates a direct or

indirect financial benefit for any

member of the board of directors or

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trustees, officer, supervisor, or any

relative thereof;

(2) Ensure no member of the board of

directors or trustees, officer, or

supervisor receives any commissions,

incentives, bonuses, or benefits

(monetary or non-monetary) of any kind

that are directly or indirectly based on

the financial or legal decisions any

client makes after requesting counseling

services;

(3) Ensure no member of the board of

directors or trustees, officer or

supervisor is a relative of an employee

of the United States Trustee, a trustee

appointed under 28 U.S.C. 586(a)(1) or

(b) for any federal judicial district where

the agency is providing or is applying to

provide counseling services, a federal

judge in any federal judicial district

where the agency is providing or is

applying to provide counseling services,

a federal court employee in any federal

judicial district where the agency is

providing or is applying to provide

counseling services, or a certified public

accountant that audits the agency’s trust

account;

(4) Not enter into any referral

agreement or receive any financial

benefit that involves the agency paying

to or receiving from any entity or person

referral fees for the referral of clients to

or by the agency, except payments

under a fair share agreement;

(5) Not enter into agreements

involving counseling services that create

a conflict of interest; and

(6) Not provide counseling services to

a client with whom the agency has a

lender-borrower relationship.

(e) Use of credit counselors. An

agency shall have a credit counselor

provide the counseling services to each

of the agency’s clients. The credit

counselor shall interact with the client

regarding the accuracy of the

information obtained from the client

and the alternatives available to the

client for dealing with his or her current

financial situation, including the plan

developed to address such financial

situation.

(f) Credit counselor training,

certification and experience. An agency

shall:

(1) Use only counselors who possess

adequate experience providing credit

counseling, which shall mean that each

counselor either:

(i) Holds a counselor certification and

who has complied with all continuing

education requirements necessary to

maintain his or her counselor

certification; or

(ii) Has successfully completed a

course of study and worked a minimum

of six months in a related area such as

personal finance, budgeting, or credit or

debt management. A course of study

shall include training in counseling

skills, personal finance, budgeting, or

credit or debt management. A counselor

shall also receive annual continuing

education in the areas of counseling

skills, personal finance, budgeting, or

credit or debt management;

(2) Demonstrate adequate experience,

background, and quality in providing

credit counseling, which shall mean

that, at a minimum, the agency shall

either:

(i) Have experience in providing

credit counseling for the two years

immediately preceding the relevant

application date; or

(ii) For each office providing

counseling services, employ at least one

supervisor who has met the

qualifications in paragraph (f)(2)(i) of

this section for no fewer than two of the

five years preceding the relevant

application date;

(3) If offering any component of

counseling services by a telephone or

Internet method of delivery, use only

counselors who, in addition to all other

requirements, demonstrate sufficient

experience and proficiency in providing

such counseling services by those

methods of delivery, including

proficiency in employing verification

procedures to ensure the person

receiving the counseling services is the

client, and to determine whether the

client has completely received

counseling services.

(g) No variation in services. An agency

shall ensure that the type and quality of

services do not vary based on a client’s

decision whether to obtain a certificate

in lieu of other options that may or may

not be suggested by the agency.

(h) Use of the telephone and the

Internet to deliver a component of client

services. An agency shall:

(1) Not provide any client diminished

counseling services because the client

receives any portion of those counseling

services by telephone or Internet;

(2) Confirm the identity of the client

before receiving counseling services by

telephone or Internet by:

(i) Obtaining one or more unique

personal identifiers from the client and

assigning an individual access code,

user ID, or password at the time of

enrollment; and

(ii) Requiring the client to provide the

appropriate access code, user ID, or

password, and also one or more of the

unique personal identifiers during the

course of delivery of the counseling

services.

(i) Services to hearing and hearing-

impaired clients and potential clients.

An agency shall furnish toll-free

telephone numbers for both hearing and

hearing-impaired clients and potential

clients whenever telephone

communication is required. The agency

shall provide telephone amplification,

sign language services, or other

communication methods for hearing-

impaired clients or potential clients.

(j) [reserved].

(k) Services to clients and potential

clients with special needs. An agency

that provides any portion of its

counseling in person shall comply with

all federal, state and local laws

governing facility accessibility. An

agency shall also provide or arrange for

communication assistance for clients or

potential clients with special needs who

have difficulty making their service

needs known.

