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

S_SC PASS-01 — South Carolina provider market access and consumer fees

South Carolina provides a licensing pathway for compensated consumer debt settlement, including negotiation that does not involve handling the consumer’s money. Its ordinary licensed-provider fee schedule does not authorize a percentage of enrolled debt, a percentage of savings, or a separate success fee for each settled debt. The negotiation schedule instead permits specified consultation, monthly maintenance, and reinstatement fees, subject to the conditions below. A state fee ceiling does not establish when that fee may be collected. Claims C010, C018, C020, C022, C027, C044–C045. CONSUMER PROTECTION CODE+2

Research baseline: October 22, 2026, Pacific. Actual access: October 23, 2026, Pacific. Scope: Provider market access, classification, consumer fees, related timing and refund conditions, and public licensing procedure. This is not acceptance of the South Carolina dossier or A066.

Currentness limit: The legislature’s statutory website states that its Code is current through the 2026 legislative session. Its regulation compilation states a March 27, 2026 cutoff. I supplemented that compilation with the April–September 2026 State Register issues. The issue scheduled for October 23 was not yet retrievable during this research; its contents remain unverified. C001, C041.

In the discussion, S001 abbreviates S_SC-P1-S001, and C001 abbreviates S_SC-P1-C001. The full identifiers appear in the source and claim tables.

A. Substantive findings

1. Classification: the conduct and financial arrangements determine coverage

The controlling framework is the South Carolina Consumer Credit Counseling Act, S.C. Code §§37-7-101 through 37-7-122, implemented by R.28-700.

Section 37-7-101(3) identifies three covered service categories:

1. Receiving or offering to receive consumer funds for distribution among creditors, in full or partial payment.
2. Improving or offering to improve a consumer’s credit record, history, or rating.
3. Negotiating or offering to negotiate deferral or reduction of obligations concerning credit extended by others.

The organization definition includes providing or offering these services for a fee, compensation, gain, or the expectation of any of those things. It is broader than charging the consumer directly. S001, §37-7-101(2)–(4); C002, C005.

Debt settlement and DMP are different definitions. Section 101(7)’s debt-settlement definition is broad enough to cover principal and payment/charge concessions. Section 101(6)’s DMP definition additionally requires a program involving settlement or pooling/distribution in which the consumer gives the organization money or control of funds for creditor distribution. A purely noncustodial negotiator can therefore provide regulated credit counseling without operating a statutory DMP. C003–C004, C009. CONSUMER PROTECTION CODE

Consumer versus business purpose

The definition chain is:

• §37-7-101(1) incorporates §37-1-301(10);
• §37-1-301(10) refers to credit extended in a consumer credit transaction;
• §37-1-301(11) incorporates consumer credit sales, consumer loans, refinancings/consolidations, consumer leases, and rental-purchase agreements.

The principal sale and loan definitions require primarily personal, family, or household purpose, a buyer/debtor other than an organization, and additional installment/finance-charge and transaction conditions. However, §§37-2-601 and 37-3-601 permit signed agreements bringing otherwise nonconsumer sales or loans into the title’s consumer framework. “Business purpose” is consequently not an absolute exclusion without reviewing the transaction. S002–S004; C007.

The nominal $25,000 appearing in the sale/loan definitions is not the currently published adjusted amount. The actual 2026 adjustment notice publishes $135,000 for July 1, 2026–June 30, 2028, compared with $127,500 for the preceding period. These are transaction-definition amounts—not debt-settlement fee caps or a maximum aggregate enrollment balance. The agency advises using the published amounts applicable when a contract was entered. The notice’s narrative refers to “December 2023” CPI-W, while its table expressly identifies the 2026–2028 period; I used the published table and did not calculate a substitute adjustment. S012–S013; C008. CONSUMER PROTECTION CODE+5

South Carolina nexus

The business is conducted in South Carolina if the organization, its employees, or its agents are located there or the organization solicits or contracts with debtors located there. Section 37-7-102 expressly applies without an in-state office, facility, agent, or other physical presence. An out-of-state website or telephone operation is therefore not outside the Act merely because it operates remotely. S001, §§101(2)(a), 102; C006.

