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

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S_NY PASS-01 — New York debt-adjustment and debt-settlement provider law

SettleADebt.com | A066 — State, local, territorial and tribal rules | Research baseline and actual check date: October 22, 2026 | Jurisdiction: New York, with separately identified federal overlays

Scope: Category 1 only — provider regulation, licensing, fees, contracts, client funds, enforcement and remedies. This is a reference-law investigation, not advice about an individual borrower's circumstances.

1. Executive findings

The central legal distinction in New York is between budget planning as statutorily defined and broader commercial debt-settlement activity. The two should not automatically be treated as identical.

New York Banking Law Article 12-C regulates budget planners. Section 579 restricts licensed budget-planning activity to qualifying charitable or comparable out-of-state nonprofit entities. But whether a particular debt-negotiation model constitutes budget planning requires examining General Business Law § 455, its exceptions, and the actual service and payment arrangements—not merely the company's marketing description. NYSenate.gov+1

Confirmed statutory framework

Banking Law Article 12-C includes licensing, contracts, prohibited activities, examinations and enforcement provisions. Section 584-a expressly requires specified written contract terms, including a three-business-day cancellation notice. NYSenate.gov+1

Critical unresolved classification

A settlement provider that never receives consumer funds is not automatically exempt from all New York regulation. Equally, it is not established that every noncustodial negotiator must obtain an Article 12-C license. The statutory definition, exclusions, and judicial interpretation must control.

Proposed legislation is not operative law

Assembly Bill A1427, proposing a Uniform Debt-Management Services Act framework, is listed in Assembly committee in the 2025–2026 session. Its proposed debt-settlement licensing requirements must not be presented as existing law. nysenate.gov

The findings below distinguish provisions actually inspected from questions requiring further primary-authority verification. No unverified fee cap, exemption or judicial holding is treated as established.

2. Detailed statutory findings

2.1 Regulated activity and geographic reach

S_NY-P01-C001 — Definition of budget planning.

Under New York General Business Law § 455(1), the definition requires a contractual arrangement involving two elements:

1. The debtor agrees to pay money, and the provider distributes that money among specified creditors under an agreed plan, supervises/co-ordinates/controls that distribution, or contracts with another entity performing those functions.
2. The debtor agrees to provide valuable consideration for the relevant services.

The statutory language reaches beyond businesses physically holding consumer funds. It expressly includes supervision, coordination, control and contractual relationships involving distribution. NYSenate.gov

S_NY-P01-C002 — New York customer reach.

GBL § 455(1) expressly addresses businesses soliciting budget-planning business within New York and contracting with an individual resident in New York at the time. Physical office location is therefore not the sole criterion.

This is an affirmative statutory coverage rule, not proof that every other interstate arrangement is excluded. A business advertising nationally must evaluate its New York solicitation and contracting activity. NYSenate.gov

S_NY-P01-C003 — Prohibition.

GBL § 456 prohibits the business of budget planning except as authorized by Banking Law Article 12-C. GBL § 457 makes violation of § 456 a misdemeanor for each violation, including specified individuals acting for an organization. Banking Law § 579 establishes the charitable/nonprofit licensing framework. NYSenate.gov+2

Service-model classification matrix

S_NY-P01-C004 — Noncustodial settlement inference.

A genuine negotiation-only arrangement, without direct or indirect distribution activity or supervision/control, is textually distinguishable from statutory budget planning. That is an interpretive inference, not a controlling judicial holding or DFS exemption ruling. The facts must include all affiliates, payment administrators, settlement instructions and contractual rights.

The distinction matters because a company cannot safely redesign its customer-funds arrangement on the assumption that simply avoiding custody eliminates New York exposure.

2.2 Attorneys, nonprofits and counseling

S_NY-P01-C005 — Attorney exclusion has conditions.

GBL § 455(2) excludes a person admitted to practice law in New York from the article's definition of person. Section 455(3) addresses legal organizations whose members or principals are all admitted in New York.

