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SettleADebt.com — S_KY PASS-01

Kentucky provider market access and consumer fees

Actual public-source research date: October 24, 2026, Pacific Time. Requested baseline: October 22, 2026. The baseline is not treated as the current-verification date.

Component status: This is the Kentucky provider-access and consumer-fee component only. It does not complete the Kentucky dossier, does not resolve every contract, client-funds, remedies, litigation, secured-debt, sector, local, tribal, limitations, or case-law issue, and does not imply Kentucky-state or A066 acceptance.

Executive disposition

Kentucky does not impose a blanket prohibition on ordinary debt-settlement or debt-management businesses. It uses a broad, activity-based debt-adjuster registration regime administered by the Kentucky Attorney General. “Debt adjusting” expressly includes budget counseling, debt management, debt modification or settlement, foreclosure assistance, debt pooling, creditor intermediation, receiving and distributing debtor funds, and soliciting or advertising as a debt adjuster. The definition therefore reaches principal-reduction settlement as well as concession/payment-distribution plans, and it reaches noncustodial as well as custodial models. Legislative Research Commission

A covered person must register annually. Under the currently effective regulation, filing alone is not enough: the registration must be complete, accurate, and confirmed in writing by the Consumer Protection Division before the person engages in debt adjusting. Kentucky calls this registration, not licensing. Legislative Research Commission+2

Kentucky’s verified printed fee provisions are:

• initial setup: not more than $75;
• consultation: not more than $50 per calendar year;
• custodial unsecured-creditor periodic fee: not more than the greater of 8.5% of the monthly amount paid for distribution to creditors or $30;
• bad-check charge: $20 or the amount passed through by the bank, whichever is greater;
• for a defined category of residential-mortgage-secured consumer debt, no “other” fee may be accepted—or even escrowed—before complete performance of all promised services. Legislative Research Commission

KRS 380.040(4) permits annual CPI-related adjustment, but this investigation did not locate a current official adjustment schedule, order, bulletin, methodology, base period, or authoritative current adjusted amount. The Attorney General’s dated operational table still displays the printed amounts, but the page is identified as updated in November 2010 and even uses an obsolete subsection reference for the mortgage rule. Accordingly, no CPI uplift is calculated or asserted in this pass. Kentucky Agriculture+1

For a noncustodial unsecured-debt-settlement performance fee, no express Kentucky percentage, per-debt, savings-based, or aggregate amount cap was found in the current Chapter 380 provisions reviewed. That is an absence finding, not affirmative authorization to charge any amount. All fees must be itemized in the contract, conduct may not be unconscionable, unrelated add-ons are barred, the debtor must receive the full benefit of a compromise, and independently applicable federal timing restrictions may prohibit requesting or receiving the fee before performance. Legislative Research Commission+1

A. Substantive answers to the numbered scope questions

1. Current Kentucky classification and coverage

1.1 Activity-based definition

KRS 380.010 defines “debt adjusting” through the activity performed, not the business’s chosen label. It covers doing business in Kentucky in:

• debt adjusting;
• budget counseling;
• debt management;
• debt modification or settlement;
• foreclosure assistance; or
• debt pooling.

It also covers holding oneself out, offering, or attempting to act as an intermediary between a debtor and creditors for a fee, contribution, or other consideration to adjust, compromise, settle, modify, or discharge debt; receive and distribute debtor funds; or solicit and advertise as a debt adjuster. A “person” includes individuals, partnerships, associations, corporations, LLCs, trusts, and other legal entities. Legislative Research Commission

1.2 Model-by-model classification

The statutory “debtor” is an individual who resides in Kentucky, with “reside” including temporary or permanent residence. That makes Kentucky residency the clearest consumer-side nexus. Legislative Research Commission

