[Federal Register Volume 78, Number 50 (Thursday, March 14, 2013)]
[Rules and Regulations]
[Pages 16138-16159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04361]


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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.

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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

[[Page 16139]]

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 
(Sec.  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 (Sec.  
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 
(Sec.  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 
(Sec.  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 (Sec.  
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 (Sec.  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 (Sec.  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 
(Sec.  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 (Sec.  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 Sec.  58.23(f)), is not subject to the bonding and 
insurance requirements (Sec.  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 (Sec.  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 (Sec.  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 (Sec.  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

[[Page 16140]]

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 (Sec.  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 (Sec.  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 (Sec.  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 (Sec.  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 
(Sec.  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 (Sec.  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 (Sec.  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 (Sec.  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 [Sec.  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 [Sec.  
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 [Sec.  58.12(b)(3)]
    Comment: One comment recommended adequate counseling be

[[Page 16141]]

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 [Sec.  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 [Sec.  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 [Sec.  
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 [Sec.  
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 [Sec.  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 [Sec.  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 [Sec.  58.12(b)(29)]
    Comment: EOUST received one comment suggesting that the definition 
of ``nonprofit'' require that the credit counseling agency has been 
approved

[[Page 16142]]

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 [Sec.  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 [Sec.  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 [Sec. Sec.  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 [Sec. Sec.  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 [Sec.  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. Sec.  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 [Sec.  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 [Sec.  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.

[[Page 16143]]

    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 [Sec.  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 [Sec.  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) [Sec.  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 [Sec.  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 (Sec.  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 [Sec.  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) [Sec.  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 [Sec.  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 [Sec.  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 [Sec.  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. Sec.  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 [Sec.  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 
[Sec.  58.20(p)(10)]
    Comment: One comment stated the protections in Sec.  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 [Sec.  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 [Sec.  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 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 (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

[[Page 16146]]

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, 
Sec.  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 [Sec.  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 [Sec.  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

[[Page 16147]]

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 [Sec.  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 [Sec.  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 [Sec.  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 [Sec.  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 [Sec.  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 [Sec.  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 [Sec.  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

[[Page 16148]]

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 Register and identified on the EOUST 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, 
Sec.  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. Sec. Sec.  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,

[[Page 16149]]

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 Sec.  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

[[Page 16150]]

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 1995

    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]

0
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.


0
2. Sections 58.12 through 58.14 are added to read as follows:


Sec.  58.12  Definitions.

    (a) The following definitions apply to Sec. Sec.  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

[[Page 16151]]

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

[[Page 16152]]

    (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 Sec.  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.


Sec.  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.
    (c) The agency shall submit the 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.


Sec.  58.14  Automatic expiration of agencies' status as approved 
agencies.

    (a) Except as provided in Sec.  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 Sec.  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.

0
3. Sections 58.15 through 58.17 are revised to read as follows:


Sec.  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.
    (c) An approved agency that has 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

[[Page 16153]]

written extension from the United States Trustee.


Sec.  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.


Sec.  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.
    (c) An approved agency shall 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.

0
4. Sections 58.18 through 58.24 are added to read as follows:


Sec.  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 Sec.  58.13(e).
    (c) An approved agency shall not transfer or assign its United 
States Trustee approval to act as an approved agency.


Sec.  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.


Sec.  58.20  Minimum qualifications agencies shall meet to become and 
remain approved agencies.

    To meet the minimum qualifications set forth in Sec.  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.
    (c) Structure and organization. An 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

[[Page 16154]]

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;

[[Page 16155]]

    (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 Sec.  58.21(b)(1)(i), the number of 
clients for whom the agency waived all or part of its fees under Sec.  
58.21(b)(1)(ii), and the number of clients for whom the agency 
voluntarily waived all or part of its fees under Sec.  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.

[[Page 16156]]

Sec.  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 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.
    (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 Sec.  
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 Register.
    (c) Notwithstanding the requirements 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; or
    (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.


Sec.  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).
    (c) An approved agency shall send a 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 Sec.  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

[[Page 16157]]

    (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 
Sec.  58.20(l)(1).


Sec.  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.
    (c) Allowing an independent certified 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

[[Page 16158]]

    (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. Sec.  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.


Sec.  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.
    (c) The United States Trustee may 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. Sec.  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

[[Page 16159]]

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