Importantly, § 455(5) affirmatively requires a New York attorney engaged in budget planning to negotiate directly with creditors, place client money received into the attorney's client-funds account, pay creditors from that account, and provide the service through the same legal entity used to practice law. NYSenate.gov

Therefore, the statute does not establish that a nominal attorney relationship or an attorney-owned marketing company is automatically outside regulation.

Unresolved issues include professional-responsibility rules, nonlawyer fee-sharing, actual lawyer supervision, attorney trust-account regulation, and federal telemarketing coverage.

S_NY-P01-C006 — Licensed nonprofit treatment.

GBL § 455(4) excludes specified licensed charitable corporations or comparably situated out-of-state nonprofit entities from the GBL article's defined person/entity terms. Banking Law § 579 separately provides the authority and license requirement for qualifying budget planners.

The distinction is essential: a nonprofit's organizational status does not itself constitute authorization to operate a paid budget-planning program. NYSenate.gov+1

S_NY-P01-C007 — Counseling condition of licensing.

Banking Law § 581(2) requires an applicant to agree to provide, directly or indirectly, budgeting, educational and/or counseling services acceptable to the superintendent. Failure to provide them can support suspension or revocation.

This does not mean all financial counseling is regulated budget planning. The service must first be evaluated under the statutory activity definition. NYSenate.gov

2.3 Licensing, bonding and operational requirements

S_NY-P01-C008 — Application and licensing.

Banking Law § 580(1) requires a sworn written application identifying the applicant, officers/directors, business locations and other information required by the superintendent. Section 580(2) requires separate applications for multiple business locations. Section 581(1) requires an assessment of financial responsibility, experience, character and fitness, and provides a 90-day application determination period.

This is a regulator determination period, not permission to operate while an application is pending. NYSenate.gov+1

S_NY-P01-C009 — Surety bond.

Banking Law § 580(4) states a baseline bond principal of $250,000, subject to superintendent-authorized increases or decreases based on specified conditions, including financial condition, business plan, complaints and debtor funds/fees. It permits specified substitute deposits.

Bond/deposit proceeds have designated reimbursement purposes, including improperly distributed debtor payments and improperly charged fees. The baseline is not an invariant amount for every licensee. NYSenate.gov

S_NY-P01-C010 — License restrictions and reporting.

Banking Law § 582 requires posting licenses at business locations, prohibits assignment/transfer, requires notice of location changes, and calls for an independently audited financial statement within 90 days after fiscal-year close.

Section 586 requires books and records sufficient for regulatory review, preservation for at least three years, and annual reporting by February 1. NYSenate.gov+1

S_NY-P01-C011 — DFS administration.

DFS's official Budget Planner Licensing page identifies NMLS as its application-management platform, references Superintendent's Regulations Parts 402, 404 and 300, and describes quarterly New York trust-account reporting and separate New York trust accounts. These are official administrative materials, but the underlying regulatory provisions still need full independent reading for a complete rule-by-rule compliance matrix. Department of Financial Services

2.4 Contracts, disclosures and cancellation

S_NY-P01-C012 — Required contract provisions.

Banking Law § 584-a requires licensees to submit intended written contract forms to DFS and include:

• All obligations being adjusted, identifying creditors.
• Agreed total fees and treatment of estimated creditor rebates.
• Contract commencement and termination dates.
• Pro forma total-fee percentage relative to obligations being adjusted.
• Cancellation and prepayment settlement terms.
• Notice of the right to cancel through midnight of the third business day after signing.
• Debtor payment terms.

An executed copy must be furnished immediately. The contract may subsequently be amended to add creditors and obligations. NYSenate.gov

The three-business-day provision is a required contractual cancellation notice; its operation in any individual dispute depends on signing date, applicable business-day counting and any additional regulatory requirements.

S_NY-P01-C013 — Advertising, referrals and prohibited conduct.

Banking Law § 584-b prohibits unauthorized representations of licensure or use of protected budget-planner terminology. Licensee advertising must not be false or deceptive and must contain specified licensee identifying information.