(l) Mandatory disclosures to clients

and potential clients. Prior to providing

any information to or obtaining any

information from a client or potential

client, and prior to rendering any

counseling service, an agency shall

disclose:

(1) The agency’s fee policy, including

any fees associated with generation of

the certificate;

(2) The agency’s policies enabling

clients to obtain counseling services for

free or at reduced rates based upon the

client’s lack of ability to pay. To the

extent an agency publishes information

concerning its fees on the Internet, such

fee information must include the

agency’s policies enabling clients to

obtain counseling for free or at reduced

rates based upon the client’s lack of

ability to pay;

(3) The agency’s policy to provide free

bilingual counseling services or

professional interpreter assistance to

any limited English proficient client;

(4) The agency’s funding sources;

(5) The counselors’ qualifications;

(6) The potential impacts on credit

reports of all alternatives the agency

may discuss with the client;

(7) The agency’s policy prohibiting it

from paying or receiving referral fees for

the referral of clients, except under a

fair share agreement;

(8) The agency’s obligation to provide

a certificate to the client promptly upon

the completion of counseling services;

(9) A statement that the client has the

opportunity to negotiate an alternative

payment schedule with regard to each

unsecured consumer debt under terms

as set forth in 11 U.S.C. 502(k), and a

statement whether or not the agency

will provide this service. If the agency

does not provide this service, it shall

disclose that it may refer the client to

another approved agency, and shall

disclose that clients may incur

additional fees in connection with such

a referral;

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(10) The fact that the agency might

disclose client information to the United

States Trustee in connection with the

United States Trustee’s oversight of the

agency, or during the investigation of

complaints, during on-site visits, or

during quality of service reviews;

(11) The fact that the United States

Trustee has reviewed only the agency’s

credit counseling services (and, if

applicable, its services as a provider of

a personal financial management

instructional course pursuant to 11

U.S.C. 111(d)), and the fact that the

United States Trustee has neither

reviewed nor approved any other

services the agency provides to clients;

and

(12) The fact that a client will receive

a certificate only if the client completes

counseling services.

(m) Complaint Procedures. An agency

shall employ complaint procedures that

adequately respond to clients’ concerns.

(n) Background checks. An agency

shall:

(1) Conduct a criminal background

check at least every five years for each

person providing credit counseling, and

(2) Not employ anyone as a counselor

who has been convicted of any felony,

or any crime involving fraud,

dishonesty, or false statements, unless

the United States Trustee determines

circumstances warrant a waiver of this

prohibition against employment.

(o) Agency records. An agency shall

prepare and retain records that enable

the United States Trustee to evaluate

whether the agency is providing

adequate counseling and acting in

compliance with all applicable laws and

this part. All records, including

documents bearing original signatures,

shall be maintained in either hard copy

form or electronically in a format widely

available commercially. Records that the

agency shall prepare and retain for a

minimum of two years, and permit

review by the United States Trustee

upon request, shall include:

(1) Upon the filing of an application

for probationary approval, all

information requested by the United

States Trustee as an estimate, projected

to the end of the probationary period, in

the form requested by the United States

Trustee;

(2) After probationary or annual

approval, and for so long as the agency

remains on the approved list, semi-

annual reports of historical data (for the

periods ending June 30 and December

31 of each year), of the type and in the

form requested by the United States

Trustee; these reports shall be submitted

within 30 days of the end of the

applicable periods specified in this

paragraph;

(3) Annual audited financial

statements, including the audited

balance sheet, statement of income and

retained earnings, and statement of

changes in financial condition;

(4) Books, accounts, and records to

provide a clear and readily

understandable record of all business

conducted by the agency, including,

without limitation, copies of all

correspondence with or on behalf of the

client, including the contract between

the agency and the client and any

amendments thereto;

(5) Records concerning the delivery of

services to clients and potential clients

with limited English proficiency and

special needs, and to hearing-impaired

clients and potential clients, including

records:

(i) Of the number of such clients and

potential clients, and the methods of

delivery used with respect to such

clients and potential clients;

(ii) Of which languages are offered or

requested and the type of language

support used or requested by such

clients or potential clients (e.g.,

bilingual instructor, in-person or

telephone interpreter, translated web

instruction);

(iii) Detailing the agency’s provision

of services to such clients and potential

clients; and

(iv) Supporting any justification if the

agency did not provide services to such

potential clients, including the number

of potential clients not served, the

languages involved, and the number of

referrals provided;

(6) Records concerning the delivery of

counseling services to clients for free or

at reduced rates based upon the client’s

lack of ability to pay, including records

of the number of clients for whom the

agency waived all of its fees under

§ 58.21(b)(1)(i), the number of clients for

whom the agency waived all or part of

its fees under § 58.21(b)(1)(ii), and the

number of clients for whom the agency

voluntarily waived all or part of its fees

under § 58.21(c);

(7) Records of complaints and the

agency’s responses thereto;

(8) Records that enable the agency to

verify the authenticity of certificates

their clients file in bankruptcy cases;

and

(9) Records that enable the agency to

issue replacement certificates.

