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

S_NM PASS-01 — New Mexico provider market access and consumer fees

Actual research/access date: October 24, 2026, Pacific time. Execution: Regular Chat using GPT-5.6 Sol Pro as the owner-authorized quality fallback; public web research only. No Deep Research, Work, Chrome control, APIs, purchases, applications, contacts, account changes, private borrower data, other chats, local writes, or publication actions.

Component boundary: This is only the New Mexico provider-access and consumer-fee component. It does not constitute acceptance of the full New Mexico dossier, A066, or any broader launch decision.

Bottom-line disposition

The best-supported current reading is that New Mexico still has its short 1965 Debt Adjusters Act, NMSA 1978 §§56-2-1 through 56-2-4. It is structured as a prohibition with narrow exclusions, not as an ordinary licensing statute:

1. A compensated intermediary that negotiates, settles, compounds, or otherwise changes an individual debtor’s payment terms and receives—or offers a role in receiving—debtor property for payment or distribution to creditors is at serious risk of being a prohibited “debt adjuster.”
2. No current New Mexico debt-adjuster license, registration, application, public registry, fee schedule, bond schedule, or inflation-adjustment notice was found.
3. A conventional for-profit custodial debt-settlement or custodial DMP model has no established lawful New Mexico fee pathway unless the provider itself fits a precise statutory exclusion.
4. A genuinely noncustodial, direct-to-creditor model presents a material unresolved boundary because the statute’s definition includes a receipt-of-property element. It is not safe to convert that uncertainty into authorization.
5. The nonprofit and attorney provisions are entity-specific exclusions. A nonprofit label, 501(c) status alone, attorney referral, attorney ownership, or “attorney-backed” marketing does not establish that a separate provider is excluded.
6. The registration, fee, bond, refund, and indexing provisions sometimes associated with a New Mexico Uniform Debt-Management Services Act came from 2013 SB 432, which failed. They are not current New Mexico law.
7. Federal TSR timing may still govern a telemarketed noncustodial debt-relief program, but federal timing compliance does not legalize a model prohibited by New Mexico law.

The official New Mexico Legislature directs users to the official OneSource compilation, but that live route was inaccessible through the public research tool. Current status is therefore supported by the 2025 codification mirror, the September 12, 2024 federal decision applying the Act, the verified failure of the proposed replacement statute, and bounded negative checks of the 2025 and 2026 final legislative subject indexes—not by a successfully opened official current OneSource section. That limitation remains material. New Mexico Legislature+5

A. Substantive answers

1. How New Mexico classifies debt adjustment, settlement, DMP, credit counseling, and related conduct

1.1 Operative classification elements

Section 56-2-1 supplies a conjunctive, activity-based definition. A “debt adjuster” is a covered person only when the material elements below are present:

These elements come from §56-2-1(A)-(C). The definition does not use the terms “consumer debt,” “personal, family or household,” “debt settlement company,” or “credit counselor.” It instead looks to the functions actually performed. Claims C001-C006, C039-C041. Justia Law

1.2 Model-by-model classification

The September 12, 2024 Hendricks v. Alum Financial order is useful but limited. It is a federal district-court pleading decision, not controlling New Mexico appellate authority. The court accepted pleaded allegations as true and dismissed claims only as to Debt Pay Pro. It did not enter a merits judgment against Alum or establish a universal rule for noncustodial providers. GovInfo+3

1.3 Consumer versus business purpose

The Debt Adjusters Act defines the debtor by status—an individual—not by the purpose of the debt. Thus:

• An obligation owed solely by a corporation or LLC is outside this Act’s debtor definition.
• An individual’s personal, family, household, or jointly owed debt is within the debtor definition.
• An individual’s business-purpose debt is not expressly excluded because the statute says “any debts,” but no public controlling interpretation was located. That category remains held rather than conclusively included.

