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

S_IL PASS-01 — Illinois provider market access and consumer fees

Baseline: October 22, 2026, Pacific. Actual research access: October 22, 2026, PDT, corresponding to October 23, 2026, UTC. The final access check was 06:12 UTC / 11:12 p.m. PDT.

Core finding: Illinois establishes separate licensing pathways for covered debt settlement and debt management services. The verified statutory consumer-fee limits are:

• Debt settlement: one enrollment fee of up to $50, plus a settlement fee of up to 15% of defined savings, subject to the settlement and payment conditions discussed below.
• Debt management: initial counseling of up to $50 per debtor counseled, plus additional fees of up to $50 per month after completion of initial counseling.

These permissions come from the statutes. They do not authorize every activity associated with a debt-relief business: customer-referral compensation, for example, is expressly prohibited for covered licensees. State fee limits also do not override independently applicable federal advance-fee restrictions. C013, C017–C023, C029, C033–C036. my.ilga.gov+4

This is a component investigation. Several specific evidence gaps remain, including the detailed settlement-refund provision, portions of the current DMP rules, and readable current application checklists. They are identified below without substituting secondary text for an actual primary read. No Illinois-wide or A066 acceptance is implied.

Identifier convention: References such as S001 and C001 below mean S_IL-P1-S001 and S_IL-P1-C001. The source and claim tables contain the full identifiers.

A. Substantive answers

1. Classification follows the service and compensation, not its name

Core activity boundaries

The two Acts expressly exclude each other’s defined services. That requires classification of the actual arrangement; it does not make the provider’s preferred label controlling. A hybrid program promising both distribution services and reductions of existing balances requires a specific analysis of its contracts, representations, compensation, and cash flows. C001–C003. my.ilga.gov

Consumer versus business purpose

Neither definition supplies a simple, express “personal, family, or household purposes only” exclusion:

• The settlement Act defines a consumer as a person purchasing or contracting for the services, with additional student-loan language.
• The DMSA’s definition of “person” expressly includes firms, partnerships, associations, LLCs, corporations, and nonprofit corporations.

Consequently, business purpose is not an established automatic escape from these Acts. This is a textual boundary finding, not a completed opinion on every corporate workout. Specific business-debt applications, including the settlement exclusion for services incidental to dissolution, winding up, or liquidation, remain fact dependent. C005, C010.

Illinois residents and remote providers

The DMSA expressly reaches a business whose business, employees, or agents are in Illinois or which solicits or contracts with debtors located in Illinois. The settlement Act requires separate applications for locations doing business with Illinois residents. An out-of-state office therefore does not itself establish exemption.

The investigation does not resolve whether a particular passive website, without Illinois solicitation or contracting, creates sufficient nexus. Actual solicitation, contracting, customer location, and business locations must be established. C004.

2. Which models are licensed, excluded, or prohibited?

Affirmative licensing pathways

Both license systems contemplate nonprofit and for-profit applicants. Their annual renewal provisions use a December 1 renewal deadline and January 1 expiration structure. Full bond administration, fund handling, and renewal-compliance work remain later-pass subjects. C013–C016. my.ilga.gov+2

Provider-to-regulator charges are separate from consumer fees. The retrieved settlement rule states a $350 nonrefundable application fee plus a $1,000 annual license fee. The DMSA states $30 investigation and $100 license charges, with a $100 renewal charge. These are the legal schedule amounts retrieved, not a verified current NMLS checkout quote; no additional NMLS processing amount was established. The 2026 rulemaking authority discussed below must also be considered before a filing. C014–C015, C027.

Conditional exclusions

These are exclusions from the identified Act, not findings that all fees charged by an excluded actor are lawful under every other law. Attorney entity structure, professional rules, credit-services law, lending law, and federal coverage may still matter. C007–C012, C038. my.ilga.gov

Self-creditors and prohibited combinations

Neither reviewed definition supplies an unlimited, standalone “self-creditor” exemption. Ordinary adjustment of one’s own receivable may fall outside the relevant service definition or within a specific lender or licensed-collector exclusion. That does not automatically exempt a separate borrower-paid advisory or intermediation business. C012.