2. Market access: licensing is available, with conditional exclusions

For covered, nonexempt activities, the issuing regulator is the South Carolina Department of Consumer Affairs—DCA. The statute provides for organization licensing and individual credit-counselor licensing. Covered counselors include employees or agents performing the enumerated services. C010.

A completed application is not operating authority. Under §37-7-107, DCA must make the required financial-responsibility, character, qualifications, and fitness findings and issue the license. Permission to engage in the licensed business begins upon receipt of the license. The license is nontransferable and nonassignable. C011.

A covered organization must also file a bond before offering or agreeing to offer services. The statutory amount is at least $25,000, and must equal or exceed the relevant South Carolina client trust funds as determined by DCA. The statute does not provide a zero-bond exception simply because a covered negotiator is noncustodial. Full bond mechanics remain a later pass. S001, §§103–107; C012. CONSUMER PROTECTION CODE+1

Exclusions require both the listed category and the proper activity

Section 37-7-101(2)(b) applies the following exclusions only when the person acts in the regular course of the respective business or profession:

Controlling attorney decision. In Lexington Law Firm v. SCDCA, Opinion 26648, filed May 12, 2009, the South Carolina Supreme Court rejected a categorical exemption for an out-of-state law firm. It held that DCA makes the initial exemption determination, subject to judicial review, and that the provider must satisfy both the listed-category and regular-course requirements. Attorney affiliation or nominal law-firm status is not enough. S010, Parts II.A–II.B; C013–C016. sccourts.org

In In re Naderi, Opinion 27881, filed April 24, 2019, the Court applied the Act to an out-of-state attorney’s negotiation service and identified the absence of the required license and bond, along with collection of an unearned fee. Its mortgage facts are used here only for the attorney/licensing/earned-fee boundary; they do not establish comprehensive mortgage-service permission. S011, PDF p.5 and nn.2–4; C027. In the Matter of Farzad Naderi

No alternative consumer-fee schedule for a genuinely exempt attorney or institution is established by this pass. Exemption from this licensing framework does not establish unrestricted fees under other applicable law.

3. Consumer fee structures and current dollar limits

The controlling rule is an exclusive, single-branch schedule

Section 37-7-112 prohibits consumer fees other than those established by regulation. R.28-700(B)(1) prohibits unlisted direct or indirect consumer fees and prohibits charging under more than one of the three branches in B(2). The branch depends on the primary purpose of the contracted services. C018.

S005, R.28-700(B)(1)–(2), PDF pp.36–37; S009, printed p.38; C019–C021. scstatehouse.gov+1

The consequences are material:

• A negotiation provider cannot add the distribution branch’s $50 setup fee or approved $10 related-service category.
• The monthly multiplier counts creditors, not balances, savings, creditor payments, or automatically each account.
• A separate settlement-success fee, enrolled-debt percentage, savings percentage, or success fee per debt is not authorized by the exclusive schedule.
• Waiting until successful settlement does not create authority for an otherwise unlisted fee.
• The state amounts are ceilings. A lower contractual fee, suitability determination, earned-service requirement, or federal rule can reduce what may actually be charged or received. C022–C025.

Common charges, aggregate restrictions, and refunds

Dishonored payments. R.28-700(B)(3) permits a charge up to $25 upon the third dishonored consumer payment within a twelve-month period. No more than three such charges may be charged to that consumer in the same twelve-month period. The express aggregate ceiling is therefore $75 for those charges in that period. This does not authorize a fee for each of the first three dishonors. The rule does not separately explain every subsequent-event charging sequence. C024.

Contract and benefit conditions. Under B(5), a fee must be permitted, delineated in the contract, and supported by a good-faith determination that the consumer will benefit. Section 37-7-110(B)(2) also requires an estimate of all payments and fees over the contract term, including a maximum. The service-performance period under §110(B)(4) cannot exceed five years from the original contract. No independent percentage-based or single lifetime-dollar cap is stated in these provisions; the individual caps, changing creditor counts, contractual maximum, and performance conditions still apply. C025.