(p) Additional minimum

requirements. An agency shall:

(1) Provide records to the United

States Trustee upon request;

(2) Cooperate with the United States

Trustee by allowing scheduled and

unscheduled on-site visits, complaint

investigations, or other reviews of the

agency’s qualifications to be an

approved agency;

(3) Cooperate with the United States

Trustee by promptly responding to

questions or inquiries from the United

States Trustee;

(4) Assist the United States Trustee in

identifying and investigating suspected

fraud and abuse by any party

participating in the credit counseling or

bankruptcy process;

(5) Not exclude any client or creditor

from a debt repayment plan because the

creditor declines to make a fair share

contribution to the agency;

(6) Take no action that would limit,

inhibit, or prevent a client from bringing

an action or claim for damages against

an agency, as provided in 11 U.S.C.

111(g)(2);

(7) Refer clients and prospective

clients for counseling services only to

agencies that have been approved by a

United States Trustee to provide such

services;

(8) Comply with the United States

Trustee’s directions on approved

advertising, including without

limitation those set forth in Appendix A

to the application;

(9) Not disclose or provide to a credit

reporting agency any information

concerning whether a client has

received or sought instruction

concerning credit counseling or

personal financial management from an

agency;

(10) Not expose the client to

commercial advertising as part of or

during the client’s receipt of any

counseling services, and never market

or sell financial products or services

during the counseling session provided,

however, this provision does not

prohibit an agency from generally

discussing all available financial

products and services;

(11) Not sell information about any

client or potential client to any third

party without the client or potential

client’s prior written permission;

(12) If the agency is tax-exempt,

submit a completed and signed tax

waiver permitting and directing the

Internal Revenue Service to provide the

United States Trustee with access to the

Internal Revenue Service’s files relating

to the agency;

(13) Comply with the requirements

elsewhere in this part concerning fees

for credit counseling services and fee

waiver policies; and

(14) Comply with the requirements

elsewhere in this part concerning

certificates.

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§ 58.21 Minimum requirements to become

and remain approved agencies relating to

fees.

(a) If a fee for, or relating to, credit

counseling services is charged by an

agency, such fee shall be reasonable:

(1) A fee of $50 or less for credit

counseling services is presumed to be

reasonable and an agency need not

obtain prior approval of the United

States Trustee to charge such a fee;

(2) A fee exceeding $50 for credit

counseling services is not presumed to

be reasonable and an agency must

obtain prior approval from the United

States Trustee to charge such a fee. The

agency bears the burden of establishing

that its proposed fee is reasonable. At a

minimum, the agency must demonstrate

that its cost for delivering such services

justify the fee. An agency that

previously received permission to

charge a higher fee need not reapply for

permission to charge that fee during the

agency’s annual review. Any new

requests for permission to charge more

than previously approved, however,

must be submitted to EOUST for

approval; and

(3) The United States Trustee shall

review the amount of the fee set forth in

paragraphs (a)(1) and (2) of this section

one year after the effective date of this

part and then periodically, but not less

frequently than every four years, to

determine the reasonableness of the fee.

Fee amounts and any revisions thereto

shall be determined by current costs,

using a method of analysis consistent

with widely accepted accounting

principles and practices, and calculated

in accordance with the provisions of

federal law as applicable. Fee amounts

and any revisions thereto shall be

published in the Federal Register.

(b)(1) An agency shall waive the fee

in whole or in part whenever a client

demonstrates a lack of ability to pay the

fee.

(i) A client presumptively lacks the

ability to pay the fee if the client’s

household current income is less than

150 percent of the poverty guidelines

updated periodically in the Federal

Health and Human Services under the

authority of 42 U.S.C. 9902(2), as

adjusted from time to time, for a

household or family of the size involved

in the fee determination.

