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

S_MA PASS-01 — Massachusetts provider market access and consumer fees

Baseline requested: October 22, 2026, Pacific. Actual research access: October 23, 2026, Pacific. Component disposition: Partially resolved, with specific evidence holds. This answer establishes the principal statutory restrictions, conditional attorney and nonprofit pathways, several fee and refund rules, and the available public verification routes. It does not establish an ordinary Massachusetts debt-settlement license available to a commercial provider, approve a particular provider, or complete the Massachusetts dossier or A066 acceptance.

The central finding: Massachusetts regulates the underlying conduct through overlapping credit-counseling, debt-pooling, unauthorized-practice, and credit-services provisions. A commercial provider cannot establish permission merely by calling its service “settlement,” avoiding physical custody, employing an attorney, obtaining a collection license, or adopting a nonprofit label. The precise noncustodial and remote-provider boundaries remain unresolved on the primary evidence successfully retrieved. [C001–C014] malegislature.gov+3

For readability, S001 means S_MA-P1-S001, and C001 means S_MA-P1-C001. The registers below give the full identifiers.

A. Substantive findings

1. Definitions and classification: follow the activities and money flow

The provisions actually read do not supply one interchangeable definition covering everything marketed as debt adjustment, settlement, negotiation, DMP administration, or credit counseling.

These distinctions come from the operative statutory passages, not provider descriptions. malegislature.gov+4

Consumer debt, business debt, and self-creditor activity

The statutes have different scopes:

• Section 4A describes services to individuals.
• Section 68A defines the relevant extension of credit as primarily personal, family, or household, including deferral of payment.
• Section 46C contains no express personal/family/household limitation.

Consequently, a “business debt” designation does not establish a universal exemption from the pooling or unauthorized-practice provisions. A corporation renegotiating its own receivable presents a different relationship from a provider advising a debtor about distributions to other creditors; it does not create a transferable exemption for the debtor’s service company. C007, C013 malegislature.gov+3

Resident and remote-provider nexus

Unresolved: I did not retrieve an authoritative interpretation squarely establishing how §§4A and 46C apply to every out-of-state provider serving Massachusetts residents remotely.

The remaining analysis must distinguish residence, solicitation into Massachusetts, where services are performed, required deposits, account control, and the contractual relationship. An out-of-state address is not established as a safe harbor. C008

2. Prohibited, conditionally permitted, and excluded models

The express nonprofit exception in §46D is important: reading §46C without it would overstate the prohibition. Conversely, reading §46D without §4A’s continuing restriction on legal practice would overstate the nonprofit permission. malegislature.gov+3

The exclusions do not transfer between statutes

The §68A CSO exclusions encompass authorized lenders, HUD-approved lenders, insured banks and their subsidiaries, authorized credit unions, §501(c)(3) nonprofits, in-scope real-estate brokers, Massachusetts-authorized attorneys acting within their practice, in-scope SEC/CFTC broker-dealers, and consumer reporting agencies. These are exclusions from that CSO definition. They do not automatically supply an exception to debt-pooling or unauthorized-practice restrictions. C011 malegislature.gov

Similarly, the collector definition has its own exclusions, including specified own-creditor employees, affiliates, fiduciary/escrow situations, qualifying nonprofit counseling distributions, and attorneys. Their conditions must be evaluated under that separate statute. C012

Foreign nonprofits

This remains a distinct hold:

• Chapter 180’s definition of a corporation is domestic.
• Sections 4A and 46D use an organization-under-chapter-180 condition.
• Chapter 156D addresses foreign qualification and generally gives an authorized foreign corporation the rights and duties of a domestic corporation of like character.

I found no successfully read controlling authority reconciling those provisions for this specific exemption. Foreign qualification is not established as automatically sufficient; Massachusetts reincorporation is also not established as invariably necessary. C009 malegislature.gov+3

3. Fee bases, limits, indexing, and refunds

No verified statewide numerical debt-service fee schedule

The retrieved c.180 §4A, c.221 §§46C–46D, and c.93 §§68A–68D do not establish a numerical consumer fee schedule for these services.