This contrasts with the separate Collection Agency Regulatory Act, whose “debt” definition is expressly confined to personal, family, or household transactions. Justia Law+1

2. Prohibited, licensed, registered, authorized, or exempt?

2.1 Covered debt adjusting is prohibited, not ordinarily licensed

Section 56-2-2 states that acting or offering to act as a debt adjuster in New Mexico is a misdemeanor. The four-section Act contains no license, registration, certificate, bond, administrator, application, fee schedule, or discretionary approval mechanism. Section 56-2-3 instead authorizes an Attorney General action for an injunction and potential receiver. Claims C009, C018, C020-C025. Justia Law+1

It would therefore be incorrect to characterize New Mexico as a state where a covered for-profit debt-settlement company can simply obtain an ordinary debt-settlement license.

2.2 Exact statutory exclusions and failure cases

These are the complete exclusions shown in §56-2-4. The no-cost and no-adjustment-compensation conditions attach specifically to the creditor-agent and lender exclusions; they are not general statewide fee caps. Justia Law

2.3 Institutional exclusions

The Act does not expressly provide blanket exclusions for:

• banks;
• credit unions;
• depository institutions;
• money transmitters;
• escrow companies;
• trust companies;
• collection agencies;
• licensed lenders;
• insurers; or
• an entity merely registered in another state.

A regulated institution might qualify under the court/law-authority or lender exclusion on specific facts, but its separate charter or license cannot be presumed to erase the Debt Adjusters Act. Claim C018. Justia Law

2.4 Collection-agency licensing is a separate legal track

The Collection Agency Regulatory Act defines collection agencies and separately excludes a nonprofit organization that, at debtors’ request, performs bona fide consumer credit counseling and assists liquidation by receiving and distributing payments. That exclusion:

• is from the collection-agency definition;
• does not itself create a debt-adjuster license;
• does not enlarge §56-2-4’s nonprofit exclusion; and
• does not authorize a for-profit settlement provider.

The operative NMAC rule is expressly scoped to New Mexico-licensed collection agencies and derives from the Collection Agency Regulatory Act, not the Debt Adjusters Act. Its licensing requirements and bond amounts are therefore not a debt-settlement market-access route. Claims C019, C037. Justia Law+1

3. State fee structures, limits, indexing, refunds, and credits

3.1 No current Debt Adjusters Act fee schedule was found

The complete four-section Act contains:

• no setup-fee cap;
• no monthly-fee cap;
• no settlement or success-fee percentage;
• no per-debt fee;
• no savings-based formula;
• no aggregate cap;
• no minimum-debt threshold;
• no statutory inflation adjustment;
• no regulator-issued adjusted-dollar notice;
• no cancellation period;
• no ordinary refund calculation; and
• no earned-fee credit rule.

For a covered, nonexcluded model, the correct conclusion is not “New Mexico caps the fee at $0.” The correct conclusion is that no lawful state fee pathway was established because the underlying covered activity is prohibited. Claims C022-C024. Justia Law+3

3.2 Fee treatment by category

3.3 The failed Uniform Debt-Management Services Act must not be used

Official 2013 legislative records identify SB 432’s Uniform Debt-Management Services Act—including registration, bond, fees, trust accounts, remedies, dollar adjustments, and repeal of §§56-2-1 through 56-2-4—as failed. Its proposed effective dates of January 1, 2014 and January 1, 2017 never became operative.

The official fiscal analysis also stated that, at that time, FID did not license or regulate debt-management companies and described the existing Act as not allowing for-profit businesses to conduct covered debt-management services. That fiscal analysis is historical explanatory material, not current legal permission. Claim C021. New Mexico Legislature+4

Accordingly, any dated table that assigns New Mexico registration fees, setup/monthly limits, settlement percentages, surety bonds, trust-account duties, CPI adjustments, or automatic refunds from SB 432 must be marked never enacted, not “historical current law” and not “current adjusted amount unknown.”