(ii) The presumption shall be

rebutted, and the agency may charge the

client a reduced fee, if the agency

determines, based on income

information the client submits in

connection with counseling services,

that the client is able to pay the fee in

a reduced amount. Nothing in this

section requires an agency to charge a

fee to clients whose household income

exceeds the amount set forth in

paragraph (b)(1)(i) of this section, or

who are able to demonstrate ability to

pay based on income as described in

this section.

(iii) An agency shall disclose its fee

policy, including the criteria on which

it relies in determining a client’s

eligibility for reduced fees, and the

agency’s policy for collecting fees

pursuant to paragraph (b)(1)(ii) of this

section, in accordance with § 58.20(l)(2).

(2) The United States Trustee shall

review the basis for the mandatory fee

waiver policy set forth in paragraph

(b)(1) of this section one year after the

effective date of this part and then

periodically, but not less frequently

than every four years, to determine the

impact of that fee waiver policy on

clients and agencies. Any revisions to

the mandatory fee waiver policy set

forth in paragraph (b)(1) of this section

shall be published in the Federal

of paragraph (b) of this section, an

agency may also waive fees based upon

other considerations, including, but not

limited to:

(1) The client’s net worth;

(2) The percentage of the client’s

income from government assistance

programs;

(3) Whether the client is receiving pro

bono legal services in connection with

a filed or anticipated bankruptcy case;

(4) If the combined current monthly

income, as defined in 11 U.S.C.

101(10A), of the client and his or her

spouse, when multiplied times twelve,

is equal to or less than the amounts set

forth in 11 U.S.C. 707(b)(7).

(d) An agency shall not require a

client to purchase counseling services in

connection with the purchase of any

other service offered by the agency.

§ 58.22 Minimum requirements to become

and remain approved agencies relating to

certificates.

(a) An approved agency shall send a

certificate only to the client who took

and completed the counseling services,

except that an approved agency shall

instead send a certificate to the attorney

of a client who took and completed

counseling services if the client

specifically directs the agency to do so.

In the case of Internet counseling and

automated telephone counseling,

counseling is not complete until the

client has engaged in interaction with a

counselor, whether by electronic mail,

live chat, or telephone, following the

automated portion of the counseling

session.

(b) An approved agency shall attach to

the certificate the client’s debt

repayment plan (if any).

certificate to a client no later than one

business day after the client completed

counseling services. If a client has

completed counseling services, an

agency may not withhold certificate

issuance for any reason. An agency may

not consider counseling services

incomplete based solely on the client’s

failure to pay the fee.

(d) If an approved agency provides

other financial counseling in addition to

counseling services, and such other

financial counseling satisfies the

requirements for counseling services

specified in 11 U.S.C. 109(h) and 111,

and this part, a person completing such

other financial counseling is a client

and the approved agency shall send a

certificate to the client no later than one

business day after the client’s request.

The approved agency shall not charge

the client any additional fee except any

separate fee charged for the issuance of

the certificate, in accordance with

§ 58.20(l)(1).

(e) An approved agency shall issue

certificates only in the form approved

by the United States Trustee, and shall

generate the form using the Certificate

Generating System maintained by the

United States Trustee, except under

exigent circumstances with notice to the

United States Trustee.

(f) An approved agency shall have

sufficient computer capabilities to issue

certificates from the United States

Trustee’s Certificate Generating System.

(g) An approved agency shall issue a

certificate to each client who completes

counseling services. Spouses receiving

counseling services jointly shall each

receive a certificate.

(h) An approved agency shall issue a

replacement certificate to a client who

requests one.

(i) An approved agency shall not file

certificates with the court.

(j) Only an authorized officer,

supervisor or employee of an approved

agency shall issue a certificate, and an

approved agency shall not transfer or

delegate authority to issue certificates to

any other entity.

(k) An approved agency shall

implement internal controls sufficient to

prevent unauthorized issuance of

certificates.

(l) An approved agency shall ensure

the signature affixed to a certificate is

that of an officer, supervisor or

employee authorized to issue the

certificate, in accordance with

paragraph (j) of this section, which

signature shall be either:

(1) An original signature; or

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(2) In a format approved for electronic

filing with the court (most typically in

the form/s/name of counselor).

(m) An approved agency shall affix to

the certificate the exact name under

which the approved agency is

incorporated or organized.

