31A-21-109 - Debt cancellation agreements and debt suspension agreements.
31A-21-109. Debt cancellation agreements and debt suspension agreements.
(1) As used in this section:
(a) "Debt cancellation agreement" means a contract between a lender and a borrowerwhere the lender, for a separately stated consideration, agrees to waive all or part of the debt inthe event of a fortuitous event such as death, disability, or the destruction of the lender'scollateral.
(b) "Debt suspension agreement" means a contract between a lender and a borrowerwhere the lender, for a separately stated consideration, agrees to suspend scheduled installmentpayments for an agreed period of time in the event of a:
(i) fortuitous event such as involuntary unemployment or accident; or
(ii) fortuitous condition such as sickness.
(c) "Guaranteed asset protection waiver" is as defined in Section 31A-6b-102.
(d) "Institution" means:
(i) a bank as defined in Section 7-1-103;
(ii) a credit union as defined in Section 7-1-103;
(iii) an industrial bank as defined in Section 7-1-103; or
(iv) a savings and loan association as defined in Section 7-1-103.
(e) "Regulate the issuance" includes regulation of the following with respect to a debtcancellation agreement or a debt suspension agreement:
(i) terms;
(ii) conditions;
(iii) rates;
(iv) forms; and
(v) claims.
(f) "Subsidiary" is as defined in Section 7-1-103.
(2) Except as provided in Subsection (6), the commissioner has sole jurisdiction over theregulation of a debt cancellation agreement or debt suspension agreement.
(3) Subject to this section, the commissioner may by rule, made in accordance with Title63G, Chapter 3, Utah Administrative Rulemaking Act:
(a) authorize an insurer to issue:
(i) a debt cancellation agreement; or
(ii) a debt suspension agreement; and
(b) regulate the issuance of:
(i) a debt cancellation agreement; or
(ii) a debt suspension agreement.
(4) Except as provided in Subsection (6), a debt cancellation agreement or a debtsuspension agreement may be issued only by an insurer authorized to issue a debt cancellationagreement or debt suspension agreement under this section.
(5) (a) The rules promulgated by the commissioner under this section shall regulate theissuance of a debt cancellation agreement or debt suspension agreement according to thefunctional insurance equivalent of each type of debt cancellation agreement or debt suspensionagreement.
(b) Except as provided in Subsection (5)(c), in accordance with Title 63G, Chapter 3,Utah Administrative Rulemaking Act, the commissioner may by rule determine the functionalinsurance equivalent of each type of debt cancellation agreement or debt suspension agreement.
(c) Notwithstanding Subsection (5)(b), the functional insurance equivalent of a debtcancellation agreement that provides for the cancellation of indebtedness at death is credit lifeinsurance.
(6) Notwithstanding the other provisions of this section, the issuance of a debtcancellation agreement or a debt suspension agreement by an institution or a subsidiary of aninstitution is:
(a) not subject to this section; and
(b) subject to the jurisdiction of the primary regulator of:
(i) the institution; or
(ii) the subsidiary of an institution.
(7) This section does not apply to a guaranteed asset protection waiver.
Amended by Chapter 274, 2010 General Session