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

S_MI PASS-01 — Michigan provider market access and consumer fees

Michigan has an operating DIFS licensing system for debt management involving receipt and distribution of debtor funds. DIFS’s published consumer-fee position is a $50 initial charge plus a reasonable service fee capped at 15% of debt liquidated, with reconciliation when the plan ends. This investigation did not establish a verified, standalone Michigan success-fee pathway for a provider that negotiates settlements without receiving creditor-payment funds. The Credit Services Protection Act is a material additional issue for that model. michigan.gov+2

Evidence qualification: The current official Michigan statutory pages and act PDFs repeatedly returned access errors. I read the current official administrative rules, relevant final rule instruments, DIFS operational materials, official interpretations, and the exact federal timing provision. I also read identified statutory sections in unofficial reproductions, but those reproductions do not establish October 2026 statutory currentness. Conclusions dependent on that missing authentication remain expressly held.

Baseline: October 22, 2026, Pacific. Actual access: October 23, 2026, UTC; the research window ended at 06:58 UTC, equivalent to October 22, 2026, 11:58 p.m. PDT. Thus the UTC access date is later, while the Pacific access date remained the requested baseline.

This is a partially resolved component investigation, with substantive findings and specific evidence holds. It is not acceptance of Michigan or A066.

References abbreviated below as S001 or C001 mean S_MI-P1-S001 or S_MI-P1-C001.

A. Substantive findings

1. Classification depends on the activity and money flow

Debt management, concessions, and principal reduction

The definition reproduced on DIFS’s licensing page combines two elements:

• Planning and managing a debtor’s financial affairs.
• Receiving money from the debtor for distribution to creditors toward payment or partial payment of obligations.

Consequently, the outcome sought—lower interest, waived charges, extended payments, or reduced principal—is insufficient by itself to determine DMA coverage. A conventional DMP collecting and distributing payments fits the published definition. A settlement operation with the same receipt-and-distribution functions cannot avoid that definition simply by calling itself a negotiation company. C002. michigan.gov

The reproduced statutory definitions are broad: “debt” includes secured and unsecured monetary obligations, and “person” includes business entities. This does not establish clearance for all business-purpose programs; it does mean that a consumer-purpose-only limitation should not be invented. The meaning of residence for an entity and the treatment of commercial programs remain unresolved. C003.

Custodial and noncustodial models

These distinctions are supported by DIFS’s functional description and the reproduced DMA/CSPA provisions; the noncustodial and agency boundaries remain C002, C007, C011 holds. law.justia.com+2

Michigan resident and remote-provider nexus

The reproduced DMA text covers providing or offering debt-management services to one or more Michigan residents and expressly addresses providers located inside or outside Michigan. DIFS’s FAQ treats a client who signed while residing in Michigan as a Michigan client even after moving, unless a new contract is executed. An out-of-state address therefore does not establish an exemption. C003.

The exact current statutory compilation, entity-residence interpretation, and control-through-affiliates boundary remain missing. law.justia.com+2

2. Authorization, prohibitions, and exclusions

DMA authorization

DIFS identifies the Debt Management Act, 1975 PA 148, as the licensing statute. Its actual application and current rules establish an active license/exemption-order process. The reproduced §451.414 prohibits covered activity before licensing and makes an unlicensed debt-management contract void. That prohibition is not cured merely by applying. C004, C012. michigan.gov+2

The retrieved materials do not establish a nonprofit-only licensing system. Conversely, an applicant’s corporate or nonprofit form does not itself establish eligibility or permission.

DMA exclusions are conditional. DIFS lists:

1. An attorney’s debt-management advice incidental to legal practice.
2. A CPA’s advice incidental to accounting practice.
3. Specified authorized banks, fiduciaries, savings and loan associations, and credit unions acting in their regular principal business.
4. Title insurers or abstract companies acting as escrow agents.
5. Employees or agents acting solely for a licensee.
6. Judicial officers or persons acting under court order.

