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

SettleADebt.com — S_KS, PASS-16

Two bounded PASS-06 remedies precision corrections

Fresh targeted research date: October 26, 2026, Pacific / October 26, 2026, UTC Character: Same-coordinator bounded correction; not an independent review. All supported PASS-06 findings, examples, arithmetic, source history, and unresolved holds remain preserved except for the cells expressly replaced below.

1. Complete two-group disposition

Group 1 — K.S.A. 50-1126(e): unauthorized imposition or receipt

2. Replacement for PASS-06 B1

B1. Operative rule — corrected

K.S.A. 50-1126(e) contains two disjunctive trigger branches. Absent an accidental and bona fide error, the subsection applies when a licensee:

1. Imposes a fee or other charge not authorized by K.S.A. 50-1126; or
2. Receives funds or other payments not authorized by K.S.A. 50-1126.

When either trigger is established:

• The debt-management-services agreement is void; and
• The licensee must return the amount of the unauthorized fees, charges, funds, or payments to the consumer. Kansas Legislature

The prior PASS-06 formulation incorrectly narrowed the trigger to unauthorized amounts that the licensee received. Actual receipt is not required for the agreement-voiding branch where the licensee has already imposed an unauthorized fee or charge.

The two consequences nevertheless require separate treatment:

• Voidness: An unauthorized fee or charge can trigger voidness when imposed, even if it has not yet been paid.
• Return: A cash-return amount depends on what the consumer actually paid or what the licensee actually received. Where an unauthorized charge was imposed but remains wholly unpaid, there is no paid or received cash amount to refund on those facts. The subsection does not expressly prescribe whether the unpaid line item must be canceled, reversed, credited, or removed through a particular accounting method.

The subsection itself does not require punitive intent, knowledge, reliance, or a particular amount of private damages as elements of its voidness-and-return rule. A separate private damages claim under K.S.A. 50-1133 still requires a consumer injured by a violation. Kansas Legislature+1

It also remains unresolved under the public authority reviewed:

• Who bears the burden of proving the accidental-and-bona-fide-error qualification.
• What facts satisfy “accidental” and “bona fide.”
• Whether a legal mistake can qualify.
• Whether prompt reversal or repayment constitutes a cure.
• Whether an excepted error leaves the charge lawful.
• Whether the exception affects only subsection (e)’s void-and-return consequences or also other statutory routes.

No responsive published Kansas appellate decision construing those questions was located in the bounded searches performed for this correction.

3. Replacement B2 table

The corrected trigger and consequences follow directly from the complete current subsection. Kansas Legislature

4. Bounded unpaid-fee example

Example P16-E01 — unauthorized charge imposed but unpaid

Express assumptions

• The actor is a covered Kansas licensee.
• The licensee imposes a $300 fee not authorized by K.S.A. 50-1126.
• The consumer pays $0 of that fee.
• The licensee receives $0.
• The imposition was not the result of an accidental and bona fide error.
• No separate injury, reliance, damages, KCPA remedy, or administrative order is assumed.

Statutory application

Plain text

Unauthorized fee imposed                     $300
Amount paid by consumer                         0
Amount received by licensee                     0
Cash amount available to return under
the stated facts                               $0
Agreement status under §50-1126(e)(1)         Void

The $300 imposition can trigger voidness even though no money was received. The example does not infer a $300 cash refund, compensatory-damages award, civil penalty, attorney-fee award, or punitive award. The statute does not expressly identify the bookkeeping action required for the unpaid $300 entry. Kansas Legislature

Original PASS-06 Examples J1 and J2 remain unchanged because both already assumed an amount was actually paid or charged in a manner producing the stated return arithmetic. Their existing bona-fide-error, causation, offset, and private-remedy limitations remain preserved.

Group 2 — K.S.A. 60-3702(e) and (f): punitive-cap nesting

5. Replacement for PASS-06 D2

D2. Punitive damages — corrected

K.S.A. 50-1133(b) permits punitive damages but does not make them automatic. K.S.A. 60-3702 supplies the general Kansas entitlement, procedure, findings, and maximum-award structure:

1. The trier of fact decides whether punitive damages will be allowed.
2. Clear and convincing evidence must establish willful conduct, wanton conduct, fraud, or malice.
3. If punitive damages are allowed, the court conducts a separate amount proceeding.
4. The court may consider the statutory factors in subsection (b).
5. Principal, employer, association, partnership, and corporate liability for another person’s conduct remains subject to subsection (d)’s authorization-or-ratification requirements.
6. The court then applies subsection (e), unless subsection (f)’s profitability branch is established. Kansas Legislature+1

Correct subsection-(e) formula

Define:

Plain text

I = defendant’s highest gross annual income
    for any one of the five years immediately
    before the act

N = defendant’s net worth

E1 = subsection (e)(1) measure
Le = complete subsection (e) ceiling

If the court does not find I clearly inadequate to penalize the defendant:

Plain text

E1 = I
Le = min(I, $5,000,000)

If the court expressly finds I clearly inadequate:

Plain text

E1 = 50% × N
Le = min(50% × N, $5,000,000)

The net-worth language substitutes a new measure inside paragraph (e)(1). It does not remove paragraph (e)(2). The complete subsection-(e) cap remains the lesser of the applicable paragraph-(1) measure and $5 million. Kansas Legislature

The U.S. District Court for the District of Kansas applied that nesting directly in Scheufler v. General Host Corp.: both the defendant’s annual income and one-half of its net worth exceeded $5 million, so the court treated $5 million as the applicable subsection-(e) ceiling. That is persuasive federal authority applying Kansas law, not a Kansas Supreme Court holding squarely devoted to the net-worth nesting question. The Tenth Circuit later affirmed the $550,000 punitive award but did not separately decide that formula issue. Justia Law+1

Correct subsection-(f) formula

Define:

Plain text

P = profit the defendant gained or is expected
    to gain from the misconduct

After determining the applicable subsection-(e) limitation Le, subsection (f) becomes available only if the court finds:

Plain text

P > Le

The statutory text says “exceeds or is expected to exceed”; equality alone does not satisfy the stated trigger.

