Testimony of Michael Komaschka on Behalf of the Association for Consumer Debt Relief in Support of Senate Bill 256

On June 9, ACDR Government Relations Manager, Mike Komaschka, testified before the Ohio Senate Financial Institutions, Insurance and TechnologyCommittee in support of Senate Bill 256, which would make it possible for Ohioans to access debt relief services. Video of the testimony can be found here.

My name is Michael Komaschka, and I serve as Government Affairs Manager for the Association for Consumer Debt Relief (ACDR), the national trade association representing responsible debt relief providers across the country. As a lifelong Ohioan, I appreciate the opportunity to testify in support of Senate Bill 256. 

ACDR represents companies that help consumers resolve unsecured debts through transparent, results-based programs. Our members collectively serve hundreds of thousands of consumers each year, negotiating billions of dollars in relief and helping families facing serious financial hardship regain control of their finances. ACDR members are required to adhere to strict industry standards, undergo independent audits, and comply with all applicable federal and state consumer protection laws.

Today, many Ohio families are facing increasing financial pressure. Rising costs, high interest rates, and growing credit card balances have left many consumers struggling to keep up. Ohio ranks fifth among the states experiencing the fastest growth in credit card delinquencies. Meanwhile, Ohio’s bankruptcy filings increased by 4% last year. Despite these realities, Ohio consumers remain unable to access the same regulated debt relief options that are available to consumers in neighboring states such as Michigan, Indiana, Kentucky, and Pennsylvania.

For consumers facing overwhelming unsecured debt, there are relatively few options available. Credit counseling can be an effective solution for some consumers, but it does not reduce principal balances. Bankruptcy remains available, but it often carries significant long-term consequences.

Debt relief provides another path forward for consumers who need it. Debt relief is not a loan. It does not create new debt or extend new credit. Instead, debt relief providers work directly on behalf of consumers with their creditors to negotiate reductions in existing unsecured debt, helping consumers resolve obligations they can no longer realistically repay in full.

Senate Bill 256 creates a comprehensive regulatory framework for debt resolution providers to operate in Ohio. The legislation establishes licensure and oversight by the Division of Financial Institutions while incorporating strong consumer protections that reflect existing federal standards that have governed debt settlement providers for more than fifteen years. 

Among its key protections, SB 256:

• Requires providers to obtain a license and maintain a surety bond before offering services in Ohio;

• Prohibits fees until a debt has been successfully resolved and the consumer has made a payment under the relief agreement;

• Requires consumer funds to remain in dedicated FDIC-insured accounts owned and controlled by the consumer;

• Gives consumers the right to terminate a program at any time without penalty; and

• Provides regulators with clear authority to oversee providers and enforce compliance. 

This legislation does not require anyone to use debt relief. It simply ensures that Ohio consumers have the freedom to choose a regulated option that may be appropriate for their circumstances.

These protections are among the strongest found in consumer financial services today. Debt relief is fundamentally results-based. Providers cannot charge consumers simply for enrolling in a program; they must first deliver a measurable result by successfully resolving debt before collecting any fee. That model aligns the interests of providers and consumers and helps ensure accountability throughout the process. 

Senate Bill 256 will also provide Ohio regulators with a modern framework to oversee an industry that already operates under extensive federal requirements. By establishing clear licensing standards, disclosure requirements, reporting obligations, and enforcement mechanisms, the bill promotes transparency and consumer confidence while ensuring that Ohio families have access to a lawful and regulated debt relief option. 

As an Ohioan, I believe consumers facing financial hardship deserve access to safe, regulated options that can help them avoid bankruptcy and rebuild their financial futures. Senate Bill 256 strikes an appropriate balance between strong consumer protections and access to legitimate debt relief services.

On behalf of the Association for Consumer Debt Relief, I thank Senator Lang for his sponsorship of this bill and the members of this Committee for their consideration of this legislation. I respectfully urge your support for Senate Bill 256