Check a debt-help provider’s evidence

SettleADebt.com — S_AL PASS-01

Alabama provider market access and consumer fees

Baseline: October 22, 2026, Pacific. Actual access: October 22, 2026, Pacific, corresponding to October 23, 2026, UTC.

Principal finding: Alabama requires separate analysis of authority to perform the underlying debt service and authority to receive and transmit client money. A money-transmitter license can authorize covered payment-distribution activity. It does not authorize a nonlawyer to perform services reserved to licensed attorneys. Conversely, attorney involvement or nonprofit status does not establish a blanket money-transmission exemption. The controlling collection precedent also prevents treating every peaceful adjustment of an undisputed account as prohibited legal practice. Claims C001–C014. Alabama Securities Commission+3

Fee finding: This investigation did not establish a current Alabama debt-service schedule prescribing consumer setup, monthly, settlement, per-debt, savings-percentage, or aggregate dollar caps, or a CPI adjustment mechanism. That is a bounded evidence finding, not a conclusion that fees are unlimited. Verified lawyer-fee restrictions, qualifying nonprofit conditions, and independently applicable federal timing rules still matter. C015–C019, C026–C035.

This is one component of the Alabama dossier. Alabama and A066 acceptance remain open.

Identifier convention: References such as C001 and S001 below mean S_AL-P1-C001 and S_AL-P1-S001. The registers contain the full unique identifiers.

A. Substantive answers to the seven scope questions

1. Definitions and classification depend on the actual conduct

Alabama’s two principal classification systems

The Alabama practice-of-law framework reaches more than appearances in court. Section 34-3-6 addresses compensated legal advice and document work, compensated representation concerning another’s rights, and vocational adjustment or compromise of specified accounts and claims. Its debt-related language concerns defaulted, controverted, or disputed accounts and the actor’s relationship to the parties. Custody of money is not a prerequisite. The operative language is corroborated by an official State Bar opinion, although the current official legislative codification could not be retrieved; the freshly read standalone codification was the unofficial 2025 reproduction. C001, C003–C004; S001–S003. law.justia.com+1

Separately, the Alabama Monetary Transmission Act covers receiving money or monetary value for transmission, as well as issuing or selling specified payment instruments or stored value. ASC expressly connects the Act to debt-management businesses that receive obligors’ money to pay their bills or accounts. C005–C007; S005–S006, S028. Alabama Securities Commission+2

Classification and access matrix

The important limitation supplied by Porter

In State ex rel. Porter v. Alabama Association of Credit Executives, the Alabama Supreme Court distinguished peaceful collection of undisputed, uncontested delinquent accounts from prohibited activity involving legal threats or disputed claims. The case concerned a creditor-side commercial collection association, not a modern debtor-side settlement program.

Accordingly, neither “all debt settlement is prohibited” nor “friendly negotiation makes every settlement business lawful” is supported. The opinion’s rehearing modification also matters: a sentence categorically prohibiting a particular 5% follow-up charge was deleted. That historical charge is not a current consumer fee cap. C002; S002, pp. 813–816. law.justia.com

Consumer versus business purpose

The Alabama provisions examined do not use consumer purpose as a universal exclusion from either reserved legal practice or money transmission. A commercial-debt business therefore cannot assume exemption merely because its customers are businesses. Federal TSR coverage has its own definitions and business-call exemptions, discussed separately below. C003, C005, C027.

2. Prohibited, authorized, and conditionally exempt models

Reserved legal services

An unauthorized nonlawyer cannot obtain permission to perform reserved legal services by acquiring a transmission license, employing a lawyer as nominal cover, or changing the fee’s name. Alabama professional-independence rules restrict nonlawyer fee sharing, ownership/control arrangements, and assistance in unauthorized practice. C001, C014; S003–S004.

The debt-specific historical example is In re Nelms. The bankruptcy court described a purported law-firm debt operation that outsourced substantive work to a nonlawyer business and separately encountered licensing violations under the then-applicable Sale of Checks Act. This is useful evidence against treating an attorney connection as sufficient. It is not a current interpretation of every provision of Chapter 7A. C014, C023; S019, pp. 2–5. cond5_4+1

Transmission authorization

The issuing regulator is the Alabama Securities Commission, under Ala. Code Title 8, Chapter 7A. Section 8-7A-5 addresses engaging in, advertising, soliciting, or holding out covered transmission services. The authorized-delegate route requires a licensed principal and compliance with the statutory relationship requirements; it does not permit an unlimited chain of subdelegates. C006–C007.

The statute distinguishes:

• Section 8-7A-3 exclusions from the chapter, including specified governmental, banking, and commodities-related categories.
• Section 8-7A-4 exemptions from §§8-7A-5 through 8-7A-15 only, including specified clearing, payment-system, broker-dealer, and government-payment activities.

