GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
H	2
HOUSE BILL 356*
 Committee Substitute Favorable 4/10/01

Short Title:	Collection Agency/Bail Bond Amendments-AB.	()	
Sponsors:	     	
Referred to:	     	
March 1, 2001

A BILL TO BE ENTITLED
AN ACT TO UPDATE THE BOND REQUIREMENTS FOR COLLECTION AGENCIES; TO REQUIRE NONRESIDENT COLLECTION AGENCIES TO POST A SECOND BOND FOR EXPENSES INCURRED BY THE STATE IN A RECEIVERSHIP PROCEEDING INVOLVING THE COLLECTION AGENCY; TO MAKE TECHNICAL CORRECTIONS; TO ALLOW BAIL BONDSMEN TO CREATE SHARED TRUST ACCOUNTS; TO CODIFY AN ADMINISTRATIVE RULE ON BONDSMEN AFFIDAVITS; AND TO AUTHORIZE THE COMMISSIONER TO DENY LICENSE RENEWALS TO PROFESSIONAL BONDSMEN UNTIL THEY CURE DEPOSIT DEFICIENCIES. 

The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 58‑70‑5(f) reads as rewritten:
"(f)	A completed statement by each stockholder owning ten percent (10%) or more of the applicant's outstanding voting stock and each partner, director, and officer actively engaged in the collection agency business, containing: the name of the collection agency, the name and address of the individual completing the form, the positions held by  the individual, each conviction of any criminal offense and any criminal charges pending other than minor traffic violations of  the individual, and the name and address of three people not related to the individual who can attest to the individual's reputation for honesty and fair dealings;".
SECTION 2.  G.S. 58‑70‑20 reads as rewritten:
"§ 58‑70‑20.  Bond requirement.
(a)	As a condition precedent to the issuance of any permit under  this Article, every applicant for  a permit shall file with the Commissioner a bond in favor of the State of North Carolina  that is executed by a surety company  licensed to transact surety business in this State. The bond shall be maintained in force during the permit period, continuous in  form, and  remain in effect until all moneys collected have been accounted for. The bond shall expressly provide that  the bond is for the benefit of any person, firm or corporation for whom  the collection agency engages in the collection of accounts.  The bond shall be in the amount of  ten thousand dollars ($10,000) for the initial permit. The amount of  the bond for any renewal permit shall be no less than  ten thousand dollars ($10,000), nor more than seventy-five thousand dollars ($75,000), and shall be computed as follows: The total collections paid directly to the collection agency less commissions earned by the collection agency on those collections for the calendar year ending immediately prior to the date of application, multiplied by one‑sixth.
(b)	A person required by this section to maintain a bond may, in lieu of that bond, deposit with the Commissioner the equivalent amount in cash, in certificates of deposit issued by banks organized under the laws of the State of North Carolina, or any national bank having its principal office in North Carolina, or securities, which shall be held in accordance with Article 5 of this Chapter. Securities may only be obligations of the United States or of federal agencies listed in G.S. 147‑69.1(c)(2) guaranteed by the United States, obligations of the State of North Carolina, or obligations of a city or county of this State. Any proposed deposit of an obligation of a city or county of this State is subject to the prior approval of the Commissioner.
(c)	In addition to the requirements of subsections (a) and (b) of this section, as a condition precedent to the issuance of any permit under this Article, every nonresident applicant for a permit shall file with the Commissioner a bond in the amount of ten thousand dollars ($10,000) in favor of the Department that is executed by a surety company licensed to transact surety business in this State. The bond shall be maintained in force during the permit period, be continuous in form, and remain in effect until terminated by the Commissioner. The bond shall expressly provide that the bond is for the purpose of reimbursing the Department for expenses incurred in visiting and examining a nonresident collection agency in connection with a federal bankruptcy or State receivership proceeding in which the collection agency is the subject of the proceeding."
SECTION 3. G.S. 58‑71‑40(a) reads as rewritten:
"(a)	No person shall act in the capacity of professional bondsmen, surety bondsmen, or runners or perform any of the functions, duties, or powers prescribed for  professional bondsmen, surety bondsmen, or runners under this Article unless that person  is qualified and  licensed  under this Article. No license shall be issued  under this Article except to an individual natural person."
SECTION 4.  G.S. 58‑71‑100 reads as rewritten:
"§ 58‑71‑100.  Receipts for collateral; trust accounts.
