Rep. Howard files bill in North Carolina House to expand debt settlement prohibitions

A new bill filed by State Rep. Julia C. Howard in the North Carolina House seeks to update and broaden rules against unfair debt settlement practices, according to the North Carolina State House.

The bill, filed as HB 734 on April 2 during the 2025 regular session, was formally listed with the short title: ‘Modernize Debt Settlement Prohibition.’

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill seeks to modernize and expand the prohibition on debt settlement by categorizing it as an unfair trade practice. It revises and clarifies definitions associated with debt adjusting and includes debt settlement as a form of this activity. The bill expands civil remedies for debtors and specifies that contracts for debt settlement are void against public policy. It outlines entities exempted from being categorized as debt adjusters, including employees managing employer debts, court-mandated actions, and certain credit counseling organizations meeting specific criteria. Unauthorized debt settlement acts are penalized as misdemeanors, and the superior court can enjoin such practices as unfair trade practices. This bill will be effective July 1, 2025.

Of the four sponsors of this bill, Mitchell S. Setzer proposed the most bills (32) during the 2025 regular session.

Bills in North Carolina follow a multi-step process before becoming law. A lawmaker starts by filing a bill, which is assigned to a committee for review. The bill must be read three times in each chamber. If one chamber changes the bill after the other passes it, both must agree on the final version. Once both chambers approve the same bill, it goes to the governor, who has 10 days (or 30 if the legislature is not in session) to sign, veto, or let it become law without a signature.

You can read more about the bills and other measures here.

Howard graduated from Salem College in 2003 with a BA.

Howard, a Republican, was elected to the North Carolina State House in 2019 to represent the state’s 77th House district, replacing previous state representative Harry Warren.