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

S_NY PASS-02 — New York provider fees, cancellation and debtor funds

SettleADebt.com | A066 | Research baseline and actual check: October 22, 2026 | GPT-6, regular Chat | No Deep Research invoked

1. Findings and regulatory status

The most important new finding is that 3 NYCRR Part 404 is relevant to debtor-fund safeguarding, not simply another general fee regulation.

New York DFS identifies both Parts 402 and 404 as regulations applicable to budget planners. Part 402 addresses licensed budget-planner operations, including fee-structure changes, rescission, termination, disbursements and return of unused funds. Part 404 addresses delegation of specified activities involving debtor money to service providers. Department of Financial Services+2

Critical source-status limitation: New York's publicly accessible Westlaw NYCRR is explicitly labeled Unofficial. It reproduces the official compilation but warns that its section-level currency dates may precede later State Register amendments. The located Justia reproduction reports currency through June 25, 2025. Neither establishes, by itself, the complete operative regulatory text on October 22, 2026.

Consequently, this pass establishes additional regulatory text and its apparent applicability, but does not certify that the entire current official Parts 402 and 404 have been authenticated.

S_NY-P02-C001 — Part 402 applicability

Part 402 is titled Budget Planners and is issued under Banking Law §§ 12 and 587. Its listed provisions include:

• § 402.3 — Services provided by licensees.
• § 402.10 — Rescission.
• § 402.11 — Term and termination.
• § 402.14 — Fee-structure changes.
• § 402.15 — Noncommingling.
• § 402.21 — Books and records.
• § 402.22 — Return of unused debtor funds.

The rules are framed around licensed budget planners; their existence does not independently classify every commercial negotiation-only provider as a licensee. LII / Legal Information Institute

S_NY-P02-C002 — Part 404 is substantively relevant

The opened reproduction of § 404.2 states that where a licensed budget planner uses a licensed or nonlicensed service provider to hold, access or obtain possession of debtor money, the service arrangement is subject to §§ 404.3–404.6.

This is a meaningful correction to the earlier assumption that Part 404 might be irrelevant. It is particularly important for third-party payment administrators.

However, the precise obligations imposed by §§ 404.3–404.6 still require full examination. Section 404.2 alone does not establish the complete bonding, custody, contractual or monitoring requirements. govt.westlaw.com

S_NY-P02-C003 — Fee-structure modification

The reproduced § 402.14 states that a licensee proposing to change its debtor fee structure must notify the superintendent in writing at least 30 calendar days before implementation.

It describes superintendent review considering operational expenses, debtors' financial condition and other relevant factors. It also describes a 30-day disapproval period, subject to written extension.

This is a procedure for changes to an existing licensee's fee structure. It does not establish a universal percentage ceiling, approval of a particular fee amount, or a right to impose otherwise unlawful charges. Justia

Status: Text corroborated by a reproduction current through June 25, 2025; October 2026 official currency unverified.

S_NY-P02-C004 — Counseling and creditor payments

The reproduced § 402.3(a) requires an initial assessment of the prospective debtor's finances and whether the arrangement is economically appropriate. If not, the licensee must recommend appropriate alternatives, including legal advice or bankruptcy.

Subsection (b) requires budgeting, education and counseling services.

Subsection (c) requires prompt transmission of debtor funds to creditors, less contractual fees that are actually due and owing.

This last qualification matters: it does not authorize deduction of fees merely because the contract lists them. Their validity and due date must be independently established. govt.westlaw.com

S_NY-P02-C005 — Rescission and counseling-fee exception

The opened Westlaw reproduction of § 402.10 provides:

• Subsection (a): rescission through midnight of the third business day after signing; notice must be explained before or at execution.
• Subsection (b): written rescission notice.
• Subsection (c): properly addressed and posted mailed notice deemed given when deposited in the mailbox.
• Subsection (d): prompt return of contract-associated fees paid to the licensee following timely rescission, excluding reasonable counseling fees imposed separately from execution of the budget-planning contract.

The exception is conditional. A charge is not necessarily a valid counseling fee merely because the provider labels it that way. govt.westlaw.com

Status: Opened reproduction current through February 15, 2022. The October 2026 official version and subsequent amendment history remain unverified.

S_NY-P02-C006 — Trust-account titling and individual debtor accounting

The full text of § 402.15(a)–(b) was opened in Cornell's regulatory reproduction. It requires accounts holding debtor funds to carry the prescribed agency-for-debtors title and records that identify each debtor's balance on any given day. It also requires the account to be maintained at a qualifying financial institution's New York branch.

DFS independently confirms these requirements on its official licensing page, including the prescribed title and New York branch requirement. LII / Legal Information Institute+1

This provides official agency corroboration of the substantive requirements, although the official October 2026 regulatory compilation has not been authenticated.

S_NY-P02-C007 — Bond coverage and reporting

DFS states that the licensee's bond or asset pledge must cover 100% of the highest daily balance of New York debtor funds held for creditor disbursement, or an average balance if previously approved.

DFS also specifies quarterly reporting within 10 business days after quarter-end, including the relevant highest or approved average daily balance. Department of Financial Services

The important qualification is that the DFS description and Banking Law § 580(4)'s baseline bond provisions must be read together. A $250,000 statutory baseline does not independently establish the correct bond for every licensee.

S_NY-P02-C008 — Records and examination trail

The located reproduction of § 402.21 identifies a minimum six-year regulatory record-retention requirement and specific categories of rejected and canceled debtor applications.