For covered providers:

• Settlement: Rule 145.70(d)–(e) prohibits receiving compensation for referring potential customers and paying an attorney, lender, or other source for customer referrals.
• DMP: Section 13(3) prohibits directly or indirectly receiving or paying cash or in-kind consideration for the specified referrals.
• DMP: Section 13 also prohibits making loans, acting as a loan broker, specified credit-card/customer-procurement activity, requiring ancillary purchases, and operating another business at the licensed location.

A paid-referral or prohibited bundled-business model cannot be converted into an ordinarily licensable model merely because IDFPR accepts applications for debt management or settlement. Whether a particular advertising arrangement is compensation for referrals requires its actual terms; this investigation does not approve a fixed-advertising alternative. C029–C030. ilsos.gov+1

3. Consumer fee structures, bases, limits, credits, and refunds

Verified fee schedule

C017–C022. ilga.gov+2

Settlement savings: the baseline matters

The Act’s defined “principal amount” is the outstanding balance when the consumer enters the settlement contract. It is not necessarily the original loan principal, and it is not the later balance after additional interest or penalties.

Consequently:

• Later balance growth cannot inflate the statutory savings base.
• A settlement above the enrollment balance produces no settlement fee, even if it is below the later current balance.
• Equal enrollment and payoff balances produce a zero savings-based fee.
• An unresolved debt does not generate a success fee merely because it was enrolled.
• Fees already collected for the same settlement must be accounted for within the applicable ceiling.

No separate fixed per-debt charge, additional aggregate program-dollar cap, or mandatory enrollment-fee credit against the settlement fee was found in the retrieved fee provisions. That last finding is not permission to front-load or duplicate fees; the contract and federal allocation rules still matter. C017–C020.

Refund and cancellation distinctions

Settlement—verified primary minimum: Sections 115(c) and 120(c)(14) establish the disclosed right to cancel and obtain a refund of unearned fees and settlement funds not paid to creditors. C024. ilga.gov+1

Settlement—detail held: The actually read 2025 secondary reproduction of §135 says cancellation or a material violation triggers refunds, with exceptions described as an “application fee” and earned settlement fees, and requires refund/accounting within five business days after cancellation notice. The current primary §135 passage could not be retrieved. Therefore:

• The five-business-day deadline is not promoted here to primary-verified current law.
• The “application fee” wording is not treated as a second authorized consumer charge.
• Retention of the $50 enrollment charge is not approved without resolving the operative text and its application.

C025; exact recovery task in Section D.

DMP—verified: Written cancellation is effective on the first day of the following month after receipt. The rule does not authorize a separate cancellation penalty beyond §12, and current §12 supplies no such penalty. The retrieved provisions do not establish a general numeric refund deadline or an automatic refund of all properly earned earlier counseling/service fees. C023. ilsos.gov

Currentness, indexing, and conflicting numbers

No automatic CPI formula was found in the operative consumer-fee sections. No CPI calculation or invented adjusted dollar amount is used here.

The currentness reconciliation is:

C026–C028. Title 38+5

4. When fees may be requested or received

Illinois settlement timing

Section 125(d) requires a legally enforceable creditor agreement accepting a specified amount as full and complete satisfaction and provision of those funds to the creditor, either by the provider or directly by the consumer pursuant to the negotiated agreement.

That language does not simply reproduce the federal first-payment rule. For an installment settlement requiring all installments for full satisfaction, this pass does not approve collection of the settlement fee after the first installment alone. The worked example below holds that collection pending the state condition or an authoritative interpretation. No controlling decision resolving that installment question was established. C019. ilga.gov

A signed settlement-services contract must also identify fees and timing under §120. A cap does not independently establish that a charge has been earned or may be collected.