1.3 Consumer versus business purpose

Chapter 380’s general debtor definition is tied to an individual resident, not expressly to “consumer debt.” By contrast, several special mortgage provisions expressly apply only where the debt is primarily for personal, family, or household use and is secured by residential real property or related collateral. That contrast supports the cautious conclusion that an individual’s business-purpose debt is not automatically excluded from the chapter, while an entity’s own debt is outside the defined “debtor.” This is a textual inference, not a reported Kentucky appellate holding. Legislative Research Commission+1

2. Prohibited, registered, authorized, and exempt models

2.1 Ordinary covered businesses: registration, not blanket prohibition

KRS 380.040(5) requires any person that engages in debt adjusting to file an initial registration and renew annually, with a $250 filing fee each time. The currently effective regulation provides that:

1. the initial filing must occur before the provider begins;
2. registration is not effective until all required information and materials are filed;
3. the Division provides written confirmation;
4. a person may not engage in debt adjusting before a complete and accurate registration has been confirmed; and
5. registration is valid for one year from the effective date in the written confirmation. Legislative Research Commission+1

Thus:

• ordinary for-profit debt settlement is conditionally market-accessible through confirmed registration, not generally prohibited;
• custodial DMP activity is conditionally market-accessible through confirmed registration, subject to additional trust and fee rules;
• mortgage/foreclosure-assistance activity is not converted into ordinary advance-fee authority merely by registration; the activity-specific fee prohibition still applies;
• registration is not a determination that every contract, fee, marketing representation, or servicing model complies with law.

2.2 Express statutory exemptions

The conditions come directly from KRS 380.030 and 380.130. Legislative Research Commission+1

2.3 Attorney and nonprofit boundaries

The attorney exemption is narrower than a generic “attorney model.” It requires Kentucky admission, nonprincipal engagement in debt adjusting, and provision of the services in the attorney’s law practice. A company cannot safely infer exemption because a lawyer reviews files or appears in the corporate structure. Legislative Research Commission

Likewise, the nonprofit exemption is conjunctive: the organization must have the specified §501(c)(3) status and must not be in the business of debt adjusting. Nonprofit status by itself does not establish exemption. Legislative Research Commission

3. Applicable consumer fee structures

3.1 Verified Kentucky fee matrix

The figures below are the amounts and formula printed in the current KRS text. Because the CPI-adjustment issue is unresolved, they should not be restated as proven CPI-adjusted 2026 figures.

The operative fee text is in KRS 380.040(2)-(4). Legislative Research Commission

3.2 CPI adjustment: exact current amount held

KRS 380.040(4) says the fees, contributions, or consideration permitted in subsections (1), (2), and (3) “may be adjusted” annually by an amount equivalent to any CPI increase published by BLS. The provision does not itself state a base year, a particular CPI series, a rounding method, a required publication instrument, or an adjusted table. Legislative Research Commission

The Attorney General’s fee page continues to display $75, $50, 8.5%/$30, and $20/bank pass-through. But the landing page identifies that guidance as updated in November 2010, and the fee page labels the mortgage rule as “380.040(4)” even though current KRS places that rule at §380.040(2)(d), while current subsection (4) is the CPI provision. The page therefore corroborates the nominal figures but is not sufficient evidence of a legally operative 2026 CPI adjustment—or of the absence of one. Kentucky Agriculture+1

PASS-01 hold: No official adjustment order, bulletin, fee schedule, administrative regulation, or other primary Kentucky instrument establishing a different current amount was located. No CPI calculation is supplied.