The government-payment category has cumulative conditions, including exclusive purpose, a binding government contract, notice, annual audit, segregation, prompt notification of problems, and examination access. No generic attorney or nonprofit exclusion appears in those sections. C008–C010; S005, S028. Alabama Securities Commission+1

A genuine lawyer pathway also requires the correct professional status. The Bar’s licensing page distinguishes an occupational license for private practice from special membership; “good standing” alone does not establish private-practice authority. Rule 5.5’s temporary or incidental out-of-state permissions are not a blanket authorization for continuous Alabama practice. C012–C013; S004, S015. cond5_5+1

3. Applicable fee structures, limits, indexing, and refunds

The lawyer-fee and refund conclusions come from the official Alabama court rules. The nonprofit percentage restriction was read in the official U.S. Code compilation, with stated currency through October 7, 2026. S004, S025. cond1_5+2

Reconciliation of dated materials

The ASC’s May 11, 2009 alert and the historical Nelms matter concern the former framework. Act 2017-389 repealed Chapter 7 and replaced it with Chapter 7A, effective August 1, 2017. The 2009 alert’s placement in a /2023/11/ upload directory does not change its issue date. C023; S006, S019–S020, S028.

A September 27, 2023 official sunset report lists a $500 renewal fee, citing Rule 830-X-7A-.09. That is dated corroboration of an agency charge, not a freshly verified 2026 operative rule or consumer-fee schedule. C021; S027, printed p. 20. asc.alabama.gov+3

Two 2026 boundaries were also checked:

• The cryptocurrency-kiosk addition, §8-7A-28, became effective October 1, 2026. Its transaction and fraud-refund rules are activity-specific and do not supply an ordinary debt-settlement fee schedule. The ASC Chapter 7A reproduction omits this addition. C024.
• HB585’s introduced international-transfer fee proposal is not treated as enacted law. Its final official disposition remains unverified. C025.

4. When fees may actually be requested or received

Alabama permission first

This pass establishes no general Alabama rule allowing a debt-settlement business to collect an enrollment fee merely because the customer signs a contract. A lawful business model, a lawful charge, and lawful collection timing are separate requirements.

For an authorized lawyer, the general advance-payment comment must be read together with the unearned-fee refund rule and any independently applicable federal restriction. C015–C017, C028.

Federal TSR common context

The current eCFR passages were actually read. The display stated currency through October 21, 2026. These federal provisions are common context, not Alabama licensing authority.

For covered debt-relief telemarketing, requesting or receiving provider fees generally requires:

1. A qualifying alteration of at least one debt under a valid agreement executed by the customer.
2. At least one customer payment under the agreement with the creditor or collector.
3. Compliance with the applicable allocation method when debts are altered individually.

A retainer, membership, application, or maintenance label does not avoid the restriction. C028–C030, C034; S021–S024. ecfr.gov+1

For individually resolved debts, the rule permits either the specified proportional allocation using enrollment balances or a consistent percentage of savings using the enrollment balance and amount paid to satisfy the debt. It does not establish a federal 15%, 20%, or 25% safe-harbor ceiling. C029–C030.

DMP and partial-payment boundaries

The FTC adoption explanation addresses a DMP in which creditor concessions are obtained together: a binding plan and the consumer’s first qualifying payment must precede fees; the rule does not then prohibit subsequent periodic servicing fees merely because the program continues. That explanation cannot be applied to every arrangement marketed as a DMP. C031.

A genuine creditor-approved installment settlement can satisfy the payment trigger with its first qualifying installment. If the creditor instead requires a lump sum, a provider cannot create its own installment schedule and claim that an insufficient partial payment unlocks its fee. C032; S022, 75 FR 48489–48490, notes 431–432. federalregister.gov+2

Dedicated accounts and coverage exceptions

A qualifying dedicated account remains consumer-owned, including interest, and must satisfy the rule’s insurance, independence, and compensation conditions. Upon exit, the specified account balance, less compliant earned fees, must be returned within seven business days of the request. This is not a general Alabama seven-day cancellation rule. C033.

Coverage depends on actual sales conduct and entity jurisdiction. Debt relief is carved out of certain general inbound-call exemptions; attorneys have no categorical exemption; bona fide nonprofit treatment is different from a nonprofit label. The face-to-face and business-purchase provisions have specific boundaries. C026–C027, C034–C035. ecfr.gov+2

5. Actual permission, application, and lookup evidence

An actual ASC application route was verified. The posted instructions identify Form MT, supporting materials, initial charges, and submission directions. Form MT contains an Obligor Agent Questionnaire addressing receipt, safeguarding, accounting, and transmission of customer funds. Form MTR supplies a renewal procedure. C011, C020–C022; S009–S011.