An attorney affiliation, referral arrangement, or nonprofit label does not satisfy these conditions automatically. C005. michigan.gov

A separate discretionary exemption in reproduced §451.414(2) requires qualifying primary funding, safeguards for debtor funds, a departmental public-interest finding, and an actual grant. Its stated funding sources include governmental organizations, government-sponsored organizations, charitable trusts, and qualifying tax-exempt foundations. It is not self-executing, and the order’s scope would control which provisions were exempted. C006. law.justia.com

CSPA is a separate conduct restriction

The reproduced Credit Services Protection Act, 1994 PA 160, includes paid intermediation on behalf of a debtor concerning previously extended credit. It also covers specified credit-improvement, credit-obtainment, and foreclosure-assistance services. OFIR’s formal 2010 interpretation describes CSPA as a conduct statute enforced by the Attorney General and county prosecutors, rather than a licensing statute. That interpretation is historical and mortgage-specific; it does not supply a current general settlement license. C007. FindLaw+1

CSPA’s exclusions differ from DMA’s. The reproduced language includes activity-specific exclusions for lenders and DMA licensees acting under their respective statutes; an attorney limitation addressing a regular, continuing credit-services business; and a nonprofit-corporation exclusion requiring §501(c)(3) tax exemption. The complete relevant enumeration appears in C008 below. Those exclusions cannot be transferred from one statute to another.

The consequential CSPA restrictions are:

• No charging or receiving consideration before completing all agreed services.
• A 90-day performance requirement.
• A narrow ongoing-services exception tied to specified credit-improvement services, written periodic-payment terms, and penalty-free cancellation.
• A written-contract requirement.

The ongoing-services proviso expressly modifies the 90-day provision; it is not a verified general debt-settlement advance-fee exception. Current official text and the relevant amendment remain held. C009. FindLaw

RLA or CFSA licensing does not establish a settlement pathway

DIFS’s Regulatory Loan page describes licensing the making of regulatory loans. Its Consumer Financial Services page supplies Class I/Class II procedures. Neither page establishes standalone settlement-fee authority.

Moreover, the reproduced CFSA §487.2067(c) prohibits a CFSA licensee from engaging in the business of a DMA-licensed debt-management company. That statutory prohibition cannot be converted into ordinary permission because a licensing page exists. Current primary authentication remains held. C010. michigan.gov+2

DIFS Bulletin 2026-17-CF, issued June 11, 2026, addresses a payday/credit-services lending model and supersedes Bulletin 2006-06-CF. Its loan-processing discussion is not a Michigan settlement-fee schedule. C010, C034. michigan.gov

3. Consumer fee structures and limits

The following distinguishes agency-supported amounts from matters supported only by an unofficial statutory reproduction.

Sources: DMA §§13–14, 18–19; current Rules 1, 23, 25; DIFS FAQ. law.justia.com+4

Unresolved denominator: The material read does not conclusively establish whether, after a discounted settlement, “debt actually liquidated” means the discharged balance, cash paid, or another amount. It also does not resolve fees attributable to a partly paid obligation that remains outstanding. No savings-based or enrollment-balance fee is approved here by inference.

Indexing and historical reconciliation: An older official rules PDF still contains a $25 initial-fee reference; the current compilation and 2020 final rule use $50. The 2026 DIFS fee schedule concerns payments by licensees to the regulator. Neither that schedule nor the payday bulletin establishes consumer-fee CPI indexing. No verified consumer adjustment notice was found, and no CPI calculation has been manufactured. C034–C035. gsaindexed.apps.lara.state.mi.us+2

4. When a fee may be requested or received

State timing

The reproduced DMA permits the initial charge when a licensee establishes a plan. Its distribution provision recognizes amounts due for monthly fees and other listed items; that does not establish that the entire estimated service charge is earned immediately. The current rules also tie receipt to the accepted contract. C017, C020, C028–C029.

Reproduced §451.423 requires an attempt to obtain participation from at least 51% of creditors, measured by number or dollars, within 90 days. It specifies notice/payment presumptions and a closure/refund consequence if required consent is not obtained. Those state presumptions are not substitutes for federal fee-trigger requirements. C027. law.justia.com+2

For a nonexcluded CSPA provider, the reproduced all-services-completed restriction raises a separate problem: settling one debt may leave other promised services unfinished. Federal per-debt timing does not decide that state question. C009, C029.