3.3 Additional fee boundaries

The following provisions further constrain fees even where no numerical performance-fee cap was identified:

• all fees or their determination method must be individually itemized in the agreement;
• the total amount and terms of compensation must be disclosed;
• unrelated insurance, club memberships, coupons, internet access, and similar add-ons may not be charged as part of debt-adjusting services;
• the debtor must receive the full benefit of a compromise arranged by the adjuster;
• unfair conduct is prohibited, with “unfair” defined as unconscionable;
• Kentucky permits a settlement fee to be deferred only at no additional expense to the debtor. Legislative Research Commission+2

4. When fees may be requested or received

4.1 Kentucky timing

Kentucky creates one clear activity-specific performance trigger:

For the defined residential-mortgage-secured consumer debt, no other fee may be accepted before complete performance of all promised services, and putting the fee into escrow for later release is expressly prohibited. Legislative Research Commission

For ordinary unsecured settlement, the Kentucky provisions reviewed do not state a comparable universal performance trigger for setup, consultation, or performance fees. That does not mean that a Kentucky amount ceiling authorizes advance collection. Timing remains subject to:

• the specific service model;
• contract and cancellation rights;
• unconscionability and misrepresentation prohibitions;
• independently applicable federal law; and
• other unreviewed state or federal laws.

For custodial models, debtor funds received for creditor distribution generally must be distributed, less lawful fees, within 30 days unless the debtor specifically instructs otherwise, and must be maintained in a separate trust account. Legislative Research Commission

Kentucky also prohibits representing a payment as a settlement unless the debtor receives creditor certification that the payment is a full settlement or part of a certified payment plan that will lead to full settlement. Legislative Research Commission

4.2 Federal TSR baseline—separate from Kentucky permission

The federal TSR defines a debt-relief service as a program represented to renegotiate, settle, or alter payment or other terms with unsecured creditors or debt collectors, including balance, interest-rate, or fee reductions. “Telemarketing” generally means a plan, program, or campaign using one or more telephones and involving more than one interstate call. A full federal coverage and exemption analysis is outside this state component. eCFR+1

Where the TSR applies, a seller or telemarketer may not request or receive any fee or consideration for the debt-relief service until:

1. at least one debt has been renegotiated, settled, reduced, or otherwise altered under an agreement executed by the customer; and
2. the customer has made at least one payment under that agreement. eCFR+1

Where debts are altered individually, the fee must either:

• bear the same proportional relationship to the total fee as that debt’s enrolled amount bears to the total enrolled amount; or
• be the same percentage of savings for each debt. eCFR

A qualifying dedicated account must be at an insured institution, remain owned by the customer, be administered by an unaffiliated entity that does not exchange referral compensation, and return all funds other than properly earned fees within seven business days after withdrawal. eCFR+1

Critical reconciliation: A Kentucky setup ceiling of $75 is an amount restriction. It is not permission to collect $75 before the federal performance trigger where the TSR applies.

5. Current regulator process, permission, lookup, and effective status

5.1 Current verified route

The current operative route is:

1. complete the Commonwealth of Kentucky Debt Adjuster Registration Statement, Form DA-1;
2. supply the required organizational, authority-to-transact, service-model, fee-schedule, agreement, trust-account, insurance, and bond/letter-of-credit information;
3. file the original documentation with the Kentucky Attorney General, Consumer Protection Division;
4. pay the $250 filing fee;
5. file before beginning Kentucky debt-adjusting activity;
6. obtain written confirmation of an effective registration; and
7. renew annually, with the renewal filed at least four weeks before expiration and accompanied by required audit material. Legislative Research Commission+3

The current form requires, among other things:

• evidence of authority to transact business in Kentucky;
• a description of services offered to Kentucky residents;
• identification of residential-mortgage-secured activity;
• separate disclosure of setup, consultation, service/periodic, bad-check, and “other” fees;
• sample Kentucky consumer agreements;
• trust-account information;
• insurance details; and
• a bond or approved letter-of-credit submission. Kentucky Agriculture+3

5.2 Current versus proposed procedure

The currently effective 40 KAR 12:400 retains the paper-form process, written confirmation, one-year registration period, and current July 2010 forms. It was recodified as 40 KAR 12:400 effective July 18, 2025, and the LRC page shows a seven-year expiration date of February 21, 2027. Legislative Research Commission+1