(n) An approved agency shall identify

on the certificate:

(1) The specific federal judicial

district requested by the client;

(2) Whether counseling services were

provided in person, by telephone or via

the Internet;

(3) The date and time (including the

time zone) on which counseling services

were completed by the client; and

(4) The name of the counselor that

provided the counseling services.

(o) An approved agency shall affix the

client’s full, accurate name to the

certificate. If the counseling services are

obtained by a client through a duly

authorized representative, the certificate

also shall set forth the name of the legal

representative and legal capacity of that

representative.

(p) If an individual enters into a debt

repayment plan after completing credit

counseling, upon the client’s request

after the completion or termination of

the debt repayment plan, the approved

agency shall:

(1) Provide such additional credit

counseling as is necessary at such time

to comply with the requirements

specified in 11 U.S.C. 109(h) and 111,

and this part, including reviewing the

client’s current financial condition and

counseling the client regarding the

alternatives to resolve the client’s credit

problems;

(2) Send a certificate to the client no

later than one business day after the

client completed such additional

counseling; and

(3) Not charge the client any

additional fee except any separate fee

charged for the issuance of the

certificate, in accordance with

§ 58.20(l)(1).

§ 58.23 Minimum financial requirements

and bonding and insurance requirements

for agencies offering debt repayment plans.

If an agency offers or has offered debt

repayment plans, an agency shall

possess adequate financial resources to

provide continuing support services for

such plans over the life of any debt

repayment plan, and provide for the

safekeeping of client funds, which shall

include:

(a) Depositing all client funds into a

deposit account, held in trust, at a

federally insured depository institution.

Each such trust account shall be

established in a fiduciary capacity and

shall be in full compliance with federal

law such that each client’s funds shall

be protected by federal deposit

insurance up to the maximum amount

allowable by federal law.

(b) Keeping and maintaining books,

accounts, and records to provide a clear

and readily understandable record of all

business conducted by the agency,

including without limitation, all of the

following:

(1) Separate files for each client’s

account that include copies of all

correspondence with or on behalf of the

client, including:

(i) All agreements with all entities,

including the contract between the

agency and the client and any

amendments thereto;

(ii) The analysis of the client’s budget;

(iii) Correspondence between the

agency and the client’s creditors;

(iv) The notice given to creditors of

any debt repayment plan; and

(v) All written statements of account

provided to the client and subsidiary

ledgers concerning any debt repayment

plan;

(2) A trust account general ledger

reflecting all deposits to and

disbursements from all trust accounts,

which shall be kept current at all times;

(3) A reconciliation of the trust

accounts, prepared at least once a

month; and

(4) An operating account general

ledger reflecting all of the agency’s

financial transactions involving the

agency’s operating account, which shall

be kept current at least on a monthly

basis.

public accounting firm to audit the trust

accounts annually in accordance with

generally accepted accounting

principles as defined by the American

Institute of Certified Public Accountants

and any Statement of Work prepared by

the United States Trustee, which audit

shall include:

(1) A report of all trust account

activity including:

(i) The balance of each trust account

at the beginning and end of the period;

(ii) The total of all receipts from

clients and disbursements to creditors

during the reporting period;

(iii) The total of all disbursements to

the agency; and

(iv) The reconciliation of each trust

account;

(2) A report of all exceptions (e.g.,

discrepancies, irregularities, and errors)

found, regardless of materiality; and

(3) An evaluation of the agency’s trust

account internal controls and its

computer operations to determine

whether it provides a reasonable

assurance that the trust funds are

safeguarded against loss from

unauthorized use or disposition.

(d) Obtaining a surety bond payable to

the United States, as follows:

(1) Subject to the minimum amount of

$5,000, the amount of such surety bond

shall be the lesser of:

(i) Two percent of the agency’s

disbursements made during the twelve

months immediately prior to

submission of the application from all

trust accounts attributable to the federal

judicial districts (or, if not feasible to

determine, the states) in which the

agency seeks approval from the United

States Trustee; or

(ii) Equal to the average daily balance

maintained for the six months

immediately prior to submission of the

application in all trust accounts

attributable to the federal judicial

districts (or, if not feasible to determine,

the states) in which the agency seeks

approval from the United States Trustee;

(2) The agency may receive an offset

or credit against the surety bond amount

determined under paragraph (d)(1) of

this section if:

(i) The agency has previously

obtained a surety bond, or similar cash,

securities, insurance (other than

employee fidelity insurance), or letter of

credit in compliance with the licensing

requirements of the state in which the

agency seeks approval from the United

States Trustee;