This is not a finding that fees are unlimited. Activity prohibitions, timing rules, unfair/deceptive-practice law, professional duties, tax-exemption conditions, and potentially relevant fee regulations remain applicable or require resolution. C015, C020–C021, C032–C033 malegislature.gov+3

Verified fee restrictions and related amounts

CSO services. Section 68B restricts charging or receiving compensation before complete agreed performance, with a specified bond-and-trust exception. Its $10,000 minimum surety bond is not a consumer fee ceiling. A fee solely for referral to retail credit on substantially general-public terms is prohibited. Sections 68C–68D require cost information and establish the cancellation protection discussed below. C016–C019

Attorneys. In Matter of Zak, the SJC rejected the theory that Rule 1.5 independently authorizes advance fees despite other applicable prohibitions. The current complete Rules 1.5 and 1.16 were inaccessible. Official informal bar guidance supports prompt return of unearned amounts, but expressly lacks substantive legal effect; it cannot substitute for the operative rules. C020 bbopublic.massbbo.org+1

Tax-exempt credit-counseling organizations. The retrieved 26 U.S.C. §501(q) requires a reasonable fee policy and inability-to-pay waivers. Subject to its state-law allowance, it restricts percentage-of-debt, DMP-payment, and savings fees. It also addresses incidental credit-repair charges and, for §501(c)(3) organizations, soliciting consumer contributions during counseling/services. These are federal exemption conditions, not Massachusetts licensing permission. The 2024 Code text and current IRS explanation were read; the later amendment chain remains a narrow currentness hold. C021 INTERNAL REVENUE CODE+1

Historical numbers and proposals must not become current caps

Home Budget Service describes the defendant’s 6% of indebtedness plus 10–15 cents per creditor per week. Those were historical charges in a business adjudged unlawful—not judicially approved fee limits. C030

Likewise, H.956 of the 193rd General Court proposed a new chapter 255G licensing scheme. Its history records referral to a study order; that study’s final history records no further action. The bill is not used here as enacted licensing or fee authority. C014 law.justia.com+3

4. When fees may be requested or received

Massachusetts CSO timing

For a covered, nonexcluded CSO, §68B(1) bars charging or receiving compensation before full, complete, satisfactory performance unless the organization has both the required authorized surety bond and the specified Massachusetts-located, federally insured institution trust account.

That state exception:

• Does not legalize otherwise prohibited pooling;
• Does not override an independently applicable federal advance-fee restriction;
• Does not establish a general installment or “partly performed” collection entitlement. C016, C026

Under §68D, timely cancellation is without penalty or obligation through midnight of the third business day following signing; payments must be returned within 10 days after receipt of the cancellation notice. The refund period is stated as days, not business days. C019 malegislature.gov+1

Federal TSR: common context, separately applicable

For covered debt-relief telemarketing, fees cannot be requested or received until the customer has executed the qualifying debt-change agreement, made the required first creditor payment, and the fee satisfies the applicable allocation rule. A dedicated-account deposit is not itself earned provider compensation. C023–C025 ecfr.gov

Coverage includes qualifying inbound responses to debt-relief advertising; there is no general attorney exemption. Actual face-to-face transactions and bona fide nonprofit jurisdictional questions require their own analysis. A provider’s Massachusetts exception does not decide federal coverage. C022 ecfr.gov+1

For credit-repair promises, §310.4(a)(2) has a distinct timing rule involving expiration of the promised performance period and a qualifying consumer report issued more than six months after achieving the promised results. CROA, 15 U.S.C. §1679b(b), separately prohibits covered credit-repair organizations from charging or receiving payment before agreed services are fully performed. Neither rule should be replaced by the debt-settlement first-payment test. C026 ecfr.gov+2

5. Actual permission, application, and lookup evidence

The presently linked corporate form states a $35 filing fee; §8E specifies a $100 initial charity registration fee. These are governmental filing amounts, not borrower service-fee limits or permission to pass them through. C036 sec.state.ma.us+4

6–7. Worked examples and retained coverage

Section D provides the requested plain-text calculations, classification holds, and component coverage table. All other Massachusetts dossier categories remain open.