Illinois DMP timing

Section 12(2) permits additional fees at completion of initial counseling. Rule 140.50(i) limits earning to one monthly service fee per contract-anniversary month, using the corresponding-date/last-day convention specified there.

Rule 140.50(c)(1) also limits earning after a debtor stops making payments for more than 30 days: the rule refers to 30 days after the next monthly contract date. It should not be replaced with an invented daily-proration formula.

This pass does not establish a general right to collect the initial counseling charge before counseling is performed, or to precollect future monthly service fees. C021–C023.

Independently applicable federal TSR baseline

For a covered telemarketing transaction, 16 CFR 310.4(a)(5)(i)(A)–(C) prohibits requesting or receiving debt-relief fees until:

1. At least one debt has been renegotiated, settled, reduced, or otherwise altered under a valid agreement executed by the customer;
2. The customer has made at least one payment under that agreement; and
3. For debts resolved individually, the fee follows either the specified proportional-debt allocation or a consistent percentage-of-savings method.

The applicable Illinois cap and state earning conditions must also be satisfied. Federal first-payment compliance does not establish Illinois settlement-fee maturity. Conversely, Illinois’s $50 enrollment exception does not establish a federal advance-fee exception. C034–C036. ecfr.gov

The TSR includes relevant inbound responses to debt-relief advertising; coverage cannot be decided merely by calling the business “online.” FTC staff guidance does not recognize a general attorney exemption from the debt-relief fee rule. Genuine nonprofit jurisdiction and other exemptions require their actual conditions; a nonprofit label is insufficient. The staff guide is interpretive guidance, not the regulation itself. C033. ecfr.gov+1

A qualifying consumer-owned dedicated account under §310.4(a)(5)(ii) is not payment of an earned provider fee. The provision has insurance, ownership, independence, referral-compensation, withdrawal, and seven-business-day return conditions. Full account administration remains a later investigation. C035.

5. Public market-access procedure and lookup

The actual IDFPR Consumer Credit Section page lists both debt-management and debt-settlement licensing and links to their application routes. The actual Division of Financial Institutions License Lookup page lists both categories under Consumer Credit. These are verified operational routes, supported by the separate statutory licensing authority. C031–C032. Consumer Credit+1

The actual link-following results were:

• DMP application: IDFPR’s NMLS link redirected to the NMLS State Resource Center, but yielded no readable current checklist.
• Settlement application: the linked NMLS “New Application Checklist” PDF route redirected to the resource center and yielded no readable checklist.
• License lookup: the IDFPR-linked lookup endpoint failed or was restricted in this browsing environment. No provider-specific results were obtained.

Thus, the public application and lookup routes are verified; the current checklist contents and any named provider’s authorization are not. No claim is made about SettleADebt.com or another provider’s actual license, exemption, branch coverage, standing, or disciplinary status.

6. Worked fee and boundary results

Section D supplies the complete arithmetic. It includes lower balances, one settled debt within a larger program, previously collected fees, installment settlements, cancellation, and models for which no lawful fee pathway was established.

7. Component coverage

The final coverage table distinguishes answered issues from documentary holds and later-pass exclusions. Agreement, funds, bonds, remedies, collection, litigation, limitations, property exemptions, secured debt, sectors, local/tribal issues, full contract analysis, and full case-law coverage remain open except for the narrow provisions needed above.

B. Source table

Access notation: Every entry was checked on October 22, 2026 PDT / October 23 UTC. “Read” means actual returned document passages were examined. “Partial” does not imply the entire document was read. Failed routes and indexed discoveries are identified separately.

C. Claim table

“High” below means strong support for the stated, bounded proposition from the actually read source. It does not imply completion of every related legal issue.