This is more demanding than simply keeping a final account balance. A compliance audit needs the original enrollment decision, cancellation documentation, transaction ledger, creditor remittances and fee records. govt.westlaw.com

The section's complete record-category list and October 2026 currency remain unverified.

S_NY-P02-C009 — Ordinary termination is distinct from rescission

A further regulatory provision was located: 3 NYCRR § 402.11.

Its reproduced text states that licensed budget-planner contracts are limited to a payment period not exceeding 60 months, must permit debtor termination on 10 days' written notice without a termination fee or penalty, and must provide for return of debtor money remaining in the licensee's possession. Assignment requires the debtor's written consent. LII / Legal Information Institute

This is materially different from the three-business-day rescission remedy under § 402.10. A consumer terminating later should not automatically be promised a refund of every fee previously earned and lawfully collected.

Evidence status: Secondary text located; current official version and any additional § 402.22 requirements remain unverified.

S_NY-P02-C010 — Official compilation and amendment history

The New York Department of State identifies its Division of Administrative Rules as the compiler of the official NYCRR and publisher of the weekly State Register. Its materials distinguish publicly available unofficial text from the official compilation. Department of State+1

This resolves the source-authentication methodology, but not the substantive currency question: a complete check of relevant 2022–October 2026 amendments has not been completed.

The Department of State's official publication route must be used to reconcile the regulatory text and effective dates before certification.

2. Source register

All retrievals below occurred October 22, 2026. “Opened” identifies actual page access; “search extract” means retrieved search-result text, not a successful full-page opening.

The source register intentionally does not claim access to an official, consolidated October 2026 version of Parts 402 or 404. Nor was an individualized DFS fee approval, contract approval or interpretive ruling obtained.

3. Additional Part 404 findings

Three more sections were successfully opened in Cornell's secondary regulatory compilation.

S_NY-P02-C011 — Licensed service-provider delegation (§ 404.3). A licensed budget planner using another licensed service provider for debtor-money custody, access or distribution must give the superintendent 10 days' written notice. The notice includes the provider's identity, services, agreement and highest daily funds exposure. Depending on the superintendent's determination, additional bond/deposit protection or an approved alternative mechanism may be required. The licensee cannot proceed before the specified written regulatory confirmation when required. LII / Legal Information Institute

S_NY-P02-C012 — Nonlicensed service-provider delegation (§ 404.4). A nonlicensed payment administrator is not automatically outside the safeguarding rules. The reproduced section requires 10 days' written notice, extensive provider/control-person information, the service contract and maximum daily funds exposure. It also imposes examination-access and asset-deposit conditions, subject to specified exceptions and regulator-approved alternatives. The licensee must obtain the prescribed written receipt confirmation before using the arrangement. LII / Legal Information Institute

S_NY-P02-C013 — Termination of service-provider agreements (§ 404.5). Covered agreements must provide at least 30 days' written notice of termination, and the licensed budget planner must notify the superintendent immediately when the termination notice is sent or received. This governs the provider-to-provider arrangement, not the consumer's separate 10-day termination provision in § 402.11. LII / Legal Information Institute

These findings establish that Part 404 is materially relevant to third-party debtor-fund arrangements. They do not establish that Part 404 independently sets consumer fee ceilings.

Source-register additions

4. Claim/evidence register

All claims concern A066 — New York, except where explicitly discussing source-authentication methodology. Dates are the October 22, 2026 research baseline, not independently established regulatory effective dates.

No claim in this register establishes a universal New York consumer fee cap, a legally approved fee percentage, a complete unsuccessful-enrollment refund rule, or the absence of any such rule.

5. Granular coverage table

6. Conditional refund illustration

No consumer fee ceiling has been authenticated, so no fee-legality example is appropriate.

For accounting purposes only, suppose a licensed budget planner holds $1,200 of debtor deposits and has transmitted $500 to creditors.

• Deposits = $300/month × 4 months = $1,200.
• Undisbursed balance = $1,200 − $500 = $700.

Under the reproduced § 402.11, ordinary termination triggers return of debtor money remaining in the licensee's possession. But the hypothetical $700 cannot automatically be represented as the legally payable refund without verifying the actual ledger, custody, pending transactions, contract provisions and controlling regulations.

If rescission occurred within the three-business-day period, the separate § 402.10 fee-refund provisions would also require analysis.

7. Corrections to pass-01

8. Persistent publication holds

The following must remain unpublished as affirmative legal conclusions until the missing evidence is authenticated:

1. Any universal New York consumer debt-settlement fee ceiling or assertion that no ceiling exists.
2. Any claim that a particular provider fee, counseling fee or unsuccessful-enrollment charge is legally approved.
3. Any unconditional refund amount or deadline beyond the verified applicability of the relevant rules.
4. Any assertion that Parts 402 and 404 were comprehensively authenticated as operative on October 22, 2026.
5. Any blanket conclusion that third-party payment administration avoids licensing, trust-account or security requirements.

The immediate highest-value follow-up is obtaining the official current text of §§ 402.10, 402.11, 402.14, 402.15, 402.22 and 404.1–404.5, together with applicable amendment records. Section 402.22 is the most significant unresolved refund source.

9. Researcher self-check

Pass-02 disposition: Substantive gaps were narrowed, particularly regarding ordinary termination, DFS trust-account requirements and Part 404 service-provider safeguards. The requested current-official-regulation authentication remains incomplete. The coordinator should retain all source-access qualifications and publication holds.

END S_NY PASS-02