Federal common context—only where the TSR applies

The exact provision read was 16 CFR 310.4(a)(5). Before requesting or receiving a debt-relief fee, it requires a qualifying result under a valid customer-executed agreement and at least one customer payment under that agreement. Individually resolved debts must use the specified proportional-fee method or a consistent percentage of savings. These are federal timing/allocation conditions, not Michigan price permission. C031. ecfr.gov

Coverage requires its own assessment. Section 310.2(o) covers representations about unsecured-debt relief, including balance, interest, or fee concessions. Section 310.6 preserves coverage for specified debt-relief inbound advertising responses and contains conditional exemptions, including business-to-business and face-to-face provisions. FTC staff identifies no general attorney exemption and distinguishes bona fide nonprofits from false nonprofit claims. C030, C033. ecfr.gov+3

The dedicated-account provision requires insured custody, customer ownership, an independent administrator, no referral compensation, and penalty-free withdrawal with unearned funds returned within seven business days. A state cancellation ceiling does not override those conditions. C032.

5. Actual public application and verification route

The active DIFS page links an actual Debt Management License Application, FIS 0506, with supporting forms. The packet requests organizational and financial material, business histories, credit reports, a bond form, proposed contract/budget/creditor forms, a fee schedule, and counselor documentation. Current rules require an application for each operating location. This establishes a real public procedure, not an approval of any applicant. C012–C013. michigan.gov+2

The official schedule expressly applies to January 1–December 31, 2026:

• Initial license: $50 per location.
• Investigation: $50 per location.
• Annual renewal: $50 per location.
• Examination: $71 per hour per examiner.

These are regulatory charges, separate from consumer fees. C014. michigan.gov

Two verification problems matter:

• The current DMA renewal-checklist link opened a document headed Deferred Presentment License. Its September deadlines and payment instructions were excluded. DMA Rule 13 instead specifies December 1 filing; DIFS’s FAQ describes December 31 expiration. C015.
• The live Consumer Finance locator returned 403. A separately posted provider list is revised September 9, 2024 and cannot establish October 2026 status. No named provider’s authorization was verified. C016. michigan.gov+2

6–7. Examples and component coverage

The bounded calculations and classification holds appear in D. The coverage table preserves every question in this pass and the exact remaining investigations.

B. Source register

Access convention: All entries below were checked on October 23, 2026 UTC / October 22, 2026 PDT. “Read” means actual document/body text, not a title or search snippet. Michigan sources concern Michigan unless otherwise stated. A posted agency page’s update date is not treated as a statutory effective date.

Primary documents, operational materials, and held official sources

Statutory passages actually read in unofficial reproductions

These are additional retrieval routes for the same underlying documents, not new document IDs.

C. Claim table

Confidence notation: P = actual primary passage read; G = agency guidance/operational position; U = unofficial statutory reproduction, current authentication held; H = unresolved; I = expressly identified inference. These indicate evidence quality, not provider clearance.

D. Worked examples and coverage gaps

Bounded plain-text examples

All amounts below are US dollars. Calculations produce exact cents; no additional rounding is needed. DMA examples assume an actually authorized provider, an accepted contract, reasonable charges, satisfaction of applicable timing rules, and no exemption order changing the provisions. They illustrate the agency-supported structure, subject to the statutory-authentication hold.

Example 1 — Full repayment, lower agreed fee. C017–C019, C029.

Inputs: $10,000.00 debt fully paid during the plan; zero additional interest; agreed service fee $1,200.00; initial charge $50.00; no extras. Base: $10,000.00 actually liquidated. Operator: $10,000.00 × 0.15 = $1,500.00 ceiling. Comparison: agreed $1,200.00 is below $1,500.00. Result: $1,200.00 service fee plus $50.00 initial charge = $1,250.00, assuming the agreed fee is reasonable and earned. The unused $300.00 of ceiling is not additional entitlement.

Example 2 — Lower debt balance. C017–C018.

Inputs: $400.00 fully liquidated; zero interest; proposed ordinary fee at the ceiling; $50.00 initial charge; no extras. Base/operator: $400.00 × 0.15 = $60.00. Result: arithmetic ceiling of $60.00 ordinary fees plus $50.00 initial = $110.00. Reasonableness and timing remain independent conditions. Applying 15% to the initial charge, or treating the entire $110.00 as the ordinary-fee allowance, would use the wrong structure.

Example 3 — Cancellation after some obligations are fully paid; previous fees. C019, C025.