It also restricts debtor-fund commingling, requires timely creditor payments, prohibits purchasing debtor obligations, restricts referral compensation, prohibits coercive debt disclosures and simulated judicial communications, and imposes conflict-of-interest and identifying-information restrictions. Specific statutory exceptions include limited affiliate payment aggregation and creditor rebates. NYSenate.gov

These are obligations imposed on licensees and other specified persons by particular subsections, not automatically universal rules governing every debt negotiator.

2.5 Enforcement

S_NY-P01-C014 — Licensing discipline.

Banking Law § 584 authorizes license revocation on enumerated grounds, including statutory/regulatory violations and certain dishonesty-related judgments or convictions. It authorizes temporary suspension for good cause, with notice/hearing protections for suspension or revocation, and states that surrender does not erase pre-surrender liability. NYSenate.gov

S_NY-P01-C015 — Examinations and regulatory powers.

Banking Law § 585 grants examination and investigative powers over licensees, including access to records and assessment of examination costs. Section 587 authorizes rules and rulings consistent with Article 12-C. NYSenate.gov+1

A consumer should not assume these provisions themselves guarantee a private damages action, automatic contract rescission or a particular recovery amount. Those remedies require separate statutory and case-law analysis.

3. DFS licensing materials and fee findings

The official DFS licensing page and application-fee schedule were opened directly. These add several operational details beyond the statutory overview.

S_NY-P01-C016 — Application charges. DFS lists a $3,000 original budget-planner license application fee, $0 for an additional branch/office license, and $3,000 for a change of control. These are provider regulatory application fees, not amounts that may be charged to consumers. Banking Law § 580(3) supplies the application-fee authority. Department of Financial Services

S_NY-P01-C017 — Trust-account administration. DFS states that licensed budget planners must maintain New York debtor trust accounts, with the prescribed agency-for-debtors title, and submit quarterly reports identifying relevant debtor-fund balances. DFS also describes bond/asset-pledge coverage tied to debtor funds. The exact reconciliation of the $250,000 statutory baseline, 100% coverage standard and regulatory adjustments requires reading Part 402.5 in full. Department of Financial Services

S_NY-P01-C018 — Regulatory fee changes. A published version of 3 NYCRR § 402.14 states that licensees must give DFS at least 30 calendar days' written notice before implementing a changed fee structure, subject to the superintendent's review and possible disapproval or extension.

This provision was located in a secondary regulation reproduction current through June 25, 2025. Its October 2026 operative text has not been authenticated from an official New York regulatory publication. It is consequently partial evidence, not a verified current fee rule. Justia

Important fee limitation: Neither Banking Law § 584-a nor the opened DFS licensing page establishes a universal maximum consumer charge such as 15%, 20% or 25%. Those percentages must not be described as New York statutory caps. The complete Parts 402 and 404 and any controlling DFS approvals must be checked before publishing an affirmative fee-cap conclusion.

4. Federal Telemarketing Sales Rule overlay

The federal Telemarketing Sales Rule (TSR), 16 CFR Part 310, is distinct from New York's budget-planning statute. A business may be outside one specific New York definition yet still subject to federal debt-relief telemarketing rules.

S_NY-P01-C019 — Advance fees. Under 16 CFR § 310.4(a)(5)(i), where the TSR applies, a debt-relief seller or telemarketer generally cannot collect its fee for a debt until the debt has been renegotiated, settled or otherwise altered under a valid agreement, the customer has made at least one payment under that agreement, and the fee meets the prescribed proportional-allocation or savings-based calculation.

The TSR does not establish a universal 25% fee ceiling. It regulates when and how fees may be collected. 16 CFR Ch. I (1–1–18 Edition)

S_NY-P01-C020 — Dedicated accounts. Section 310.4(a)(5)(ii) permits qualifying dedicated accounts subject to conditions; permission to accumulate customer funds is not permission for the provider to take advance fees. The 2010 FTC final-rule explanation confirms the distinction. ftc.gov

The current codified text and all dedicated-account conditions, including account ownership, independence, withdrawals and account fees, remain to be directly verified in this pass. The 2010 rulemaking is historical interpretive context, not a substitute for the current regulation.