B. Source register

Access convention: Every row was checked or attempted on 2026-10-23 Pacific. Read means the specified passage or interface was actually retrieved. Blocked/discovery means it supplies no substantive operative text. Multiple sections of one chapter or regulatory document retain one source ID.

B1. Statutes, judicial authorities, and operational materials actually read

B2. Material inaccessible sources and discovery-only leads

Additional current-code failure routes: OLRC preliminary-code pages for §§501 and 1679b returned maintenance/error responses, and attempted 2025 GovInfo versions did not yield usable text. The successful 2024 editions are therefore identified by their actual version, not silently relabeled 2026.

C. Claim register

Confidence key: High = directly supported within the identified text’s scope. Bounded = a legal synthesis or limited operational finding. Held = missing evidence prevents the proposed conclusion. High confidence does not mean an exhaustive subsequent-history or whole-state review.

D. Worked examples and component coverage

Worked examples

Common conventions: All figures below are invented inputs, not provider prices or legal fee caps. Dollar results use cents; the arithmetic is exact, so no rounding adjustment occurs. No statutory rounding rule was established. The federal examples compute only the identified federal condition and do not establish Massachusetts market access.

Example 1 — A small fee does not cure prohibited pooling

Plain text

Inputs: $1,500 enrolled debt; $150 monthly deposit;
        proposed $15 monthly service fee.
Facts: An ordinary nonlawyer company advises the debtor and
       distributes pooled deposits to creditors; no qualifying exception.

Classification base: Actual pooling/distribution activity.
Arithmetic: $15 / $150 = 0.10 = 10% of the monthly deposit.
Legal operator: Apply c.221 §46C and relevant exceptions before fee math.
Result: Prohibited covered activity on these assumptions.
        No lawful fee amount is established.
Units/rounding: USD and percent; exact.
Boundary: This is not a statutory "$0 fee cap." The business activity
          fails the permission test.

Support: C002, C015; S002 §46C.

Example 2 — Half-performance is not the CSO full-performance trigger

Plain text

Inputs: $300 agreed service price; services 50% complete.
Assumptions: c.93 §68A applies; no exclusion;
             the §68B bond-and-trust exception is not satisfied.

Arithmetic base: $300 contract price.
Operator/intermediate: $300 × 0.50 = $150.
Legal operator: §68B(1)'s full-performance condition.
Result: The $150 calculation does not establish permission to charge
        or receive $150 now.
Units/rounding: USD; exact.
Boundary: Completion and any separately applicable federal rule must
          be assessed before collection; a percentage-complete invoice
          does not itself satisfy this state provision.

Support: C016, C026; S004 §68B(1).

Example 3 — Timely CSO cancellation

Plain text

Inputs: $100 already paid; timely written cancellation;
        notice received during the statutory cancellation process.
Assumptions: Covered CSO agreement; §68D cancellation right applies.

Refund base: Payment made = $100.
Operator/intermediate: $100 − $0 cancellation penalty = $100.
Result: Return $100 within 10 days following receipt of the notice.
Units/rounding: USD; exact.
Boundary: This does not validate the original collection of the payment,
          and does not establish the refund formula after the statutory
          cancellation window.

Support: C019, C035; S004 §68D(b).

Example 4 — Nonprofit inability-to-pay waiver

Plain text

Inputs: Published counseling fee $30; consumer unable to pay.
Assumptions: The organization is subject to §501(q);
             inability to pay is established under its compliant policy.

Fee base: $30 otherwise scheduled charge.
Operator/intermediate: $30 − $30 required waiver = $0.
Result: Consumer fee under this waiver condition = $0.
Units/rounding: USD; exact.
Boundary: $30 is illustrative, not an approved Massachusetts price.
          Federal tax compliance does not establish state market access.

Support: C021; S016 §501(q)(1)(C), S017. Internal Revenue Service

Example 5 — Partial settlement and a previously collected fee: federal allocation only

Plain text

Inputs:
  Enrollment balances: Debt A $2,000; Debt B $8,000.
  Total enrolled balance: $10,000.
  Assumed total program fee: $2,000.
  Debt A agreement: $1,000 settlement; customer has paid first $100.
  Previously lawfully collected fee attributable to A: $150.