3.4 Refunds and return of funds

Section 56-2-3 does not create a routine consumer cancellation/refund formula. It permits a court, in an Attorney General action, to appoint a receiver and attempt to return debtor money or property received by the debt adjuster and not yet paid to creditors. That is an enforcement remedy with specified procedural predicates, not an automatic contractual refund right. Claim C025. Justia Law

4. When fees may be requested or received

4.1 New Mexico state timing

The Debt Adjusters Act does not contain an “earned fee” event. It prohibits acting or offering to act as a covered debt adjuster. Consequently:

• no settlement acceptance;
• no creditor payment;
• no consumer deposit;
• no completed counseling session;
• no elapsed period; and
• no successful result

creates a state-law fee entitlement for a covered, nonexcluded provider.

The statute’s use of “for consideration” is a classification element, not a fee-timing permission. Claims C002, C009, C023-C024. Justia Law+1

4.2 Conditional federal TSR debt-relief timing

Where the federal Telemarketing Sales Rule applies, a debt-relief seller or telemarketer may not request or receive its fee for a debt until:

1. the provider has renegotiated, settled, reduced, or otherwise altered at least one debt under a valid agreement executed by the customer; and
2. the customer has made at least one payment under that agreement.

When debts are resolved individually, the fee must either:

• bear the same proportional relationship to the total program fee that the resolved debt bore to all enrolled debt when enrolled; or
• use the same savings percentage for every debt, where savings equals the enrolled amount minus the amount actually paid to satisfy that debt.

The TSR’s “debt relief service” definition reaches represented changes to unsecured debt terms and does not depend on the provider receiving creditor-payment funds. Thus, a direct-pay noncustodial program that falls outside or near the edge of the New Mexico definition may still fall within the TSR. Claims C027-C029. eCFR+2

4.3 Dedicated account conditions

The TSR permits requiring funds in a dedicated account only under specified conditions, including:

• insured financial institution;
• customer ownership of the funds and accrued interest;
• independent, unaffiliated administrator;
• no referral compensation between administrator and debt-relief service;
• withdrawal at any time without penalty; and
• return of all funds other than properly earned fees within seven business days after the customer’s request.

This is not an advance-fee authorization and does not answer the New Mexico “receives money or property” question. Claim C030. eCFR

4.4 TSR coverage qualifications

The TSR requires a telemarketing plan, program, or campaign involving more than one interstate telephone call. Inbound calls responding to advertisements or direct mail concerning debt-relief services are specifically carved out of the ordinary inbound-call exemptions. Business-to-business calls are generally exempt, subject to enumerated exceptions. These provisions must be evaluated on actual acquisition and telephone practices; there is no universal TSR assumption. Claim C031. eCFR+1

Most importantly, the TSR is a federal restriction on fee timing. It is not affirmative New Mexico authorization. A provider cannot cure the New Mexico prohibition by waiting until the federal performance trigger. Claim C032.

4.5 Separate credit-improvement and CROA overlap

A representation that the service will remove derogatory information or improve a credit history, record, or rating can implicate the TSR’s separate credit-improvement timing provision. That provision requires expiration of the represented service period and documentation from a consumer report issued more than six months after the represented result. It should not be substituted for the TSR debt-relief trigger unless the actual representation brings it into play. eCFR

CROA separately defines a credit repair organization by the express or implied purpose of improving a consumer’s credit record, history, or rating, for consideration using interstate commerce or mail. It excludes, among others, actual §501(c)(3) nonprofits, a creditor restructuring its own debt, and specified depository institutions and credit unions. A New Mexico “nonprofit corporation organized as a community effort” is not automatically the same thing as CROA’s §501(c)(3) exclusion. Claim C034. U.S. Code

If CROA applies:

• no charge or receipt is allowed before the agreed service is fully performed; and
• the consumer has a cancellation right through midnight of the third business day after execution.