(ii) Such surety bond, or similar cash,

securities, insurance (other than

employee fidelity insurance), or letter of

credit provides protection for the clients

of the agency;

(iii) Such surety bond, or similar cash,

securities, insurance (other than

employee fidelity insurance), or letter of

credit, is written in favor of the state or

the appropriate state agency; and

(iv) The amount of the offset or credit

shall be the lesser of:

(A) The principal amount of such

surety bond, or similar cash, securities,

insurance (other than employee fidelity

insurance), or letter of credit; or

(B) The surety bond amount

determined under paragraph (d)(1) of

this section;

(3) If an agency has contracted with

an independent contractor to administer

any part of its debt repayment plans:

(i) Except as provided in paragraphs

(d)(3)(ii) and (d)(3)(iii) of this section,

the independent contractor shall:

(A) Be an approved agency; or

(B) If the independent contractor is

not an approved agency, then the

independent contractor shall:

(1) Be specifically covered under the

agency’s surety bond required under

paragraph (d)(1) of this section; or

(2) Have a surety bond that meets the

requirements of paragraph (d)(1) of this

section; and

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(3) Agree in writing to allow the

United States Trustee to audit the

independent contractor’s trust accounts

for the debt repayment plans

administered on behalf of the agency

and to review the independent

contractor’s internal controls and

administrative procedures;

(ii) If the independent contractor

holds funds for transmission for five

days or less, then the amount of the

required surety bond under paragraph

(d)(3)(i)(B) of this section shall be

$500,000;

(iii) If the independent contractor

performs only electronic fund transfers

on the agency’s behalf, then the

independent contractor need not satisfy

the requirements of paragraph (d)(3)(i)

of this section during such time as the

independent contractor is authorized by

the National Automated Clearing House

Association to participate in the

Automated Clearing House system.

(e) Obtaining either adequate

employee bonding or fidelity insurance,

as follows:

(1) Subject to the minimum amount

set forth below, the amount of such

bonding or fidelity insurance shall be 50

percent of the surety bond amount

calculated under paragraph (d)(1) of this

section, prior to any offset or credit that

the agency may receive under paragraph

(d)(2) of this section; provided,

however, that at a minimum, the

employee bond or fidelity insurance

must be $5,000;

(2) An agency may receive an offset or

credit against the employee bond or

fidelity insurance amount determined

under paragraph (e)(1) of this section if:

(i) The agency has previously

obtained an employee bond or fidelity

insurance in compliance with the

requirements of a state in which the

agency seeks approval from the United

States Trustee; and

(ii) The deductible does not exceed a

reasonable amount considering the

financial resources of the agency; and

(iii) The amount of the offset or credit

shall be the lesser of:

(A) The principal amount of such

employee bond or fidelity insurance; or

(B) The employee bond or fidelity

insurance amount determined under

paragraph (e)(1) of this section.

(f) An agency that ceases to offer debt

repayment plans to individuals who

receive counseling from such agency

pursuant to 11 U.S.C. 109(h) shall,

concerning any debt repayment plans it

services that remain in existence with

respect to such individuals as of the

date it ceases to offer debt repayment

plans to new clients, continue to

comply with all of the requirements of

this section.

(1) The agency may seek a waiver of

the bonding and insurance requirements

set forth in paragraphs (d) and (e) of this

section if:

(i) The agency has in effect, as of the

date it ceases to offer debt repayment

plans, a written agreement to transfer all

such debt repayment plans to another

approved agency for servicing, provided

that:

(A) Transfers to another approved

agency pursuant to such agreements

must be completed within 60 days of

the date the agency ceases to offer debt

repayment plans to individuals who

receive counseling from such agency

pursuant to 11 U.S.C. § 109(h); and

(B) The agency provides written

notice to clients whose debt repayment

plans it intends to transfer within the

time described in paragraph (f)(1)(i)(A)

of this section, identifying the approved

agency to which the clients’ plans will

be transferred, any fees associated with

servicing by the approved agency, and

any fees associated with the transfer; or

(ii) In the reasonable determination of

the United States Trustee, taking into

account the facts and circumstances

surrounding the agency’s business and

the terms of the bond, compliance with

the bonding and insurance requirements

set forth in paragraphs (d) and (e) of this

section would impose an undue

hardship on the agency.

