Bill > HB1923

This bill establishes regulations for income share agreements (ISAs), which are financial arrangements where an individual receives funds for education or workforce development in exchange for a percentage of their future income over a set period. The bill defines key terms like "income" (reportable earnings for federal tax purposes) and "income share agreement originator" (someone who handles ISA applications, negotiates terms, or buys existing ISAs). It mandates that ISAs must clearly state the income percentage to be paid, the maximum duration of the obligation (up to 360 months, with potential extensions if income is below a certain threshold), and that at least the first $10,000 of annual income is exempt from calculation, with this exemption adjusted annually for inflation. The bill also requires specific disclosures to individuals, such as defining income, stating the payment percentage and frequency, clarifying that an ISA is not a debt instrument, and noting that payments may exceed or be less than the initial funds received. Furthermore, it limits the total percentage of an individual's future income obligated under all ISAs to 15%, making any ISA exceeding this limit unenforceable. The bill requires "income share agreement originators" to be licensed by the department of financial institutions, undergo background checks, maintain a surety bond, and register with the nationwide mortgage licensing system and registry. It outlines grounds for denying, suspending, or revoking licenses, prohibits deceptive advertising, and establishes penalties for violations, including fines and potential criminal charges for gross misdemeanors. The bill also clarifies that ISAs are subject to consumer protection laws and that transactions primarily for business or commercial purposes are exempt from certain usury defenses, while ISAs are specifically addressed.