CROA generally preserves noninconsistent state law, so it is not a state-prohibition override. Claim C035. U.S. Code+2

5. Regulator permission, lookup, application, and public market access

5.1 Enforcement authority

The Debt Adjusters Act names the New Mexico Attorney General as the official who may bring the state action for an injunction and receivership. It does not establish an administrator who registers debt-adjustment providers. Justia Law

5.2 Financial Institutions Division materials

The current FID pages list the categories it regulates, including banks, collection agencies, credit unions, escrow companies, money-services businesses, mortgage companies, motor-vehicle sales finance companies, small-loan companies, trust companies, and certain cemetery arrangements. Debt adjusters or debt-settlement providers are not listed as a licensable category. NM RLD+1

The current forms page likewise contains no debt-adjuster or debt-management provider application. NM RLD

The online-services page says NMLS apply/renew/verify functionality covers mortgage entities, collection agencies and related licensees, repossession companies, motor-vehicle sales finance companies, and money-services businesses. It does not identify a debt-adjuster credential. NM RLD

FID’s “Consumer Credit Counseling” entry appears under a Helpful Links page that expressly includes institutions outside FID’s jurisdiction and industry-association information. It is not an application, certificate, license, or authorization. NM RLD

5.3 Market-access conclusion

The absence of a website category alone would not prove prohibition. Here it is corroborative of a statute that expressly prohibits covered conduct and contains no licensing mechanism. Claim C020.

A named provider may still need other credentials if it separately performs collection, money transmission, lending, escrow, or another regulated activity. Those credentials would not by themselves authorize debt adjusting.

6. Worked fee and boundary examples

The examples in Section D below use only verified statutory or federal structures. None invents a New Mexico debt-adjuster license or treats a federal fee calculation as state permission.

7. Component boundary and next investigations

This pass resolves the core prohibition, classification elements, exclusions, lack of a current state fee schedule, failed-bill contamination, public licensing procedure, and conditional federal timing.

It does not close:

• full agreements and disclosures;
• escrow, dedicated-account, trust, or money-transmission analysis;
• collection-agency overlap beyond the narrow boundary above;
• bonds under other licenses;
• full criminal, UPA, restitution, private-action, aiding-and-abetting, or other remedies;
• limitations periods;
• secured debts;
• mortgage, student-loan, tax, medical, or other sector-specific laws;
• local or tribal law;
• attorney ethics, fee sharing, unauthorized practice, or advertising;
• full case-law and citator review;
• contract enforceability;
• named-provider status under other regulatory regimes; or
• entity-specific nonprofit qualification.

Those remain open in the coverage table.

B. Source table

All sources were accessed October 24, 2026 PT unless the row says otherwise.

B1. New Mexico law, legislative history, and judicial authority

B2. Adjacent regulation and current regulator materials

B3. Conditional federal fee and marketing overlap

C. Claim table

C1. Classification and scope claims

C2. Permission and exclusion claims

C3. State fee, timing, and remedy claims

C4. Conditional federal claims

D. Worked examples

All dollar results are rounded to the nearest cent. Federal calculations are conditional illustrations only; they do not create New Mexico permission.

Example E1 — Custodial principal-reduction program

Inputs

• Total enrolled debt: $20,000.00
• Debt A enrolled balance: $5,000.00
• Debt A settlement satisfaction amount: $3,000.00
• Stated savings-fee rate: 25%
• Provider receives or controls debtor funds for creditor payment
• Provider is for-profit and no §56-2-4 exclusion is established

Operator

• Savings on Debt A = $5,000.00 − $3,000.00
• Savings = $2,000.00
• Conditional TSR fee = $2,000.00 × 25%

Intermediate and result

• $2,000.00 × 0.25 = $500.00

Legal result

• Under the New Mexico elements, this is a covered custodial model and no lawful state fee pathway has been established.
• Even if the TSR applies and the creditor agreement plus first payment have occurred, the $500.00 calculation does not cure the New Mexico prohibition.
• New Mexico validated fee: none established. Conditional federal arithmetic only: $500.00.