(a)	When a bail bondsman accepts collateral he shall give a written receipt for the collateral. The receipt shall give in detail a full description of the collateral received. Collateral security shall be held and maintained in trust. When collateral security is received in the form of cash or check or other negotiable instrument, the licensee shall deposit the cash or instrument within two banking days after receipt, in an established, separate noninterest‑bearing trust account in any bank located in North Carolina. The trust account funds under this section shall not be commingled with other operating funds.
(b)	With the approval of the Commissioner, bail bondsmen operating out of the same business office or location may establish a shared trust account for collateral security received by them. The Commissioner may require the bondsmen desiring to establish the shared trust account to furnish the Commissioner information about their business that the Commissioner considers necessary to administer this Article effectively."
SECTION 5.  G.S. 58‑71‑140 reads as rewritten:
"§ 58‑71‑140.  Registration of licenses and power of appointments by insurers.
(a)	No professional bail bondsman shall become a surety on an undertaking unless he or she has registered his or her current license in the office of the clerk of superior court in the county in which he or she resides and a certified copy of the same with the clerk of superior court in any other county in which he or she shall write bail bonds.
(b)	A surety bondsman shall register his or her current surety bondsman's license and a certified copy of his or her power of appointment with the clerk of superior court in the county in which the surety bondsman resides and with the clerk of superior court in any other county in which the surety bondsman writes bail bonds on behalf of an insurer.
(c)	No runner shall become surety on an undertaking on behalf of a professional bondsman unless that runner has registered his or her current license and a certified copy of his or her power of attorney in the office of the clerk of superior court in the county in which the runner resides and with the clerk of superior court in any other county in which the runner writes bail bonds on behalf of the professional bondsman.
(d)	Professional bail bondsmen, surety bondsmen, and runners shall file with the clerk of court having jurisdiction over the principal, an affidavit on a form furnished by the Administrative Office of the Courts. The affidavit shall include, but not be limited to:
(1)	A statement that the bondsman has not, nor has anyone for the bondsman's use, been promised or received any collateral, security, or premium for executing this appearance bond.
(2)	If promised a premium, the amount of the premium promised and the due date.
(3)	If the bondsman has received a premium, the amount of premium received.
(4)	If given collateral security, the name of the person from whom it is received, and the nature and amount of the collateral security, listed in detail."
SECTION 6.  G.S. 58‑71‑160 reads as rewritten:
"§ 58‑71‑160.  Security deposit to be maintained.
(a)	Any professional bondsman, whose security deposits with the Commissioner are, for any reason, reduced in value below the requirements of this Article, shall immediately upon receipt of a notice of deficiency from the Commissioner deposit such additional securities as are necessary to comply with the law. No professional bondsman shall sign, endorse,  execute, or become surety on any additional bail bonds, or pledge or deposit any cash, check, or other security of any nature in lieu of a bail bond in any county in North Carolina until the professional bondsman has made such additional deposit of securities as  required by the notice of deficiency.
(b)	The Commissioner may deny the renewal of any license held by a professional bondsman under this Chapter or may deny the issuance of any license applied for by a professional bondsman under this Chapter if, at the time of the renewal application or license application, the professional bondsman has not complied with a notice of deficiency under subsection (a) of this section. The Commissioner may issue the renewal license or the new license upon compliance by the professional bondsman with the notice of deficiency."
SECTION 7.  G.S. 58‑71‑170(a) reads as rewritten:
"(a)	Whenever the Commissioner  considers it prudent, the Commissioner shall visit and examine or cause to be visited and examined by a competent person appointed by the Commissioner for that purpose any professional bail  bondsman, surety bondsman, or runner subject to this Article. For this purpose the Commissioner or person making the examination shall have free access to all records of the  licensee that relate to the  licensee's business and to the records kept by any of the licensee's agents."
SECTION 8.  This act becomes effective October 1, 2001, and applies to permits or licenses issued or renewed on or after that date.