A filed form alone is not proof of authorization. Section 8-7A-8 governs issuance and includes a completeness-based 120-day mechanism, subject to good-cause extensions. No applicant or provider was evaluated under that mechanism here. Alabama Securities Commission+3

Operational limit: ASC currently posts forms and mailing instructions, while the official NMLS checklist page produced no readable checklist. Therefore, the posted procedure is verified as posted, but the exclusive current intake channel is not established.

Lookup limit: NMLS Consumer Access returned a retrieval error in this investigation. The Alabama Bar’s public member-search form was successfully read. Neither result establishes a named debt-service provider’s actual authorization. No marketing statement was used as proof. C013, C022; S015–S018.

6. Worked fee and boundary examples

The complete plain-text examples are in Section D. They include:

• A classification hold for an uncleared nonlawyer model.
• An authorized-lawyer earned/unearned-fee calculation.
• A lower-balance debt resolved before larger debts.
• Credit for a previous lawful fee payment.
• Savings-based arithmetic.
• Lump-sum versus genuine installment settlement.
• Dedicated-account cancellation.
• A nonprofit percentage-fee hold.

No example assumes that an invented Alabama debt-settlement license exists.

7. Component coverage and remaining investigations

The full pass coverage and gap table follows the examples in Section D. The unresolved items remain explicit; the broader Alabama dossier is not accepted or closed by this component.

B. Source register

Access code A: Actually checked during October 22, 2026, Pacific / October 23, 2026, UTC. R: Relevant operative passage or identified document portion freshly read. X: Route attempted, but usable operative text or result was not obtained. Historical/proposed identifies legal status; it does not mean the document was merely discovered.

Alabama legal and interpretive sources

Applications, lookup, and administrative-rule evidence

Federal common-context sources

C. Claim register

“High” below means strong support for the stated proposition within the identified source and conditions. It does not certify an entire provider model or all later Alabama passes.

D. Plain-text worked examples and coverage gaps

Worked examples

Example 1 — Classification hold before calculating a nonlawyer settlement fee

Inputs: Enrolled debt $12,000. Advertised fee 20% of enrolled debt. Operator proposes to give individualized legal advice and negotiate a disputed claim, but no authorized legal-services pathway has been established.

Base and operator: $12,000 × 0.20.

Intermediate and arithmetic result: $2,400.

Legal result: HOLD the proposed $2,400 charge and collection pathway. Arithmetic does not establish authority to perform the service. Routing customer savings through an independent account does not answer the reserved-legal-activity issue.

Units/rounding: U.S. dollars; exact result, no rounding.

This is not a finding that Alabama has a “$0 statutory fee cap.” It is an authorization failure or unresolved classification. C001–C003, C017.

Example 2 — Genuine lawyer, earned work, and termination refund

Assumptions: Properly authorized Alabama private-practice lawyer; genuine representation; no nonlawyer control; the retention is outside a covered TSR telemarketing transaction; fee complies with Rule 1.5; no expenses or other charges.

Inputs: Agreed rate $200/hour. Earned work 2.25 hours. Advance received $700.

Base and operator: 2.25 hours × $200/hour = $450 earned fee.

Refund calculation: $700 advance − $450 earned = $250 unearned advance to return on termination.

Units/rounding: Dollars; $450.00 earned and $250.00 refund, exact.

The $200 rate is a hypothetical input, not an approved rate or ceiling. If TSR applies, the premise allowing receipt of the advance must be reconsidered. C013–C016, C028.

Example 3 — Lower-balance debt resolved first; proportional federal allocation

Assumptions: The fee and underlying Alabama service are otherwise lawful, the TSR applies, and the agreement/payment triggers have been satisfied for the small debt only.

Inputs: Total enrollment balances $10,000. Resolved debt’s enrollment balance $1,000. Hypothetical total contracted fee $2,000.

Base and operator: $1,000 ÷ $10,000 = 0.10.

Allocation: $2,000 × 0.10 = $200 allocated to the resolved debt.

Remaining allocation: $2,000 − $200 = $1,800 attributable to other debts; resolving the small debt does not unlock that remainder.

Units/rounding: Dollars and dimensionless ratio; exact, no rounding.

If Alabama authority remains unresolved, collection remains on hold despite the $200 federal allocation calculation. C028–C029.

Example 4 — Previous lawful fee payment

Use Example 3’s $200 allocation.

Additional input: $75 was previously collected lawfully, after that debt’s triggers were satisfied, toward the same allocation.

Calculation: $200 − $75 = $125 remaining.

Units/rounding: Dollars; exact.

