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Unofficial Opinion 1997-6

PRESS ADVISORY

Unofficial Opinion 1997-6

January 31, 1997
To: 

Senator

District 48

Re: 

There is no irreconcilable conflict between the provisions of the credit repair law set forth at O.C.G.A. § 16-9-59 and the provisions of the debt adjustment law set forth at O.C.G.A. § 18-5-1 et seq. with regard to their effect on the operation of consumer debt counseling services by nonprofit organizations exempt from taxation under § 501(c)(3) of the Internal Revenue Code.  Although exempt from the credit repair law, such organizations are prohibited from engaging in the activities proscribed by the debt adjustment law

This responds to your question regarding the relationship between the provisions of O.C.G.A. § 16-9-59 (the "credit repair law") and O.C.G.A. § 18-5-1 et seq. (the "debt adjustment law") and the effect of such provisions on the operation of consumer debt counseling services by nonprofit organizations exempt from taxation under § 501(c)(3) of the Internal Revenue Code ("501(c)(3) organizations").

Under O.C.G.A. § 16-9-59, a person who operates a credit repair services organization is guilty of a misdemeanor.  O.C.G.A. § 16-9-59(c).  The term "credit repair services organization" does not include 501(c)(3) organizations.  O.C.G.A. § 16-9-59(a)(2)(B)(iii).  Under O.C.G.A. § 18-5-4, any person who engages in the business of debt adjusting is guilty of a misdemeanor.  No exemptions from this Code Section are provided other than "debt adjusting incurred incidentally in the practice of law."  O.C.G.A. § 18-5-3.

The terms "credit repair services organization" and "debt adjusting," are similarly defined at O.C.G.A. § 16-9-59(a)(2)(A) and O.C.G.A. § 18-5-1(1), respectively.  The credit repair services prohibited by O.C.G.A. § 16-9-59 involve "improving a buyer's credit record, history, or rating," and "obtaining an extension of credit for a buyer."  O.C.G.A. § 16-9-59(a)(2)(A).  The unlawful business of debt adjusting involves

          doing business in debt adjustments, budget counseling, debt management, or debt pooling service or holding oneself out, by words of similar import, as providing services to debtors in the management of their debts and contracting with a debtor for a fee to: (A) [e]ffect the adjustment, compromise, or discharge of any account, note, or other indebtedness of the debtor; or (B) [r]eceive from the debtor and disburse to his creditors any money or other thing of value.

O.C.G.A. § 18-5-1(1).

Under the rules of statutory construction, one statute will not be construed to repeal another unless the two are in irreconcilable conflict.  Cornwell v. Atlanta Trust Co., 177 Ga. 303, 306 (1933).  Whenever possible, statutes are to be harmonized, and are to be construed so as to give full force and effect to all provisions.  Ryan v. Commissioners of Chatham County, 203 Ga. 730, 731-32 (1948); Osborn v. State, 161 Ga. App. 132, 135 (1982); Head v. H.J. Russell Constr. Co., 152 Ga. App. 864, 865 (1980); 1991 Op. Att'y Gen. 91-29; 1995 Op. Att'y Gen. U95-13.  In light of these rules of statutory construction, it would not appear that there is an irreconcilable conflict between the credit repair law and the debt adjustment law with regard to their effect on 501(c)(3) organizations.  The statutes may be harmonized by narrowly construing their provisions.

The exclusion of 501(c)(3) organizations from the definition of "credit repair services organization" does not ipso facto authorize such organizations to engage in similar activities prohibited by other statutory provisions.  Therefore, inasmuch as 501(c)(3) organizations are not exempt from the debt adjustment law, such organizations can not engage in the activities proscribed by the debt adjustment law, even though such activities may be similar to the activities covered under the credit repair law.

A violation of the debt adjustment law requires not only (1) "doing business in debt adjustments, budget counseling, debt management, or debt pooling service or holding oneself out, by words of similar import, as providing services to debtors in the management of their debts," but also (2) "contracting with a debtor for a fee to (A) [e]ffect the adjustment, compromise, or discharge of any account, note, or other indebtedness of the debtor; or (B) [r]eceive from the debtor and disburse to his creditors any money or other thing of value."  O.C.G.A. § 18-5-1(1).  Since both designated acts (1) and (2) are required for a violation of the debt adjustment law, budget counseling alone would not be prohibited by the statute.

Accordingly, it is my unofficial opinion that there is no irreconcilable conflict between the credit repair law and the debt adjustment law with regard to their effect on the operation of consumer debt counseling services by 501(c)(3) organizations.  Although 501(c)(3) organizations are exempt from the credit repair law, such organizations are prohibited from engaging in the activities proscribed by the debt adjustment law.

Prepared by:

DANIEL M. FORMBY

Deputy Attorney General