S_NY-P01-C021 — Federal disclosures and misrepresentations. Section 310.3 addresses pre-sale disclosures for debt-relief services, including time to results and settlement offers, and prohibits material misrepresentations about expected savings, credit consequences, collection activity and program outcomes. Applicability depends on the TSR's definitions, exemptions and the actual telemarketing activity. LII / Legal Information Institute

CFPB withdrawal check

S_NY-P01-C022 — Guidance status. The CFPB's official Withdrawn Guidance register was opened on October 22, 2026. It lists Circulars 2022-05 and 2022-07 as withdrawn May 12, 2025, alongside numerous other withdrawn bulletins and interpretations. No operative claim in this report relies on those withdrawn circulars. Withdrawal of guidance does not, by itself, repeal underlying statutes or regulations. Consumer Financial Protection Bureau

5. Worked examples and operational consequences

These are hypothetical arithmetic demonstrations, not representations of actual settlements, creditor policies or permitted New York fee caps.

Example A — Federal TSR fee allocation

Assume a TSR-covered provider enrolls three debts and contractually sets a hypothetical total fee of 20% of enrolled debt, subject to all other applicable laws.

Calculations:

• Total fee = $40,000 × 0.20 = $8,000.
• Debt A share = $8,000 / $40,000 = 0.20.
• Allocated fee A = $8,000 × 0.20 = $1,600.
• Debt B fee = $8,000 × ($12,000 / $40,000) = $2,400.
• Debt C fee = $8,000 × ($20,000 / $40,000) = $4,000.

All values are in U.S. dollars and rounded to cents. No rounding difference arises here.

If Debt A is settled but the consumer has not yet made the required first payment under the settlement, the TSR collection trigger has not been satisfied. The provider cannot simply collect $1,600 because a creditor verbally accepted an offer.

Example B — Savings-based fee

Assume one enrolled debt is $10,000 and a creditor accepts $6,500 as full satisfaction. A hypothetical agreement specifies a constant 30% of savings as the provider fee.

• Savings = $10,000 − $6,500 = $3,500.
• Hypothetical fee = $3,500 × 0.30 = $1,050.
• Combined settlement and fee outlay = $6,500 + $1,050 = $7,550.

This is an illustration of the savings-based calculation alternative, not a finding that a 30% savings fee is approved by New York or that the consumer is guaranteed $2,450 of economic benefit. Taxes, creditor interest, account charges, collection consequences and other debts are excluded.

Example C — Three-business-day cancellation

Assume a licensed budget planner's consumer signs a contract on Monday, October 19, 2026, and no relevant legal holiday affects the count.

• Tuesday, October 20: first following business day.
• Wednesday, October 21: second following business day.
• Thursday, October 22: third following business day.

Under Banking Law § 584-a(6), the contract must give notice of cancellation through midnight of October 22. The separate regulation governing notice delivery and refund treatment needs current-text confirmation before specifying the exact legally effective delivery method.

Example D — Failed enrollment and disbursement

Consider a consumer who deposits $300 per month into a budget-planning arrangement for four months.

• Total deposited = $300 × 4 = $1,200.
• Amount actually paid to creditors = $500.
• Account balance before authorized charges = $1,200 − $500 = $700.

If the consumer terminates the arrangement, $700 is an accounting starting point, not necessarily the legally determined refund. The review must reconcile permitted charges, pending payments, bank records, contract terms and applicable refund requirements.

If a provider collected fees for an unsuccessful debt-relief negotiation covered by the TSR before the statutory fee trigger, the advance-fee prohibition becomes a separate issue. If the business is a New York licensed budget planner, its trust-account and timely-disbursement duties also matter.

Operational evidence checklist

For an actual provider-compliance audit, preserve the signed agreement and all amendments, disclosure versions, sales scripts, advertisements, licensing records, creditor lists, authorization forms, communications, settlement agreements, creditor-payment confirmations, consumer-account statements, fee ledger, cancellation notices and refund records.