Base: Enrollment balances, not later accrued balances.
Operator/intermediate:
  A's proportion = $2,000 / $10,000 = 0.20.
  A's allocated fee = $2,000 × 0.20 = $400.
  Remaining A allocation = $400 − $150 = $250.

Result: $250 remains within A's assumed federal allocation.
        No fee is unlocked for unresolved Debt B by settling A.
Units/rounding: USD and dimensionless ratio; exact.
Failure case: Without the executed agreement or required first payment,
              the federal trigger is unmet.
Massachusetts disposition: HOLD; this calculation supplies no state
                          permission or approved 20% fee.

Support: C023–C024; S035 p.48519, cross-checked against S014. govinfo.gov

Example 6 — Lower debt and a savings-based fee: federal arithmetic only

Plain text

Inputs:
  Enrollment debt: $1,500.
  Later creditor balance: $1,800.
  Amount actually paid to satisfy the debt: $900.
  Assumed uniform savings-fee rate: 25%.
  Previously lawfully collected fee on this debt: $60.

Base: $1,500 enrollment amount.
Operator/intermediate:
  Savings = $1,500 − $900 = $600.
  Assumed fee = $600 × 0.25 = $150.
  Remaining assumed fee = $150 − $60 = $90.

Result: $90 under these assumed figures.
Units/rounding: USD; exact.
Failure case: Using $1,800 would improperly change this specified base.
              The same percentage must apply across individual debts.
Massachusetts disposition: HOLD; 25% is not a verified state ceiling
                          or entitlement.

Support: C024; S035 p.48519 and S014 §310.4(a)(5)(i)(C)(2).

Example 7 — Dedicated-account withdrawal without double-deducting an earlier fee

Plain text

Inputs:
  Current account balance, including interest: $1,200.
  Properly earned but not yet deducted provider fee: $200.
  Earlier $150 fee: already deducted before the current balance.
Assumptions: The federal dedicated-account conditions apply and are met.

Base: Current $1,200 account balance.
Operator/intermediate: $1,200 − $200 = $1,000.
Result: Return $1,000 within 7 business days of the request.
        Do not subtract the earlier $150 again.
Units/rounding: USD; exact.
Failure case: If the $200 was not earned under the rule, the stated
              deduction is unavailable and the return is $1,200.
Boundary: Massachusetts legality of the underlying program remains
          separately unresolved.

Support: C025; S035 pp.48491, 48520; S014 §310.4(a)(5)(ii)(E). govinfo.gov

Component coverage and exact next investigations

E. Researcher self-check

Actually read: the specified Massachusetts statutory sections; the relevant judicial passages in Home Budget Service and Zak; the Secretary’s formation instructions and actual form; corporate and attorney lookup interfaces; the identified federal provisions; the IRS and FTC guidance; the identified legislative histories; and the relevant 2010 federal adoption text. The source register differentiates primary judicial text reproduced on Justia from official government-hosted material.

Not read as operative authority: DOB Opinion01-181; complete940CMR38 and its guidance/adoption record; complete209CMR18 and950CMR106; complete current professional-fee rules; usable charity portal records; and the DMB complaint/judgment. The DMB mirror’s page count did not make its contents readable. Search snippets, catalog titles, filenames, provider statements, and proposed bills were not promoted into legal permission or current fee limits.

Currentness limits: official posted Massachusetts codification was checked, but a complete session-law amendment chain and full judicial subsequent-history review were not completed. The eCFR displayed currency through October21,2026. The successful U.S. Code tax and CROA texts were the2024 editions, with later statutory currentness expressly held. No source’s webpage-update date was treated as its legal effective date, and inaccessible material was not classified as stayed, vacated, expired, or withdrawn without evidence.

Method and independence: this work used the existing chat’s public web tools and parallel internal research tasks. No Deep Research or separate ChatGPT conversations were used. I could not independently verify a separate UI model badge or mode designation. This is a researcher self-check, not an independent review.

No authorization or completion implication: no application, contact, purchase, account change, provider approval, local-file deliverable, publication, Massachusetts acceptance, or A066 acceptance is claimed. This provider-access/fees component remains subject to the explicit holds above; all other state categories remain required.

END S_MA PASS-01.