Inputs: original plan $10,000.00; distinct obligations totaling $4,000.00 fully paid; remaining obligations untouched; ordinary fees previously collected $900.00. Base/operator: $4,000.00 × 0.15 = $600.00. Intermediate: $900.00 − $600.00 = $300.00 excess. Result: $300.00 ordinary-fee reimbursement under DIFS’s reconciliation approach, assuming the $600.00 itself satisfies the contract and reasonableness requirement. The initial charge is accounted for separately. No cancellation charge is automatically added or netted against this refund.

Example 4 — Discounted settlement and an unfinished program: hold. C009, C019, C029.

Inputs: one $10,000.00 obligation settles for $4,000.00; another enrolled obligation remains unresolved. Candidate calculations: 15% × $10,000.00 = $1,500.00; 15% × $4,000.00 = $600.00. Issue: the first assumes discharged balance is the base; the second assumes cash paid is the base. Neither interpretation was established by a controlling passage read here. CSPA may separately require completion of all promised services. Result: no Michigan settlement fee approved. The $900.00 difference between candidate calculations is evidence of the unresolved denominator, not a selectable pricing range.

Example 5 — Noncustodial negotiation with a proposed upfront fee: hold. C002, C007–C010, C031.

Inputs: Michigan consumer; $20,000.00 enrolled debt; consumer retains creditor funds; provider proposes a $2,000.00 charge immediately; no creditor agreement or payment yet. Operator: test actual receipt/control, CSPA coverage/exclusion, and—if applicable—both TSR performance events. Intermediate: no verified Michigan fee pathway; federal qualifying agreement and payment conditions are unsatisfied. Result: classification and state-fee hold; $0.00 presently requestable/receivable under the assumed applicable TSR debt-relief provision. The result does not establish that $2,000.00 becomes lawful later.

Example 6 — Timely cancellation with unspent creditor funds. C023–C025.

Inputs: cancellation assumed timely under the statutory third-business-day rule; $1,000.00 unspent creditor funds; no outstanding creditor checks; no ordinary fee earned; separately paid $50.00 initial charge. Operator: return the $1,000.00 due to the debtor; apply the timely-cancellation exception to the proposed $25.00 cancellation fee. Result: $1,000.00 creditor-fund refund and $0.00 cancellation charge under the reproduced provisions. The disposition of the separately paid $50.00 remains held; this example does not declare it automatically earned or automatically refundable.

Example 7 — Regulatory application cost, separate from consumer pricing. C014.

Inputs: one location; initial 2026 application; no examination hours included. Operator: $50.00 license fee + $50.00 investigation fee. Result: $100.00 payable in those two regulatory categories. This excludes bond and other compliance costs and creates no right to pass $100.00 to a consumer.

Component coverage and exact next investigations

Failed routes retained for the principal holds

E. Researcher self-check

• Actually read: the full current official DMA rule compilation; the 2020 and 2024 final rule instruments; the 2024 effective-date record; relevant DIFS application, fee, FAQ and licensing materials; the identified official bulletins; pertinent official consumer guidance; the relevant primary court passages; and the exact federal provisions used.
• Read only in unofficial reproductions: the listed DMA, CSPA and CFSA statutory passages. Their wording was useful for identifying issues, but their October 2026 official currentness remains unverified.
• Not obtained: authenticated current DMA/CSPA statutory compilations, the full operative enactment chain, a controlling Michigan merits decision resolving modern noncustodial settlement, an applicable exemption/charge-approval order, a correct current DMA renewal checklist, or a named provider’s live license status.
• Not promoted into authority: search snippets, proposed-bill leads, provider marketing, the historical “unregulated” description, a broad education-page licensing statement, or the mismatched renewal document.
• This was ordinary public research in the present conversation, with parallel internal research tracks. It was not Deep Research, a set of separately opened ChatGPT conversations, or independent review. I did not verify or switch a chatgpt.com model-selector setting.
• No application, purchase, contact, account change, private borrower-data access, site publication, or local-file deliverable was undertaken.

The strongest established result is the active DMA regulatory route and its published ordinary fee framework. The unresolved noncustodial/CSPA pathway, discounted-settlement denominator, current statutory authentication, and actual provider status remain explicit holds. Michigan and A066 remain unaccepted.

END S_MI PASS-01