Example E2 — Proportional fee after one partial resolution

Inputs

• Debt A enrolled balance: $4,000.00
• Debt B enrolled balance: $6,000.00
• Total enrolled balance: $10,000.00
• Total program fee stated for all debts: $2,000.00
• Debt A alone has reached an executed agreement and received its first payment

Operator

• Debt A ratio = $4,000.00 ÷ $10,000.00 = 0.40
• Conditional allocable fee = $2,000.00 × 0.40

Result

• $800.00

Legal result

• Under the TSR proportional method, no more than $800.00 is allocated to Debt A at this point, assuming all TSR prerequisites.
• For a New Mexico covered, nonexcluded custodial provider, the state prohibition remains independently dispositive.

Example E3 — Lower-debt savings calculation

Inputs

• Enrolled debt: $1,000.00
• Satisfaction payment: $700.00
• Constant savings-fee rate: 20%

Operator

• Savings = $1,000.00 − $700.00 = $300.00
• Fee = $300.00 × 0.20

Result

• $60.00

Legal result

• The smaller debt does not create a New Mexico de minimis exception.
• $60.00 is only a conditional TSR calculation after the required agreement and payment; it is not a lawful New Mexico fee for a prohibited model.

Example E4 — Previous fee exceeds the amount earned on the first resolved debt

Use the same balances as E2.

Inputs

• Conditional fee allocated to Debt A: $800.00
• Provider previously collected: $1,200.00
• Debt B has no executed alteration agreement and no payment under one

Operator

• Previously collected amount − conditionally earned amount
• $1,200.00 − $800.00

Result

• $400.00 conditionally unearned or premature under the TSR

If the money is in a qualifying dedicated account and the customer withdraws, the customer must receive account funds other than properly earned fees within seven business days. That federal return rule does not transform the underlying New Mexico model into an authorized business.

Example E5 — Direct-pay, noncustodial settlement

Inputs

• Enrolled debt: $20,000.00
• Provider negotiates with creditors
• Consumer pays each creditor directly
• Provider never receives, controls, or represents that it will transmit creditor-payment funds
• Provider charges a $3,000.00 success fee

New Mexico classification

• Consideration: present.
• Creditor intermediary role: present.
• Alteration purpose: present.
• Receipt of money for creditor payment: apparently absent.

Result

• New Mexico classification and fee pathway held unresolved.
• No license scenario is invented.
• If the service is sold through covered telemarketing, the TSR debt-relief timing rule can still apply because its debt-relief definition does not require custodial receipt.

Example E6 — Creditor’s no-cost settlement versus debtor fee

Scenario A

• Original creditor settles an $8,000.00 debt for $4,800.00.
• No service or adjustment fee is charged to the debtor.

Result

• The creditor/no-cost exclusion may apply.
• The $4,800.00 is the debt settlement payment, not a service fee.

Scenario B

• Same settlement, but creditor or its agent charges a separate $150.00 “adjustment fee” to the debtor.

Result

• The express “without cost to the debtor” condition is no longer established.
• The $150.00 is not validated by the Debt Adjusters Act; another exclusion or separate authority would have to be proven.

Example E7 — Claimed nonprofit DMP

Inputs

• Monthly charge: $35.00
• Program duration: 12 months
• Total charge: $35.00 × 12 = $420.00
• Entity describes itself as nonprofit

Result

• The arithmetic is $420.00.
• The Debt Adjusters Act does not cap or affirmatively authorize that amount.
• Before relying on §56-2-4, the actual provider must be shown to be a nonprofit corporation organized as a community effort to assist debtors.
• IRS status or the word “nonprofit” alone does not complete that showing.
• Other federal and state fee laws remain open.

Example E8 — Attorney-connected program

Inputs

• Flat fee: $1,500.00
• A New Mexico-admitted attorney is involved
• A separate nonlawyer company performs enrollment, negotiation, servicing, or fee collection

Result

• The Act excludes an attorney admitted in New Mexico.
• It does not expressly say the separate company acquires the attorney’s exclusion.
• The $1,500.00 amount and timing are not validated by this Act.
• Attorney ethics, fee sharing, UPL, entity structure, advertising, CROA, and TSR require separate analysis.