§ 58.24 Procedures for obtaining final

agency action on United States Trustees’

decisions to deny agencies’ applications

and to remove approved agencies from the

approved list.

(a) The United States Trustee shall

remove an approved agency from the

approved list whenever an approved

agency requests its removal in writing.

(b) The United States Trustee may

issue a decision to remove an approved

agency from the approved list, and

thereby terminate the approved agency’s

authorization to provide counseling

services, at any time.

issue a decision to deny an agency’s

application or to remove an agency from

the approved list whenever the United

States Trustee determines that the

agency has failed to comply with the

standards or requirements specified in

11 U.S.C. 109(h) or 111, this part, or the

terms under which the United States

Trustee designated it to act as an

approved agency, including, but not

limited to, finding any of the following:

(1) The agency is not employing

adequate procedures for safekeeping of

client funds or paying client funds,

which could result in a loss to a client;

(2) The agency’s surety bond has been

canceled;

(3) Any entity has revoked the

agency’s nonprofit status, even if that

revocation is subject to further

administrative or judicial litigation,

review or appeal;

(4) Any entity has suspended or

revoked the agency’s license to do

business in any jurisdiction; or

(5) Any United States district court

has removed the agency under 11 U.S.C.

§ 111(e).

(d) If the Internal Revenue Service

revokes an agency’s tax exempt status,

the United States Trustee shall promptly

commence an investigation to determine

whether any of the factors set forth in

paragraphs (c)(1) through (5) of this

section exist.

(e) The United States Trustee shall

provide to the agency in writing a notice

of any decision either to:

(1) Deny the agency’s application; or

(2) Remove the agency from the

approved list.

(f) The notice shall state the reason(s)

for the decision and shall reference any

documents or communications relied

upon in reaching the denial or removal

decision. To the extent authorized by

law, the United States Trustee shall

provide to the agency copies of any such

documents that were not supplied to the

United States Trustee by the agency.

The notice shall be sent to the agency

by overnight courier, for delivery the

next business day.

(g) Except as provided in paragraph (i)

of this section, the notice shall advise

the agency that the denial or removal

decision shall become final agency

action, and unreviewable, unless the

agency submits in writing a request for

review by the Director no later than 21

calendar days from the date of the

notice to the agency.

(h) Except as provided in paragraph

(i) of this section, the decision to deny

an agency’s application or remove an

agency from the approved list shall take

effect upon:

(1) The expiration of the agency’s time

to seek review from the Director, if the

agency fails to timely seek review of a

denial or removal decision; or

(2) The issuance by the Director of a

final decision, if the agency timely seeks

such review.

(i) The United States Trustee may

provide that a decision to remove an

agency from the approved list is

effective immediately and deny the

agency the right to provide counseling

services whenever the United States

Trustee finds any of the factors set forth

in paragraphs (c)(1) through (5) of this

section.

(j) An agency’s request for review

shall be in writing and shall fully

describe why the agency disagrees with

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the denial or removal decision, and

shall be accompanied by all documents

and materials the agency wants the

Director to consider in reviewing the

denial or removal decision. The agency

shall send the original and one copy of

the request for review, including all

accompanying documents and

materials, to the Office of the Director

by overnight courier, for delivery the

next business day. To be timely, a

request for review shall be received at

the Office of the Director no later than

21 calendar days from the date of the

notice to the agency.

(k) The United States Trustee shall

have 21 calendar days from the date of

the agency’s request for review to

submit to the Director a written

response regarding the matters raised in

the agency’s request for review. The

United States Trustee shall provide a

copy of this response to the agency by

overnight courier, for delivery the next

business day.

(l) The Director may seek additional

information from any party in the

manner and to the extent the Director

deems appropriate.

(m) In reviewing the decision to deny

an agency’s application or remove an

agency from the approved list, the

Director shall determine:

(1) Whether the denial or removal

decision is supported by the record; and

(2) Whether the denial or removal

decision constitutes an appropriate

exercise of discretion.

(n) Except as provided in paragraph

(o) of this section, the Director shall

issue a final decision no later than 60

calendar days from the receipt of the

agency’s request for review, unless the

agency agrees to a longer period of time

or the Director extends the deadline.

The Director’s final decision on the

agency’s request for review shall

constitute final agency action.

(o) Whenever the United States

Trustee provides under paragraph (i) of

this section that a decision to remove an

agency from the approved list is

effective immediately, the Director shall

issue a written decision no later than 15

calendar days from the receipt of the

agency’s request for review, unless the

agency agrees to a longer period of time.

