Which place’s debt rules apply—and who can help?

S_HI PASS-01 — Hawaii provider market access and consumer fees

Actual research/access date: October 24, 2026, Pacific. Actual mode/model: Regular Chat, GPT‑5.6 Sol Pro. GPT‑6 Pro was not available in this session. No Deep Research, Work, browser control, other Chat, application filing, account change, purchase, contact, private borrower data, or local-file claim. Component boundary: Provider access, activity classification, consumer fees, and directly related timing only. This is not acceptance of the complete Hawaii dossier or A066, and it is not provider-specific authorization or legal advice.

Bottom-line determination

1. Hawaii presently uses a prohibition model, not an ordinary debt-settlement licensing model. HRS §446‑2 prohibits a person from acting or offering to act as a “debt adjuster” in Hawaii. The current definition reaches a for-profit intermediary that settles, compromises, or otherwise alters payment terms and either receives debtor funds or otherwise arranges payment to creditors. A covered for-profit contract is void and unenforceable. [S_HI-P1-C001–C005, C010] Hawaii Data Portal+1
2. Both principal-reduction settlement and ordinary DMP/concession activity can be covered. Hawaii does not create separate operative categories for settlement companies, DMPs, or credit counselors. The functional conduct controls. Negotiating principal, interest, late-fee, minimum-payment, installment, or other payment-term changes can satisfy the definition. A provider does not escape merely because the consumer pays creditors directly; the “otherwise arranges” clause reaches noncustodial structures. [S_HI-P1-C002–C006] Hawaii Data Portal
3. The only express Chapter 446 fee-bearing branch is narrow: a qualifying nonprofit or charitable corporation or association may collect “nominal sums” as reimbursement for expenses connected with its services. Chapter 446 supplies no dollar cap, percentage, CPI adjustment, setup fee, monthly fee, settlement fee, savings fee, aggregate cap, or calculation method for that branch. The exact permissible current amount therefore remains held, not estimated. [S_HI-P1-C013–C014, C020, C022, C024] Hawaii Data Portal+1
4. The familiar $50 setup, $10-per-creditor monthly, $400/4%, 30%-of-savings, $100 counseling, $25 dishonored-payment, and CPI-adjustment figures are not current Hawaii law. They appeared in introduced 2007 SB159, which proposed replacing Chapter 446. The current official HRS still contains Chapter 446’s prohibition, so those figures cannot be used as a current fee schedule or adjusted forward. [S_HI-P1-C023–C024] Hawaii Data Portal+5
5. Federal TSR timing is a separate overlay, never a source of Hawaii permission. Where a transaction independently falls within the TSR, a debt-relief fee cannot be requested or received until at least one debt has been altered under a valid agreement and the consumer has made a payment under that agreement. Individual-debt fees must then follow one consistent proportional-balance method or one consistent percentage-of-savings method. Compliance with those federal triggers does not make a Hawaii-prohibited for-profit business lawful. [S_HI-P1-C025–C030] eCFR+1

A. Substantive findings

1. Current legal classification

1.1 Operative definition

A Chapter 446 “debt adjuster” has these elements:

1. A person—defined broadly to include individuals, partnerships, corporations, firms, associations, and other legal entities;
2. acting for a profit;
3. in the business of acting as an intermediary between an individual debtor and the debtor’s creditors;
4. for the purpose of settling, compromising, or otherwise altering payment terms; and
5. either:receiving money, property, or value from or for the debtor for creditor distribution; orotherwise arranging payment or distribution to creditors.

The “debtor” is an individual, including jointly or severally indebted individuals. The definition contains no express “personal, family, or household purpose” limitation. [S_HI-P1-C002, C005, C007–C008] Hawaii Data Portal

1.2 Functional model matrix

1.3 Consumer versus business purpose

Hawaii’s state definition differs from many consumer-only statutes. It turns on whether the debtor is an individual, not expressly on whether the debt arose for personal, family, household, agricultural, or business purposes. Therefore:

• A corporation’s or LLC’s debt is facially outside the definition.
• A natural person’s business-purpose debt is not expressly excluded.
• Treating all business-purpose individual debt as covered is nonetheless an interpretive conclusion that should be held pending a controlling Hawaii decision, published agency interpretation, or legislative history directly addressing the question. [S_HI-P1-C007–C008, C036] Hawaii Data Portal

That state issue is distinct from the federal TSR’s business-to-business call exemption and CROA’s personal/family/household “consumer credit transaction” definition. [S_HI-P1-C029, C032] eCFR+1