Example E9 — Advance fee before any settlement

Inputs

• Provider collects $750.00 at enrollment.
• No debt has been altered.
• No creditor agreement has been executed.
• No consumer payment has been made under a settlement or DMP.

Result

• Covered New Mexico custodial model: prohibited; no lawful fee pathway.
• Covered TSR transaction: the entire $750.00 is premature.
• If CROA applies, charging before full performance is independently prohibited.
• The New Mexico Act does not supply an automatic three-day cancellation or refund. Section 56-2-3’s return mechanism requires an Attorney General action and receiver.

Example E10 — Dedicated-account withdrawal

Inputs

• Customer-owned dedicated-account balance: $3,000.00
• Properly earned fee under the federal per-debt formula: $800.00
• Customer requests withdrawal
• Assume every §310.4(a)(5)(ii) institutional, ownership, independence, referral, and withdrawal condition is satisfied

Operator

• Returnable account funds = $3,000.00 − $800.00

Result

• $2,200.00 must be returned within seven business days under the conditional TSR rule.

New Mexico boundary

• If the provider’s representations, control rights, affiliates, or payment authority amount to receipt on the debtor’s behalf for creditor distribution, the state prohibition remains a serious issue.
• If it is genuinely independent and noncustodial, classification remains held pending stronger New Mexico authority.

D2. Component coverage and gap table

E. Researcher self-check

Actually read and checked

• The complete text displayed for §§56-2-1, 56-2-2, 56-2-3, and 56-2-4 in the 2025 codification mirror.
• The official New Mexico Legislature page linking to OneSource.
• The official 2013 SB 432 bill text, including its proposed repeal and effective dates.
• The official 2013 final legislative index pages identifying SB 432 as failed.
• The official 2013 fiscal-impact page discussing the then-existing prohibition and FID licensing status.
• The official 2025 and 2026 final subject-index documents, with exact bounded searches.
• The full relevant portions of the official GovInfo PDF for Hendricks v. Alum Financial, including the pleaded facts, statutory discussion, intermediary analysis, and procedural posture; the PDF was also visually inspected by screenshot.
• The current FID overview, regulated-industry, forms, online-services, and helpful-links pages.
• The current official 12.24.2 NMAC collection-agency rule and its issuing-agency, scope, authority, and objective provisions.
• The relevant Collection Agency Regulatory Act definition and nonprofit-credit-counseling exclusion.
• The current eCFR provisions for TSR definitions, debt-relief and credit-improvement fee timing, dedicated accounts, and exemptions.
• Current U.S. House Code pages for the relevant CROA definition, advance-fee, cancellation, and state-law provisions.

Not read or not established

• The official live OneSource text of §§56-2-1–4; the route was inaccessible.
• An official scan of Laws 1965, chapter 80.
• A complete commercial citator, Westlaw, Lexis, Bloomberg, or paid annotated-code review.
• A complete historical New Mexico administrative-rule docket or adoption-order archive.
• A controlling New Mexico appellate decision deciding pure noncustodial debt negotiation, remote nexus, “community effort,” indirect consideration, or individual business-purpose debt.
• Any private regulator interpretation, legal opinion, application file, examination record, or enforcement file.
• Any named company’s actual license or exemption status.
• SettleADebt.com contracts, scripts, account agreements, funds flow, organizational documents, attorney relationships, or acquisition channels.
• Full agreement, funds, bond, remedies, collection, litigation, limitations, secured-debt, sector, local, tribal, contract, or case-law coverage.

Method limitations and integrity statement

This was a focused researcher pass, not an independent review, regulator determination, formal legal opinion, audit, or publication-readiness certification. No inaccessible source was reconstructed and labeled as read. The official-codification failure, bounded negative searches, federal-district-court limits, proposed-bill status, and all unresolved classification issues have been retained expressly rather than converted into categorical answers.

END S_NM PASS-01.