{"data":{"id":"us-nyc/n.y.c.-admin.-code-l.l.-2006-034","jurisdiction":"us-nyc","citation":"N.Y.C. Admin. Code § L.L. 2006/034","heading":"L.L. 2006/034","body":"Enactment date: 8/23/2006\n\nInt. No. 290-A\n\nBy Council Members Gennaro, Brewer, Fidler, Foster, Gentile, Koppell, Liu, Mark-Viverito, Nelson, Weprin, Sears, Garodnick, Felder, Martinez, White Jr. and The Public Advocate (Ms. Gotbaum)\n\nA Local Law to amend the administrative code of the city of New York, in relation to requiring credit counseling agencies to notify consumers when they are not approved pursuant to the Bankruptcy Prevention and Consumer Protection Act of 2005.\n\nBe it enacted by the Council as follows:\n\nSection 1. Of increasing regularity, indebted city residents have been the victims of a fraudulent scheme presented under the guise of financial assistance. Under this unscrupulous plan, numerous dishonest lenders have begun offering \"credit counseling\" services. However, instead of devising a realistic management plan to reduce debt, these businesses frequently take advantage of their customers' dire financial situations. Often, the counselor will recommend that the consumer borrow funds to satisfy outstanding balances and consolidate payments. The counseling agency will then arrange such loan against the consumer's assets, often a real estate interest.\n\nHowever, many victims of this scam report that the loan interest rates are so high that they are regularly in a worse fiscal position than before they sought counseling. Ultimately, the business that advertised its ability to help these consumers owns an interest in their customer's property and earns exorbitant interest on the funds loaned. When the consumer is unable to meet his or her monthly obligation, the lender may simply foreclose and sell the real estate.\n\nSection 106 of the newly enacted Bankruptcy Prevention and Consumer Protection Act of 2005 prohibits an individual from filing for personal bankruptcy protection unless such person has received credit counseling from an approved nonprofit budget and credit counseling service prior to filing a bankruptcy petition. The U.S. Trustee may waive this requirement only if an applicant can establish that the district in which he or she resides does not provide adequate services.\n\nChapter 1 of the Bankruptcy and Consumer Protection Act of 2005 specifies the requirements that a services provider must satisfy to obtain federal approval, including, but not limited to, staffing, organizational structure and counseling topic areas. Determinations must be reviewed annually and approval may be revoked at any time. Further, the Chief Bankruptcy Clerk must maintain a list, available to the public, of all approved credit counselors. Presently, there are thirteen counselors approved for residents of the Southern District of New York State, which includes the city of New York City, and fourteen for residents of the Eastern District.\n\nTo thwart unscrupulous lenders from taking advantage of consumers in financial crisis, and to ensure that each New Yorker receives the best counseling possible, the Council finds it necessary to require businesses that offer credit counseling services to inform individuals that the business, if not approved, has not been certified pursuant to the Bankruptcy Prevention and Consumer Protection Act of 2005.\n\n* * *\n\n[Consolidated provisions are not included in this Appendix A]\n\n* * *\n\n§ 3. This local law shall take effect one hundred twenty days after it shall have been enacted into law; provided, however, that the commissioner shall take any actions necessary prior to such effective date for the implementation of this local law including, but not limited to, establishing guidelines and promulgating rules.","path":["New York City Administrative Code","2006"],"source_url":"https://files.amlegal.com/pdffiles/NewYorkCity/Admin/XML.zip","current_through":"Local Law 2026/135 (enacted August 31, 2026)","vintage":"","retrieved_at":"2026-09-06T02:48:57Z","sha256":"673ceb3c618b519ada1926f6dd0dc8af93a2225eeae8fc8ca65152ff96fec13a","source_id":"us-nyc","stale":false,"prev":"us-nyc/n.y.c.-admin.-code-l.l.-2006-033","next":"us-nyc/n.y.c.-admin.-code-l.l.-2006-037"},"notice":"GroundRules: Original legal text. Not legal advice."}