2. Prohibited, authorized, and conditionally exempt models

2.1 Covered for-profit provider

HRS §446‑2 states that a person who acts or offers to act as a debt adjuster in Hawaii may be fined up to $500, imprisoned up to six months, or both. It further makes a for-profit debt-adjusting contract void and unenforceable and permits the debtor to recover sums or things deposited with the adjuster and not disbursed to creditors. This is direct prohibition language—not language establishing registration subject to a fee schedule. [S_HI-P1-C001, C010, C019] Hawaii Data Portal

No current Chapter 446 license, registration, NMLS category, or application program was located in DCCA’s current operational pages. DCCA separately publishes a licensing program for collection agencies, but that program is governed by Chapter 443B and cannot be used to convert Chapter 446’s debt-adjusting prohibition into a license. [S_HI-P1-C017, C033] DCCA Hawaii+1

2.2 Hawaii-licensed attorney

The statute excludes “[a]n attorney licensed to practice law in this State,” expressly including the Legal Aid Society of Hawaii. The exact predicate is Hawaii licensure; an out-of-state license, “Esq.” label, referral arrangement, attorney relationship, or nonlawyer affiliate is not itself the statutory wording. [S_HI-P1-C011] Hawaii Data Portal

The HSBA directory states that every lawyer licensed in Hawaii is listed and that the profile indicates whether the lawyer may actively practice. That verifies an attorney predicate, not whether a particular contract, affiliate, fee, advertising practice, or debt-relief model is lawful. [S_HI-P1-C034] Hawaii State Bar Association

The two located Hawaii appellate memorandum opinions involving debt-relief providers—Sues v. National Debt Relief LLC and Inoue v. Harbor Legal Group—addressed arbitration/severability questions rather than deciding the merits of Chapter 446 coverage or the attorney exclusion. They therefore do not establish an affiliate safe harbor. [S_HI-P1-C035–C036] Hawaii State Courts+4

2.3 Nonprofit or charitable corporation or association

The exception is not established merely by inserting “nonprofit” into a trade name. Chapter 446 defines a nonprofit organization as a corporation or association whose net earnings do not inure to a private shareholder or individual, and §446‑3(4) refers to a nonprofit or charitable corporation or association acting as an adjuster. The operational entity, governance, earnings, compensation, affiliates, and actual activity therefore matter. [S_HI-P1-C013–C014] Hawaii Data Portal+1

Hawaii’s charity registry expressly warns that inclusion is not assurance of federal tax exemption, deductibility, or compliance with all laws. Likewise, ordinary business good-standing records establish existence and good standing, not a Chapter 446 exemption. [S_HI-P1-C014, C034] DCCA Hawaii+1

2.4 Lender and institutional branch

Section 446‑4 protects a bank, financial services loan company, credit union, or other government-licensed lender that pays off existing debts in connection with or as a condition precedent to making a new loan, and only at the debtor’s request or with consent or agreement. This does not authorize a lender, affiliate, lead generator, or unrelated settlement provider to conduct general debt negotiation. [S_HI-P1-C015] Hawaii Data Portal

DFI’s lists can help verify a lender, mortgage servicer, money transmitter, or other listed license status, but the lender must still satisfy §446‑4’s transaction-specific facts. [S_HI-P1-C034] DCCA Hawaii

3. Applicable fee structures and current limits

3.1 Current fee matrix

3.2 “Nominal” nonprofit reimbursement

The statute contains two independent constraints:

1. The sum must be nominal; and
2. It must reimburse expenses in connection with the services.

No current Hawaii statute, Chapter 446-specific rule, published OCP advisory, controlling court holding, or current official fee table was located that converts “nominal” into an exact amount, percentage of enrolled debt, monthly charge, per-creditor charge, or indexed figure. Therefore:

• An exact permitted dollar amount cannot responsibly be supplied.
• A percentage of debt or savings is not supported by the wording.
• A charge materially exceeding the connected expenses cannot be assumed to be “reimbursement.”
• Whether and how indirect overhead may be allocated remains unresolved.
• “Nominal” must still be satisfied even when the provider can document an expense. [S_HI-P1-C020, C036] Hawaii Data Portal

3.3 No current indexing or adjusted figure

The current Chapter 446 contains no CPI mechanism. The annual CPI adjustment language appeared in SB159’s proposed administrator powers, which also proposed repealing Chapter 446. Because that proposal did not become the current statute, there is no current Chapter 446 amount to update mathematically. No CPI calculation was performed. [S_HI-P1-C023–C024] Hawaii Data Portal+2

4. When fees may be requested or received

4.1 Hawaii state rule

For a covered for-profit debt adjuster, the operative answer is not “after settlement” or “after first payment.” The activity itself is prohibited. Hawaii law does not provide a performance event that turns the prohibited provider into an authorized provider. [S_HI-P1-C019, C030] Hawaii Data Portal

For the qualifying nonprofit/charitable branch, Chapter 446 does not specify:

• whether reimbursement may be collected before or after the expense;
• a signed-agreement trigger;
• a first-creditor-payment trigger;
• a settlement trigger;
• a monthly billing date;
• a cancellation deadline;
• a mandatory credit against later fees; or
• a refund timetable.