If that finding is made:

Plain text

Lf = 1.5 × P

Subsection (f) applies in lieu of subsection (e). Thus:

• The annual-income ceiling no longer governs.
• The 50%-of-net-worth ceiling no longer governs.
• The $5 million paragraph-(e)(2) ceiling no longer governs.

The subsection-(f) maximum is instead 1.5 times the misconduct profit the court finds was gained or expected. Kansas Legislature

Kansas Supreme Court authority construing the materially identical predecessor profitability language requires sufficient findings to establish the subsection-(e) limitation, the misconduct profit, and the basis for invoking subsection (f). The court rejected an unexplained punitive award where the district court had not shown how it computed profit or the alternative ceiling. Justia Law+1

“Profit” is not automatically:

• Compensatory damages.
• Gross receipts.
• The amount paid by the consumer.
• The face value of enrolled debt.
• The total amount of challenged fees.

Actual or expected misconduct profit must be found from evidence attributable to the misconduct.

Cap versus entitlement and actual award

Every formula above establishes only a statutory maximum. It does not establish:

• Entitlement to any punitive award.
• An award equal to the cap.
• Authorization or ratification by an entity.
• That a particular defendant has the assumed income, net worth, or profit.
• Compliance with constitutional due-process limits.
• The effect of other claim-specific statutory limitations.
• The final interaction between K.S.A. 50-1133(b) and every procedural or constitutional issue.

Kansas authority confirms that punitive damages remain discretionary even after qualifying conduct has been established. Justia Law

No current KCSOA appellate decision was located applying the net-worth or profit branches to a K.S.A. 50-1133 claim.

6. Replacement punitive rows for the PASS-06 G table

The current statutory formulas appear in K.S.A. 60-3702(a)–(f). Kansas Legislature

7. Replacement J10 follow-up and two bounded calculations

Original J10 ordinary branch remains correct

The original assumptions were:

Plain text

Highest annual gross income             $2,000,000
Fixed comparison                        $5,000,000
No clearly-inadequate finding
Profit branch not triggered

The ordinary subsection-(e) cap remains:

Plain text

min($2,000,000, $5,000,000)
= $2,000,000

That original arithmetic is unchanged.

Example P16-E02 — net-worth substitution with continuing $5 million ceiling

Additional assumptions

• Punitive damages have been permitted.
• The court determines the income measure of $2 million is clearly inadequate.
• The court determines net worth is $12 million.
• Subsection (f) is not triggered.
• No other statutory or constitutional limit is calculated.

Plain text

Net worth                                  $12,000,000
50% of net worth                             6,000,000
Paragraph (e)(2) ceiling                     5,000,000

Subsection-(e) maximum:
min($6,000,000, $5,000,000)                $5,000,000

The net-worth substitution does not produce a $6 million statutory ceiling because paragraph (e)(2) continues to cap subsection (e) at $5 million. The court may award less than $5 million. Kansas Legislature+1

Example P16-E03 — subsection-(f) profit alternative

Express assumptions

• The court has correctly computed the complete subsection-(e) limitation as $5 million.
• The court finds the defendant gained or expected to gain $8 million from the misconduct.
• The court makes sufficient findings connecting that profit to the misconduct.
• Punitive entitlement and all other predicates are satisfied.

Trigger

Plain text

Misconduct profit                         $8,000,000
Subsection-(e) limitation                  5,000,000

$8,000,000 > $5,000,000
Therefore subsection (f) is triggered.

Alternative ceiling

Plain text

1.5 × $8,000,000
= $12,000,000

Because subsection (f) applies in lieu of subsection (e), the $5 million subsection-(e) ceiling does not remain as an additional cap in this branch. The result is a statutory maximum of $12 million on the assumptions—not an entitlement to, prediction of, or required award of $12 million. Kansas Legislature+1

8. Corrected claim cells

9. Corrected coverage cells

10. PASS-16 source-access register

11. Preserved findings and residual holds

The following PASS-06 findings remain unchanged:

• Direct K.S.A. 50-1133 relief requires a consumer injured by a violation.
• The damages floor remains the amount paid to the CSO plus reasonable attorney fees and court costs.
• Punitive damages remain discretionary.
• KCPA private damages and the court-set civil penalty remain alternatives—the greater of the two—not automatically additive.
• KCPA violation units, class predicates, and government enforcement remain distinct.
• OSBC’s $10,000-per-incident fine, elder/disabled additional $10,000-per-violation authority, restitution or disgorgement language, and discretionary interest up to 8% remain unchanged.
• K.S.A. 21-6502’s literal “registered” wording versus the current civil licensing regime remains unresolved.
• The noncustodial elements of K.S.A. 21-6502 remain distinct.
• K.S.A. 50-1131 mens rea remains held.
• The inferred three-year classification for a direct K.S.A. 50-1133 action remains an inference, not a controlling holding.
• K.S.A. 50-1126(e) accrual, private enforcement, burden of proving error, cure, offsets, and double-recovery treatment remain unresolved.
• No punitive cap, refund, voidness, penalty, or damages result is applied to an actual provider or transaction.

No complete Kansas, provider, parent, A066, operational, or publication acceptance follows from this bounded correction.

END S_KS PASS-16.