A separate 2026 amendment would institute an online registration and renewal portal. The LRC page expressly labels that amendment “PROPOSED” and “not yet current.” It was filed with LRC on July 8, 2026, and the displayed proposed page was generated August 28, 2026. It is not used here as current operative law. Legislative Research Commission+1

5.3 Public lookup limitation

The Attorney General provides a “registered debt adjusters” PDF and expressly says the list is not an endorsement. Kentucky Agriculture

However, the file has a material internal integrity problem:

• the extracted text layer says “Updated: 10/19/2026” and presents a list inconsistent with the rendered pages; Kentucky Agriculture
• rendered page 1 says “Updated: 3/30/2026”; Kentucky Agriculture
• rendered page 2 says “Updated: 8/24/2026,” reports 36 adjusters, and visually contains a duplicated entry. Kentucky Agriculture

Therefore the public PDF is useful as a discovery or screening tool but, standing alone, is insufficient to establish:

• a named provider’s registration expiration date;
• whether registration remained effective on a particular transaction date;
• the exact model or fee schedule approved or disclosed;
• whether a provider’s legal entity, DBA, or affiliate is covered;
• whether a registration was later suspended, withdrawn, or rendered incomplete; or
• whether the provider complied with nonregistration obligations.

No named-provider authorization finding is made in this pass.

6. Worked examples

The required examples appear in Section D below. They distinguish the statutory base, operator, intermediate calculation, result, units, rounding, legal conditions, and unresolved assumptions.

7. Component coverage and next investigations

The full coverage and gap table appears in Section D. Agreement form, client-money operations, bond claims, remedies, full enforcement history, collections, litigation, limitations, secured-debt overlays, sector-specific law, local law, tribal issues, contract enforceability, and exhaustive case law remain later passes except to the limited extent needed here.

B. Source table

C. Claim table

D. Worked examples and scope/gap table

D.1 Custodial DMP—lower monthly distribution

Facts and assumptions

Plain text

Monthly amount designated for distribution to unsecured creditors: $200.00
Periodic provider fee is separate from that distribution amount.
No CPI uplift is assumed.
No federal timing conclusion is embedded in this amount calculation.

Calculation

Plain text

Base:                         $200.00 per month for creditor distribution
Percentage operator:          8.5% × $200.00
Percentage result:            $17.00
Dollar alternative:           $30.00
Statutory comparison:         greater of $17.00 or $30.00
Maximum printed periodic fee: $30.00

Cash-flow illustration

Plain text

Amount reaching creditors:    $200.00
Separate periodic fee:         $30.00
Total consumer debit:          $230.00

Currency is shown to the nearest cent. No Kentucky statutory rounding rule was located. If the consumer makes a single gross $200 payment that includes the fee, the amount “paid … for distribution” must first be identified from the contract and accounting records; it should not automatically be treated as $200. C018, C020. Legislative Research Commission

D.2 Custodial DMP—higher distribution

Plain text

Base:                         $500.00 per month
8.5% operator:                0.085 × $500.00
Percentage result:            $42.50
Dollar alternative:           $30.00
Greater amount:               $42.50
Maximum printed periodic fee: $42.50

The result is a monthly fee ceiling for the described custodial unsecured-creditor facts, not permission to collect it at any time forbidden by other law. C018, C029. Legislative Research Commission+1

D.3 Very low distribution

Plain text

Base:                         $100.00 per month
8.5% operator:                0.085 × $100.00
Percentage result:            $8.50
Dollar alternative:           $30.00
Greater amount:               $30.00
Maximum printed periodic fee: $30.00

The statutory word is “greater,” not “lesser.” Therefore the printed formula produces a $30 ceiling in this example. No view is expressed here on whether charging the full ceiling would be unconscionable in particular circumstances. C018, C024. Legislative Research Commission+1

D.4 Bad-check charge

Scenario A

Plain text

Bank amount passed through:   $12.00
Statutory dollar amount:       $20.00
Operator:                      greater of $12.00 or $20.00
Maximum printed charge:        $20.00