That statutory silence is not affirmative advance-fee authorization. The provider must still establish the exception and compliance with all independently applicable laws. [S_HI-P1-C020, C022, C030] Hawaii Data Portal

4.2 Federal TSR baseline—only where independently applicable

The TSR defines a debt-relief service as a program or service represented to renegotiate, settle, or otherwise alter payment or other terms of debt owed to one or more unsecured creditors or debt collectors, including balance, interest-rate, or fee reductions. [S_HI-P1-C025] eCFR

Under 16 CFR §310.4(a)(5), payment cannot be requested or received until:

1. The seller or telemarketer has renegotiated, settled, reduced, or otherwise altered at least one debt under a settlement agreement, DMP, or other valid contractual agreement;
2. The customer has made at least one payment under that agreement; and
3. For debts altered individually, the fee follows either:the same proportional relationship to the total contracted fee using enrolled balances; orthe same percentage of actual savings for every debt.

The first-payment event alone is insufficient. There must also be an actual alteration under a valid creditor agreement and the allocation requirement must be met. [S_HI-P1-C026–C027] eCFR

A compliant dedicated account may hold funds only under the rule’s conditions, including consumer ownership, an insured financial institution, administrator independence, no prohibited referral compensation, withdrawal without penalty, and return within seven business days of requested funds other than fees already earned under §310.4(a)(5)(i)(A)–(C). [S_HI-P1-C028] eCFR

Customer-initiated calls responding to debt-relief advertisements or debt-relief direct mail do not receive the ordinary inbound-call exemption. Business-to-business calls generally have a separate exemption, subject to enumerated exceptions. Those federal boundaries do not determine Hawaii’s separate “individual debtor” issue. [S_HI-P1-C029] eCFR+1

4.3 Conditional credit-repair overlap

HRS §481B‑12 applies to specified false credit-repair representations, misleading creditworthiness statements, improper referral charges, and assistance with those practices. It defines a consumer as a natural person acting in a personal capacity and makes a violation an unfair or deceptive practice under §480‑2. It is not a general Hawaii debt-settlement fee schedule. [S_HI-P1-C031] Hawaii Data Portal

CROA applies when a person uses interstate commerce or the mails to provide or represent credit-improvement services for consideration, subject to statutory exclusions including qualifying §501(c)(3) organizations and a creditor restructuring its own debt. A covered credit-repair organization cannot charge before the agreed service is fully performed. Debt-relief activity does not universally become credit repair; actual representations and services control. [S_HI-P1-C032] U.S. Code+1

5. Regulator, permission, lookup, and public market-access verification

5.1 Regulator and enforcement

Chapter 446 appears in DCCA’s current HRS index. HRS §487‑5 authorizes the Office of Consumer Protection director to investigate and enforce consumer-protection laws through civil proceedings. DCCA’s annual compliance report also lists Chapter 446 among OCP-enforced laws. [S_HI-P1-C017–C018] DCCA Hawaii+2

The 2012 OCP/CFPB enforcement materials involved a Florida-based nationwide provider that marketed through the internet, promised payday-loan debt reductions, and charged advance fees. The stipulated order found a Chapter 446 violation and permanently enjoined the defendants from debt adjusting in Hawaii. Because the order was stipulated, it is powerful case-specific enforcement evidence but not a contested Hawaii appellate interpretation of every statutory boundary. [S_HI-P1-C009, C018, C039] Hawaii Files+7

5.2 No Chapter 446 application pathway located

DCCA’s current administrative-rule index contains many program chapters—including collection agencies—but no Chapter 446-specific rules or debt-adjuster licensing chapter was located. DCCA’s current proposed-rulemaking page likewise lists no Chapter 446 proposal. These are current published-index findings, not proof that no unpublished agency position exists. [S_HI-P1-C017, C037] DCCA Hawaii+1

Accordingly, no current “debt adjuster” application, registration instructions, renewal form, license lookup, or approved-provider list was found. The statute’s exempt branches depend on the underlying facts and status; they are not ordinary licenses granted under Chapter 446.