A payment collected unlawfully in advance is not retroactively validated merely by subtracting it from a later fee. C028–C029.

Example 5 — Savings-based fee after completed settlement

Assumptions: Otherwise lawful service and fee; applicable TSR conditions satisfied; creditor has been paid the full settlement amount; uniform hypothetical rate across debts.

Inputs: Enrollment balance $2,000. Amount actually paid to satisfy debt $1,200. Hypothetical savings fee 20%.

Savings base: $2,000 − $1,200 = $800.

Fee operator/result: $800 × 0.20 = $160.

Units/rounding: Dollars; exact.

A later $200 increase in the account balance does not change the enrollment input to $2,200. The 20% input is not an Alabama or federal statutory maximum. A qualifying nonprofit must separately clear §501(q)’s state-law condition. C018, C028, C030.

Example 6 — Partial payment and genuine installments

Inputs: Creditor’s actual agreement requires a $1,200 lump-sum settlement. Customer sends $100.

Calculation: $100 ÷ $1,200 = 1/12, approximately 8.3333% of the required payment.

Result: The provider cannot deem this the first of twelve self-created installments and use it to unlock a settlement fee.

Different actual agreement: If the creditor genuinely agreed to twelve $100 installments, the first qualifying $100 payment can satisfy the federal payment element. It does not dispense with the agreement, allocation, state-authority, or other applicable conditions.

Units/rounding: Dollars; percentage displayed to four decimal places only for illustration.

Do not calculate savings as $2,000 minus just the first $100 when the agreed satisfaction amount is $1,200. C028, C030, C032.

Example 7 — Dedicated-account cancellation

Assumptions: Qualifying TSR account; current balance includes an earned but not yet withdrawn provider fee; no other charges assumed.

Inputs: Account balance $1,000. Compliant earned fee $200.

Calculation: $1,000 − $200 = $800 returned within seven business days after the request.

Alternative: If no fee was compliantly earned, $1,000 − $0 = $1,000 returned.

Units/rounding: Dollars; exact.

An unauthorized or prematurely charged fee cannot simply be labeled “earned” for this deduction. This example does not resolve every Alabama trust, contract, or restitution question. C033, C039.

Example 8 — Nonprofit percentage-fee hold

Inputs: Qualifying §501(q) organization proposes a monthly fee of 6% of a $200 DMP payment.

Base and operator: $200 × 0.06 = $12.

Arithmetic result: $12 per month.

Legal result: HOLD clearance of the $12 percentage fee because Alabama permission sufficient for §501(q)(1)(C)(iii) was not established. Neither nonprofit status nor a missing verified Alabama cap supplies that permission.

Units/rounding: Dollars per month; exact. The 6% is an illustrative proposal, not a statutory allowance. C018.

Example 9 — Regulator charge, kept separate from consumer fees

Inputs: Posted initial ASC filing charge $500; posted initial license charge $500.

Calculation: $500 + $500 = $1,000 initial state application charges.

Units/rounding: Dollars per applicant; exact.

This does not authorize passing $1,000 to a consumer. Annual renewal is not calculated as a verified exact current amount because the operative rule remains unread. C020–C021.

Full component coverage and gap table

E. Researcher self-check

Actually read: The identified operative provisions in ASC’s Chapter 7A reproduction; relevant portions of the original signed 2017 Act; the Porter opinion including rehearing; official Alabama professional rules and Bar materials; actual ASC application and renewal forms/instructions; relevant Nelms passages; the 2009 and 2017 official materials; the 2019 adoption listing; the dated official fee table; the 2026 kiosk amendment and confirmation; the stablecoin boundary provisions and effective-date clause; current TSR definition, fee, account and exemption provisions; relevant FTC adoption explanations; and the official §501(q) text.

Not successfully read or verified: The current official standalone UPL codification, signed 2018 amendment, complete operative renewal-fee rule, current NMLS Alabama checklist, a usable transmitter lookup result, final official HB585 disposition, comprehensive later treatment of every cited case, and provider-specific authorization. The proposed-rule PDF was not promoted to an operative read. Search snippets, titles, index entries, company claims, and association charts were not used as legal permission or current fee evidence.

Status discipline: Historical materials remain historical; introduced text remains proposed evidence; the October 1, 2026 laws are distinguished from the July 18, 2028 provision; webpage/upload dates are not legal effective dates. No unsupported stay, vacatur, withdrawal, or current-provider-status conclusion is made.

Research mode: This work used regular-chat research with parallel internal research assignments, not Deep Research or newly opened independent ChatGPT conversations. I did not verify or switch the chatgpt.com model selector and therefore do not certify “actual GPT-6 Pro.” This is a researcher self-check, not an independent review.

END S_AL PASS-01.