The presence of a third-party payment processor should trigger review of its contracts, control rights, compensation and account structure—not an assumption that the debt-relief company is noncustodial in the statutory sense.

6. Additional regulatory and licensing findings

The following supplemental findings distinguish statutory text from unofficial reproductions of regulations.

S_NY-P01-C023 — Rescission notice and fee refund. The text of 3 NYCRR § 402.10(a)–(d), opened in Cornell's regulation reproduction, specifies written notice, treats properly addressed and posted mailed notice as given upon mailing, and requires prompt return of contract-related fees following timely rescission. It excludes reasonable counseling fees imposed separately from execution of the budget-planning contract. The refund exception does not automatically validate a mislabeled or otherwise impermissible counseling charge. Current official-version authentication remains outstanding. LII / Legal Information Institute

S_NY-P01-C024 — Bond regulation. The opened text of 3 NYCRR § 402.5(a)–(b) restates the adjustable $250,000 surety-bond framework and requires a larger bond to be effective within 30 days of notification. Its historical subsection (c) identifies April 7, 2003 as the effective date of the referenced 2002 statutory amendments. That historical implementation deadline is not a new 2026 deadline. LII / Legal Information Institute

S_NY-P01-C025 — Management changes. Banking Law § 583 requires prompt notification of officer/director changes. Section 583-a(1)–(4) generally requires advance superintendent approval for changes of control, contains a limited operation-of-law exception, and presumes control at a specified 10% voting-stock threshold, subject to the superintendent's determination. NYSenate.gov+1

Consumer complaint and remediation pathway

For a suspected violation involving a licensed budget planner, the practical sequence is to identify the legal entity and license, obtain a full account ledger, reconcile payments and fees, request contract cancellation or refund where supported, and submit a documented complaint to DFS if unresolved.

A complaint should identify the provider, agreement date, amount paid, account administrator, specific disputed charges or missed creditor payments, and the remedy requested. Preserve written delivery evidence.

DFS licensing information is available at:

https://www.dfs.ny.gov/apps_and_licensing/budget_planners

A consumer may also use the CFPB complaint system for matters within its jurisdiction. Complaint filing is not itself a court judgment, automatic refund or suspension of a collection lawsuit.

The availability of civil claims under New York General Business Law §§ 349–350, contract law, fraud theories or other statutes depends on the precise conduct and required elements. A private remedy solely for violating Article 12-C has not been established in this pass.

7. Source register

All rows have an actual check date of 2026-10-22. “Opened” means the page text was retrieved and inspected in this chat. It does not imply that an independent official historical archive was checked or that the text has been legally authenticated beyond the identified publisher.

For compactness, each row identifies its operative pinpoint. A webpage's most recent revision label is not automatically the law's effective date.

Unregistered sources: No unidentified case, regulator ruling or local ordinance is relied on as controlling authority. Direct URLs for unlocated materials are intentionally not invented.

8. Claim/evidence register

All claims concern A066, New York, with a baseline and check date of October 22, 2026. “Partial” means the cited text supports the stated proposition but some relevant operative material or current-version verification remains outstanding.

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S_NY PASS-01 — Continuation and completion of remaining tables

SettleADebt.com | A066 | New York debt-adjustment and debt-settlement provider law | Baseline: October 22, 2026 | Continuation date: October 22, 2026

This continuation begins at S_NY-P01-C023, preserving the prior source register S_NY-P01-S001 through S_NY-P01-S028 and the earlier findings.

Evidence qualification: No additional primary-source retrieval was completed during this continuation. The tables below reconcile the previously rendered findings and identified sources. They do not upgrade discovery-only, secondary or inaccessible materials to verified primary evidence. In particular, the prior response's claim that certain official statutory pages were opened is carried forward as its reported access history, not independently reconfirmed here.

8. Claim/evidence register — continuation

8.1 Remaining claim rows

8.2 Evidence-integrity corrections

The claim register distinguishes supported affirmative rules, interpretive inferences, and absence of sufficient evidence.