5.3 Predicate lookups and their limits

No named provider’s current status was checked, and no provider authorization is inferred from marketing copy, a business registration, a charity listing, an attorney relationship, or a collection-agency license. [S_HI-P1-C034, C038]

6. Worked examples

These examples separate arithmetic, classification, lawful timing, and unresolved interpretation.

Example 1 — For-profit principal-reduction provider

Inputs

• Debt A enrolled balance: $6,000
• Debt B enrolled balance: $4,000
• Proposed contractual fee: 20% of enrolled debt
• Provider negotiates reduced principal and arranges creditor payments
• Assumption: for-profit intermediary serving a Hawaii individual, with no §446‑3 or §446‑4 exclusion

Base

$6,000 + $4,000 = $10,000 enrolled debt

Operator

$10,000 × 20% = $2,000

Numeric result

$2,000.00

Legal result

The arithmetic is correct, but the fee is not a lawful Hawaii fee under Chapter 446. The assumed provider is a covered for-profit debt adjuster and the model is prohibited. Waiting until settlement or the consumer’s first creditor payment would not create state authorization. No rounding was required. [S_HI-P1-C003, C010, C019, C030] Hawaii Data Portal+1

Example 2 — Noncustodial DMP does not escape coverage

Inputs

• Three creditors; total balances: $8,000
• Provider negotiates lower APRs, waived late charges, and revised minimum payments
• Consumer sends every payment directly to creditors
• Proposed fee: $49 setup plus $39 monthly
• Assumption: for-profit intermediary

First-month arithmetic

$49 + $39 = $88.00

Classification

The provider has altered payment terms and “otherwise arranges” creditor payments even though it never takes custody of consumer funds.

Legal result

The proposed $88 first-month charge has no lawful Chapter 446 pathway under the stated facts. Custody is not required because §446‑1 uses alternative receiving-or-arranging prongs. [S_HI-P1-C004–C005, C019] Hawaii Data Portal+1

Example 3 — Nonprofit expense reimbursement and the unresolved “nominal” ceiling

Inputs

• Documented postage directly connected to the consumer’s plan: $8.40
• Documented transaction expense directly connected to the plan: $2.60
• Proposed consumer charge: $75
• Assumption: the entity proves it is an actual qualifying nonprofit/charitable corporation or association

Expense base

$8.40 + $2.60 = $11.00

Difference

$75.00 − $11.00 = $64.00

Result

On the stated facts, the $64 excess is not explained as reimbursement of the identified connected expenses. Even the $11 cannot be declared conclusively lawful without resolving whether it is “nominal” and whether all entity and activity predicates are satisfied. Indirect-overhead allocation is not assumed. Units are dollars and cents; no rounding was required. [S_HI-P1-C013–C014, C020, C036] Hawaii Data Portal

Example 4 — Void contract and express deposited-funds recovery

Inputs

• Consumer deposited with a covered for-profit adjuster: $1,200
• Amount actually disbursed to creditors: $700
• Provider previously retained as a fee: $200
• Remaining undistributed account balance: $300
• Assumption: all $1,200 was deposited with the adjuster

Operator

$1,200 deposited − $700 disbursed to creditors = $500 not disbursed

Express Chapter 446 result

The contract is void and unenforceable. The express recovery described in §446‑2 is $500—comprising the assumed $200 retained fee plus $300 undistributed balance—because that amount was deposited and not disbursed to creditors.

This does not purport to resolve every restitution, UDAP, damages, limitation, or tracing issue; those remain later-pass subjects. [S_HI-P1-C010] Hawaii Data Portal

Example 5 — Federal TSR proportional allocation with prior-fee consistency

This is federal timing arithmetic only; it does not authorize a Hawaii-prohibited provider.

Inputs at enrollment

• Debt A: $6,000
• Debt B: $4,000
• Debt C: $2,000
• Total enrolled balance: $12,000
• Lawful total contracted fee for federal arithmetic: $2,160
• Allocation method chosen for every debt: proportional enrolled-balance method

Debt A

After A is actually altered under a valid agreement and the consumer makes the first payment:

$2,160 × ($6,000 ÷ $12,000) = $1,080

Debt B

After B is later altered and first paid:

$2,160 × ($4,000 ÷ $12,000) = $720

Cumulative fee after A and B:

$1,080 + $720 = $1,800

Equivalent cumulative check:

$2,160 × (($6,000 + $4,000) ÷ $12,000) = $1,800

Debt C

If C has not been altered and first paid:

$0

Result

The earlier $1,080 and later $720 arise from the same enrolled balances, same total fee, and same allocation method. A payment made before a valid alteration would earn $0. Hawaii’s independent prohibition remains unchanged. [S_HI-P1-C026–C030] eCFR

Example 6 — Federal percentage-of-savings method and partial settlements

Again, this is not Hawaii permission.