Scenario B

Plain text

Bank amount passed through:   $35.00
Statutory dollar amount:       $20.00
Operator:                      greater of $35.00 or $20.00
Maximum printed charge:        $35.00

No unsupported markup over the actual bank pass-through is introduced. Exact CPI adjustment, if any, remains held. C019-C020. Legislative Research Commission

D.5 Kentucky setup ceiling versus federal timing

Plain text

Proposed setup fee:            $75.00
Kentucky printed ceiling:      $75.00
Kentucky amount comparison:    $75.00 ≤ $75.00
State amount result:           Within printed Kentucky amount ceiling

Assume, however, that the seller operates a covered interstate telephone debt-relief campaign and no enrolled debt has yet been altered under an executed creditor agreement and no payment has been made under that agreement:

Plain text

Federal trigger A met?         No
Federal trigger B met?         No
Fee may be requested/received? No, under the covered TSR facts

The state amount result does not override federal timing. C016, C029-C031. Legislative Research Commission+1

D.6 Fourteen-day cancellation

Plain text

Contract signed:               October 1, 2026
First day after signing:       October 2, 2026
Fourteenth day after signing:  October 15, 2026
Deadline:                      Midnight, October 15, 2026
Method assumed:                Email sent to address stated in contract
Result:                        Timely cancellation
Consumer obligation:           No penalty or monetary obligation

The email is effective when sent. If the required cancellation notice was never properly given, the statutory cancellation right continues until compliance. C025. Legislative Research Commission+1

D.7 Residential-mortgage assistance fee

Plain text

Promised fee:                  $1,500.00
Debt:                          Personal/family/household debt secured by residential mortgage
Service completion status:     Not completely performed
Proposed collection method:    Direct charge or escrow
Amount collectible now:        $0.00

Both direct acceptance and placement in escrow for later release are prohibited before complete performance. After complete performance, this paragraph no longer bars collection solely on timing grounds, but it does not itself establish that $1,500 is a lawful amount or resolve other mortgage-assistance law. C021. Legislative Research Commission

D.8 Fifty-percent settlement authorization boundary

Settlement A

Plain text

Pre-settlement debt:           $10,000.00
Amount remaining/payable:      $6,000.00
Operator:                      $6,000 ÷ $10,000
Result:                        60%
Boundary:                      Equal to or more than 50%
Required sequence:             Creditor assents, then debtor separately assents
POA alone sufficient?          No

Settlement B

Plain text

Pre-settlement debt:           $10,000.00
Amount remaining/payable:      $4,000.00
Operator:                      $4,000 ÷ $10,000
Result:                        40%
Boundary:                      Less than 50%
POA potentially usable?        Yes, if expressly limited and otherwise valid
Mortgage-secured exception:    POA still prohibited for defined residential-mortgage debt

C035. Legislative Research Commission+2

D.9 Federal partial settlement—proportional allocation

This example uses a hypothetical total fee formula solely to illustrate federal allocation. It does not represent a Kentucky-approved fee percentage.

Plain text

Debt A enrolled balance:       $5,000.00
Debt B enrolled balance:       $15,000.00
Total enrolled balance:        $20,000.00

Hypothetical total fee:        20% × $20,000.00
Total fee result:              $4,000.00

Debt A allocation fraction:    $5,000 ÷ $20,000 = 0.25
Debt A allocated fee:          0.25 × $4,000 = $1,000.00

Debt B allocation fraction:    $15,000 ÷ $20,000 = 0.75
Debt B allocated fee:          0.75 × $4,000 = $3,000.00

Assume only Debt A has been settled under an executed agreement and the consumer has made the first payment under that agreement. Under the covered TSR facts, up to the allocated Debt A fee could meet the timing structure; the Debt B fee remains untriggered until Debt B separately satisfies the rule. C031-C032. eCFR