D. Worked examples and coverage/gap table

Worked examples

All examples use U.S. dollars. Arithmetic is exact to cents; no rounding is needed. No statutory rounding rule is inferred. Unless the example identifies a failure, assume the correct license, a lawful agreed fee, required disclosures and contract, and all applicable state and federal conditions.

E1 — Later balance growth does not enlarge settlement savings

Claims: C017–C019.

Plain text

Inputs:
Balance at service-contract entry = $10,000.00
Later balance = $12,000.00
Amount paid for full creditor satisfaction = $7,000.00
Enrollment fee = $0.00

Base:
$10,000.00 - $7,000.00 = $3,000.00 statutory savings

Operator:
$3,000.00 x 0.15 = $450.00

Result:
Maximum settlement fee = $450.00, after all earning/payment conditions.
Using the later balance would produce $750.00; that is the wrong base.

E2 — One debt settled; another unresolved; earlier fee already paid

Claims: C017, C019–C020, C035.

Plain text

Inputs:
Debt A enrollment balance = $10,000.00
Debt B enrollment balance = $20,000.00
Debt A fully settled and paid = $4,000.00
Debt B remains unresolved.
Prior lawful fee paid for Debt A, after its earning conditions = $400.00
Agreed fee percentage = 15%; enrollment fee = $0.00

Debt A savings:
$10,000.00 - $4,000.00 = $6,000.00

Debt A total fee ceiling:
$6,000.00 x 0.15 = $900.00

Remaining ceiling:
$900.00 - $400.00 = $500.00

Result:
At most $500.00 further for Debt A, subject to the agreement.
Current success fee for unresolved Debt B = $0.00.
The full $30,000.00 enrolled balance is not a savings base.

E3 — Installment settlement: federal first payment does not settle the state issue

Claims: C019, C034, C036.

Plain text

Inputs:
Enrollment balance = $10,000.00
Creditor agrees to $4,000.00 in four $1,000.00 installments.
The agreement requires all four installments for full satisfaction.
Only one installment has been paid.

Projected savings if completed:
$10,000.00 - $4,000.00 = $6,000.00

Projected fee ceiling:
$6,000.00 x 0.15 = $900.00

Current approved collection in this investigation:
$0.00; hold the $900.00 pending the Illinois condition or authoritative
interpretation.

Reason:
A first payment can satisfy one TSR condition, but does not establish
that Illinois's specified settlement funds have been provided.

This is a text-based hold, not a claim that a controlling court has decided every installment arrangement.

E4 — Lower debt and zero/negative savings

Claim: C017.

Plain text

Case A:
Enrollment balance = $600.00
Full settlement payment = $500.00
Savings = $600.00 - $500.00 = $100.00
Fee ceiling = $100.00 x 0.15 = $15.00
Enrollment fee assumed waived.
Result: $15.00 maximum success fee; no $50 minimum success fee.

Case B:
Enrollment balance = $8,000.00
Later balance = $9,500.00
Full settlement payment = $8,300.00
Baseline difference = $8,000.00 - $8,300.00 = -$300.00
Result: success fee = $0.00.
Reduction below the later balance may still be covered settlement activity.

E5 — State enrollment ceiling with an unmet federal trigger

Claims: C018, C034–C036.

Plain text

Inputs:
For-profit provider; covered debt-relief telemarketing transaction.
Requested enrollment charge = $50.00.
No debt terms changed; no qualifying customer payment.

State enrollment ceiling = $50.00.
Federal fee amount requestable/receivable at this stage = $0.00.

Result:
The provider may not request or receive the $50.00 now.
The state ceiling supplies no federal advance-fee exception.

E6 — DMP ordinary fees after required performance

Claims: C021–C022, C036.

Plain text

Inputs:
One debtor; initial counseling completed.
Agreed initial counseling fee = $40.00.
Agreed monthly fee = $35.00.
Three eligible, earned service months; federal conditions satisfied.