Chosen uniform fee percentage: 25% of actual savings for every debt.

Debt A

• Enrolled amount: $6,000
• Amount actually paid to satisfy: $3,600
• Savings: $6,000 − $3,600 = $2,400
• Fee after valid alteration and first payment: $2,400 × 25% = $600

Debt B

• Enrolled amount: $4,000
• Amount paid to satisfy: $3,200
• Savings: $4,000 − $3,200 = $800
• Fee: $800 × 25% = $200

Debt C

• Not yet altered or satisfied
• Current fee: $0

Cumulative federal arithmetic

$600 + $200 = $800

The provider cannot switch B to a balance-percentage method or charge a different savings percentage. The same method and percentage must apply across individual debts. [S_HI-P1-C027] eCFR

Example 7 — Why the 2007 fee table cannot be used

Historical proposal inputs

• Enrolled debt: $15,000
• Proposed setup calculation: lesser of $400 or 4%
• Savings on one debt: $6,000
• Proposed settlement-fee ceiling: 30% of savings before required credits

Historical arithmetic

• 4% × $15,000 = $600; lesser amount would have been $400
• 30% × $6,000 = $1,800 before subtraction of uncredited setup/monthly fees

Legal result

Both calculations accurately follow the introduced SB159 text, but neither is a current Hawaii fee authorization. No inflation adjustment can turn an unenacted proposal into current law. [S_HI-P1-C023–C024] Hawaii Data Portal+3

B. Source table

All sources were actually opened/read to the extent stated. PDF findings were checked against rendered pages, not merely search snippets.

C. Claim table

D. Component coverage and gap table

E. Researcher self-check

Actually read or rendered

• Current official HRS §§446‑1 through 446‑4.
• Original 1967 Act 3 rendered pages.
• Current DCCA HRS, administrative-rule, and proposed-rulemaking indexes.
• Current HRS §487‑5.
• OCP’s 2012 enforcement release.
• DCCA’s 2021 Compliance Resolution Fund report page listing Chapter 446.
• CFPB/State complaint and stipulated final judgment rendered pages.
• CFPB’s current case page.
• DCCA/OCP’s 2013 HB1319 testimony rendered pages.
• The operative fee, refund, CPI, repeal, and proposed effective-date portions of introduced 2007 SB159.
• State Auditor Report 08‑04 rendered pages used here.
• Current eCFR §§310.2, 310.4, and 310.6; the eCFR displayed Title 16 current through October 22, 2026.
• Current U.S. Code CROA provisions through Public Law 119‑120.
• Current Hawaii credit-repair statute.
• Current attorney, business, charity, lender, and collection-agency lookup pages.
• Rendered Sues and Inoue passages and the Judiciary’s publication-status explanation.

Not established or not fully read

• No published OCP advisory, administrative adjudication, or controlling merits decision defining “nominal.”
• No controlling merits decision fixing remote territorial reach, business-purpose individual debt, pure counseling, nonprofit overhead, or attorney-affiliate coverage.
• No exhaustive 2025‑2026 Hawaii bill-to-act reconciliation.
• No provider-specific application, exemption, registration, license, good-standing, charity, or attorney-status determination.
• No complete attorney-ethics, UPL, collection, bond, trust, money-transmission, remedies, limitation, secured-debt, sector, local, or tribal analysis.
• No conclusion that SB159’s precise terminal legislative event was independently established; the controlling point is that its proposed repeal and fee system are absent from current Chapter 446.
• No claim of independent review, local file creation, publication readiness, full-state completion, or A066 acceptance.

PASS-01 conclusion: A conventional for-profit debt-settlement or DMP provider cannot presently derive market access or a consumer-fee schedule from Hawaii Chapter 446. The narrow statutory fee-bearing branch is qualifying nonprofit/charitable expense reimbursement that must be both connected to the services and nominal; its exact numeric ceiling remains unresolved. Attorney, employee, court/statutory, and new-loan payoff branches are status- and transaction-specific exceptions, not transferable licenses. Federal performance timing may add restrictions where applicable but cannot supply missing state permission.

END S_HI PASS-01.