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CUs help debt cancellation become law in Florida
TALLAHASSEE, Fla. (6/4/08)--Florida credit unions can now sell debt cancellation products.Florida Gov. Charlie Crist signed a bill, which was supported by the Florida Credit Union League (FCUL), into law last week. The bill--House Bill 343--creates a new insurance product that enables insurers to directly insure, rather than reinsure, banks and other entities against losses resulting from the writing of debt cancellation or debt suspension agreements, according to the Florida House of Representatives staff analysis. Debt cancellation products are lending transactions between a financial institution and a borrower in which the financial institution, for a fee, agrees to cancel or suspend the debt upon the occurrence of certain events. The risk of default due to events such as death, disability, or unemployment, shifts from the debtor to the financial institution. “The league supported the bill,” Andrew Price, FCUL director, legal services, told News Now. “We were successful in getting this bill passed the previous two years only to have it vetoed--by two different governors--for other portions of the bill not related to debt cancellation that were added to the bill during session. “None of those previous add-ons were in this bill thus freeing up the governor to sign it. It was a clean bill this year so we were happy to get it signed and in law,” he added. The key issue with the bill’s passage is that now if credit unions offer a debt cancellation product, they don’t have to put capital into reserves for it to pay out, Price said. “So now it’s a viable product in Florida for credit unions.”


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