In particular:

• S_NY-P01-C029 does not establish that New York has no fee ceiling.
• S_NY-P01-C030 does not establish that all unused funds must be refunded without deductions.
• S_NY-P01-C034 does not establish a categorical noncustodial exemption.
• S_NY-P01-C038 does not establish that no private remedy exists.
• S_NY-P01-C039 and C040 do not establish that no relevant local ordinance or controlling case exists.

These distinctions are publication-critical.

9. Granular coverage register

Status definitions: answered means the specific question has a supported substantive answer within its stated boundaries; partial means meaningful findings exist but material verification remains; unresolved means the controlling answer has not been established; excluded_with_reason identifies a deliberately excluded matter. The six remaining parent categories use the required separate status.

9.1 Category 1 — Every assigned seed

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S_NY PASS-01 — Final coverage and research holds

SettleADebt.com | A066 | New York | Baseline: October 22, 2026 | Continuation: October 22, 2026 | GPT-6, regular Chat; no Deep Research invoked. User-selected Pro mode reported, not independently verifiable.

This completes the interrupted coverage register and remaining deliverables. All source IDs and claim IDs refer to the previously saved segments. No additional sources were opened during this continuation.

9. Granular coverage register — remaining rows

9.1 Category 1 — Continued

Category 1 conclusion: The statutory framework has meaningful support, but material questions concerning fee ceilings, noncustodial classification, refunds, local rules and judicial interpretations remain open. Category 1 is partially researched, not fully verified.

9.2 Other six parent-assignment categories

10. Most consequential publication holds

Hold 1 — New York fee legality

Do not publish a universal New York debt-settlement fee ceiling, approved percentage, or fee-collection schedule. The operative regulatory provisions have not been fully authenticated.

Hold 2 — Noncustodial classification

Do not state that a negotiation-only provider is categorically exempt or categorically prohibited. GBL § 455's distribution-related definition must be reconciled with controlling interpretations and actual business arrangements.

Hold 3 — Refunds and dedicated accounts

The official current text of 3 NYCRR § 402.22 and the complete current federal dedicated-account provisions remain unverified. The failed-source result must remain visible in the evidence register.

Hold 4 — Attorneys, nonprofits and remedies

No blanket exemption, automatic civil remedy or contract invalidity conclusion is established. Professional-conduct rules and controlling decisions remain necessary.

Hold 5 — Source currency and local overlays

Secondary reproductions, historical federal materials, proposed legislation and discovery-only sources must not be presented as verified operative October 2026 law. Local requirements remain unresolved.

11. Next focused research questions

1. Does a controlling New York decision or DFS interpretation address a provider that negotiates settlements but never receives, supervises or controls debtor payments?
2. What are the complete operative consumer-fee provisions of 3 NYCRR Parts 402 and 404, and do any additional statutory restrictions apply?
3. What refund and accounting obligations apply after timely rescission, ordinary termination, rejected creditor offers or failed payment transmission?
4. Which attorney professional-conduct and nonlawyer-affiliation restrictions affect debt-settlement services?
5. Does New York City impose additional material requirements, and what private remedies have New York courts recognized?

12. Article, tool and document opportunities

13. Worked-example verification

The earlier arithmetic remains internally consistent:

• Proportional fee: $40,000 × 20% = $8,000; allocated fees $1,600 + $2,400 + $4,000 = $8,000.
• Savings fee: $10,000 − $6,500 = $3,500; $3,500 × 30% = $1,050.
• Deposit reconciliation: $300/month × 4 months − $500 disbursed = $700 before adjustments.
• October 19, 2026 was a Monday; October 22 was Thursday, the third following weekday.

These are arithmetic checks, not legal fee approvals or refund determinations. Applicable rules, holiday treatment, contractual inputs and rounding conventions remain subject to coordinator review.

14. Researcher self-check

Pass disposition: The remaining rendered deliverables are complete. The substantive New York category-1 investigation remains partial with explicit publication holds. Coordinator evidence review, legal validation, and all six other parent-assignment categories remain separate and unfinished.

END S_NY PASS-01