Initial:
min($40.00, $50.00) = $40.00

Monthly:
min($35.00, $50.00) = $35.00

Total:
$40.00 + (3 x $35.00) = $145.00

Result:
$145.00 across the completed services.
This is not permission to collect future months upfront.

E7 — DMP additional processing charge and small-debt boundary

Claims: C021–C022.

Plain text

Inputs:
$35.00 monthly fee already charged in the same applicable month.
Proposed additional processing charge = $25.00.

Combined:
$35.00 + $25.00 = $60.00

Excess above monthly ceiling:
$60.00 - $50.00 = $10.00

Result:
The proposed combined charge exceeds the limit by $10.00.
The remaining $15.00 of numerical headroom is not automatically earned
or contractually authorized.

Small-debt variation:
A single $600.00 debt does not authorize a $60.00 monthly fee.
The same proposed excess is $10.00 per month.

E8 — DMP cancellation

Claim: C023.

Plain text

Inputs:
Written cancellation received October 20.
Provider demands a separate $100.00 exit charge.

Rule effective date:
First day of the following month = November 1.

Authorized separate cancellation penalty under the read §12:
$0.00.

Result:
The $100.00 exit charge is not authorized.
No automatic refund of all properly earned prior fees is assumed.
No daily-proration formula is invented.

E9 — Settlement cancellation with unearned money

Claims: C024–C025.

Plain text

Inputs:
Unused consumer settlement funds held = $1,200.00.
Unearned fees erroneously collected = $200.00.
Enrollment fee = $0.00; earned settlement fees = $0.00.

Refund components:
$1,200.00 + $200.00 = $1,400.00.

Result:
$1,400.00 falls within the verified unspent-funds/unearned-fees refund right.

Deadline:
The reported five-business-day §135 deadline remains held for a current
primary read; this example does not certify that deadline.

E10 — Paid-referral and student-payment-reduction boundaries

Claims: C006, C029, C037.

Plain text

Referral case:
A covered provider proposes paying $150.00 for each referred customer.
The verified referral prohibition applies.
Permitted payment for that prohibited referral arrangement = $0.00.
Licensing does not make the $150.00 payment permissible.
A different advertising arrangement requires its own factual classification.

Student-loan case:
Monthly payment changes from $400.00 to $150.00.
Monthly difference = $250.00.
No debt has been paid in full satisfaction.

Result:
$250.00 is not the verified statutory savings base.
No 15%-of-monthly-payment-reduction success fee is established.
Do not invent a licensed fee scenario from that calculation.

Component coverage and exact next investigations

E. Researcher self-check

Actually read: The statute passages listed in S001–S002; the original Part145 adoption and its 2022 amendments; the retrieved DMP adoption/amendment passages, including §§140.40–.50; the official rule index, agenda, and bounded post-index Register checks; IDFPR’s actual licensing/application and lookup-directory pages; the exact TSR fee provision and relevant coverage provisions; and the Governor’s actual HB5384 signing announcement.

Not represented as read: The full current Part140, especially §§140.60/.70; current settlement §§78,135,145 and other later-pass provisions that could not be reached; the complete P.A.104-520 text; readable current NMLS checklists; a functioning provider-specific lookup result; or controlling merits decisions resolving the installment and entity-exemption questions. Some official PDFs opened only their initial displayed passages, while attempts to reach later sections failed. Those initial opens were not counted as reading the missing provisions.

Secondary and discovery handling: Justia’s 2025 §135 text was actually read but remains secondary corroboration. Search excerpts, proposed bills, historical transition language, and regulator titles were not substituted for operative permission. No controlling decision is relied upon, and the limited unsuccessful case search is not a conclusion that no relevant case exists.

Research mode: This was ordinary conversational research with primary web browsing, not Deep Research. Parallel research streams were used within the investigation; they are not labeled independent review or separate regular-Chat conversations. The chatgpt.com UI model selector was not observable here, so I do not certify the requested “actualGPT6Pro” setting.

END S_IL PASS-01