D.10 Federal savings method

Plain text

Debt at enrollment:            $10,000.00
Amount actually paid:          $6,000.00
Savings base:                  $10,000.00 − $6,000.00 = $4,000.00
Illustrative savings rate:     25%
Fee:                           0.25 × $4,000.00 = $1,000.00

The same savings percentage must be used for each individually resolved debt. The 25% is illustrative and is not established here as a lawful Kentucky amount. Federal and state performance/timing conditions must independently be satisfied. C022, C032. eCFR

D.11 Termination after a previously earned fee

Plain text

Unexpended money held for debt reduction:    $2,400.00
Previously charged fee:                        $600.00
Assumption: fee was already lawfully earned,
            properly disclosed, and not otherwise refundable
Minimum refund expressly required by
KRS 380.100(1)(g):                            $2,400.00

KRS 380.100 expressly requires return of all unexpended debt-reduction money. It does not, by that clause alone, expressly require refund of the hypothetical $600 previously earned fee. A cancellation within the initial 14-day window is different because that cancellation is without penalty or monetary obligation. Other facts could make the $600 refundable. C025-C026. Legislative Research Commission+1

D.12 Full scope-coverage and gap table

E. Researcher self-check

Actually read and used

I read the operative text of KRS 380.010, 380.030, 380.040, 380.060, 380.100, 380.110, 380.120, 380.130, and 380.990 from the Kentucky Legislative Research Commission sources. The Chapter 380 index was checked for its October 24, 2026 database date and 2026-session statement. Legislative Research Commission

I read the current 40 KAR 12:400 operative registration provisions, incorporation-by-reference section, history, and expiration statement. I separately read the proposed 2026 amendment and preserved its “not yet current” status rather than treating its online portal process as operative. Legislative Research Commission+2

I read the Attorney General’s adjuster instructions, fee table, registration landing page, and DA-1 form. The operational guidance was not substituted for the current statute where its subsection numbering or update date was stale. Kentucky Agriculture+2

I inspected both the extracted text and rendered page images of the registered-adjusters PDF and preserved the conflict rather than selecting the most convenient update date or count. Kentucky Agriculture+2

I read the current eCFR definitions and exact federal fee-trigger, allocation, and dedicated-account provisions used for the separate federal baseline. The eCFR page displayed Title 16 as current through October 22, 2026. eCFR

Not verified or not treated as established

• No current official Kentucky CPI adjustment notice, order, schedule, bulletin, base-year methodology, or adjusted fee amount was verified.
• No provider’s individual registration file, written confirmation, expiration notice, audit, fee schedule, insurance, bond, or disciplinary status was obtained.
• The public registry PDF was not treated as conclusive named-provider authorization because of its internal visual/text-layer conflict.
• The proposed online application amendment was not treated as current.
• No exhaustive paid citator, every-docket search, or comprehensive unpublished-case review was performed. Targeted searches did not locate a controlling published Kentucky appellate construction resolving the CPI, individual business-purpose, or noncustodial performance-fee issues.
• No conclusion was drawn that the absence of an express state settlement-fee cap affirmatively approves a particular fee amount or percentage.
• No full federal TSR exemption analysis was performed.
• No full mortgage, foreclosure-assistance, MARS, collection-agency, legal-services, professional-conduct, secured-debt, local, tribal, or sector-specific analysis was performed.
• No applications were filed, no agency or provider was contacted, no account or permission was changed, no private borrower information was used, and no publication or local-write claim is made.
• This self-check describes the research performed in this pass. It is not labeled an independent review.

PASS-01 conclusion: Kentucky presents a verified registration pathway for covered debt-adjusting models, with narrow conditional exemptions, model-specific fee rules, and a particularly clear complete-performance bar for defined residential-mortgage-secured consumer debt. The printed custodial fee formula is verifiable; the exact CPI-adjusted amounts and the state amount ceiling for noncustodial unsecured settlement performance fees remain explicit evidence holds. Federal timing must be overlaid separately whenever its coverage elements are met.

END S_KY PASS-01.