The decision shall:

(1) Be limited to deciding whether the

determination that the removal decision

should take effect immediately was

supported by the record and an

appropriate exercise of discretion;

(2) Constitute final agency action only

on the issue of whether the removal

decision should take effect immediately;

and

(3) Not constitute final agency action

on the ultimate issue of whether the

agency should be removed from the

approved list; after issuing the decision,

the Director shall issue a final decision

by the deadline set forth in paragraph

(n) of this section.

(p) In reaching a decision under

paragraphs (n) and (o) of this section,

the Director may specify a person to act

as a reviewing official. The reviewing

official’s duties shall be specified by the

Director on a case-by-case basis, and

may include reviewing the record,

obtaining additional information from

the participants, providing the Director

with written recommendations, and

such other duties as the Director shall

prescribe in a particular case.

(q) An agency that files a request for

review shall bear its own costs and

expenses, including counsel fees.

(r) When a decision to remove an

agency from the approved list takes

effect, the agency shall:

(1) Immediately cease providing

counseling services to clients and shall

not provide counseling services to

potential clients;

(2) No later than three business days

after the date of removal, send all

certificates to all clients who completed

counseling services prior to the agency’s

removal from the approved list;

(3) No later than three business days

after the date of removal, return all fees

to clients and potential clients who had

paid for counseling services, but had not

completely received them; and

(4) Transfer any debt repayment plans

that the agency is administering to

another approved agency.

(s) An agency must exhaust all

administrative remedies before seeking

redress in any court of competent

jurisdiction.

Dated: February 14, 2013.

Clifford J. White III,

Director, Executive Office for United States

Trustees.

[FR Doc. 2013–04361 Filed 3–13–13; 8:45 am]

BILLING CODE 4410–40–P

DEPARTMENT OF JUSTICE

28 CFR Part 58

[Docket No EOUST 104]

RIN 1105–AB31

Application Procedures and Criteria for

Approval of Providers of a Personal

Financial Management Instructional

Course by United States Trustees

AGENCY

: Executive Office for United

States Trustees (‘‘EOUST’’), Justice.

ACTION

: Final rule.

SUMMARY

: This final rule (‘‘rule’’) sets

forth procedures and criteria United

States Trustees shall use when

determining whether applicants seeking

to become and remain approved

providers of a personal financial

management instructional course

(‘‘providers’’) satisfy all prerequisites of

the United States Code, as implemented

under this rule. Under the current law,

individual debtors must participate in

an instructional course concerning

personal financial management

(‘‘instructional course’’ or ‘‘debtor

education’’) before receiving a discharge

of debts. The current law enumerates

mandatory prerequisites and minimum

standards applicants seeking to become

approved providers must meet. Under

this rule, United States Trustees will

approve applicants for inclusion on

publicly available provider lists in one

or more federal judicial districts if an

applicant establishes it meets all the

requirements of the United States Code,

as implemented under this rule. After

obtaining such approval, a provider

shall be authorized to provide an

instructional course in a federal judicial

district during the time the provider

remains approved.

EOUST intends to add to its

regulations governing debtor education

providers, two new provisions not

previously included in the proposed

rule. The first provision will amend

section 58.30(c)(5) to require providers

to notify the United States Trustee of

certain actions pursuant to 11 U.S.C.

111(g)(2) or other consumer protection

statutes, such as an entry of judgment or

mediation award, or the provider’s entry

into a settlement order, consent decree,

or assurance of voluntary compliance.

The second provision will amend

section 58.33(i) to require a provider to

assist an individual with limited

English proficiency by expeditiously

directing the individual to a provider

that can provide instruction in the

language of the individual’s choice.

Because these provisions were not

discussed in the proposed rule

published on November 14, 2008,

EOUST will publish another Notice of

Proposed Rulemaking requesting public

comment with respect to these two

provisions.

DATES

: Effective Date: This rule is

effective April 15, 2013.

ADDRESSES

: EOUST, 441 G Street, NW.,

Suite 6150, Washington, DC, 20530.

FOR FURTHER INFORMATION CONTACT

Doreen Solomon, Assistant Director for

Oversight on (202) 307–2829 (not a toll-

free number), Wendy Tien, Deputy

Assistant Director for Oversight on (202)

307–3698 (not a toll-free number), or

Larry Wahlquist, Office of the General