Contributions, ancillary products, and creditor compensation. Section 110(C) requires disclosure that the organization may also receive compensation from creditors. It prohibits requiring a “voluntary” consumer contribution and contains restrictions on requiring or selling other products or services in connection with a DMP. Creditor-paid compensation does not create an additional consumer-fee category. C026.

Unlawful receipts. R.28-700(B)(4) requires money received in violation of the Act or regulation to be returned to the payor. This is distinct from refunding unexpended creditor-payment funds on cancellation. C031.

Paid referrals. Section 37-7-116(A)(6) prohibits offering compensation for referring a prospective customer to the licensee; (A)(5) also prohibits the specified receipt of consideration for referring applicants to that organization. A provider-paid lead arrangement is therefore not cleared merely because the consumer pays nothing to the lead source. The distinction between a prohibited referral payment and a particular advertising/vendor arrangement requires its own factual and legal analysis. C032. scstatehouse.gov+2

Historical fee tables and inflation: reconciliation

The 2016 document is published under Final Regulations. Its synopsis’s use of “proposes” does not turn the final adoption into a pending proposal; the codified history expressly gives February 26, 2016 as its effective date. C039.

The current rule contains no CPI clause, and §37-1-109(6)’s designated statutory adjustment list does not include Chapter 7 counseling fees. The 2026 adjustment notice does not adjust these fees. No CPI increase has been calculated or added to the listed consumer-fee ceilings. C040. scstatehouse.gov+3

4. When fees may be requested or received

State requirements

The state framework requires more than staying below a dollar cap:

• Education and suitability: Section 37-7-108 requires the credit education program, written budget analysis delivered to the consumer, suitability/ability-to-meet-budget findings, and required notices. Section 113 requires individualized counseling and education. C017.
• Earned payment: Section 116(A)(11) prohibits collecting payment before it is earned as specifically defined in the contract. The contract cannot supply authority for a fee category prohibited by the regulation. C027.
• DMP setup: Section 109(A) permits a regulation-authorized setup fee upon establishing the DMP. If, within 45 days, lack of creditor consent makes the DMP unsuitable, the setup fee must be returned and the account closed. C028.
• Contract exception: Section 110(A) expressly excepts the §109(A) setup fee from that section’s written-contract requirement, while R.28-700(B)(5) separately requires permitted fees to be delineated in the contract. I have not treated the exception as permission to collect an undocumented fee. The exact sequencing issue remains held for the unreadable administrative interpretation and any current authoritative clarification. C029.
• Cancellation: The required contract notice provides cancellation without penalty or obligation on ten days’ written notice and refund of unexpended funds. Section 110(D) specifically requires DMP cancellation on at least ten days’ notice, with all unexpended funds refunded. Section 116(A)(2) prohibits a DMP rescission fee. C030.

The state provisions do not establish a universal rule that the whole settlement program must be completed before every permitted state fee can be earned. Equally, establishing a DMP or performing an initial consultation does not override federal restrictions. S001, §§108–110, 113, 116; S005, B(5). CONSUMER PROTECTION CODE+3

Custodial timing also affects the business model. Section 111(B)(3) requires funds received for creditor distribution to be disbursed within five business days. A counseling license therefore should not be read as permission to accumulate those funds for months while awaiting settlement. The treatment of genuinely independent consumer savings accounts and all funds-handling mechanics remain a separate required pass. C038.

Independently applicable federal TSR baseline

The exact federal provisions were read: 16 CFR §§310.2(o), 310.2(ii), 310.4(a)(5), and 310.6(b). The eCFR displayed Title 16 as current through October 21, 2026.

The debt-relief definition covers represented changes to unsecured-creditor/debt-collector obligations, including balance, interest, and fee reductions. Whether the transaction falls within federal telemarketing coverage must be established. Inbound calls responding to debt-relief advertisements are not automatically exempt: §§310.6(b)(5)(i) and (6)(i) expressly remove debt-relief services from those ordinary advertising/direct-mail exemptions. C043.

When §310.4(a)(5) applies, the seller or telemarketer cannot request or receive the fee until:

1. At least one debt has been renegotiated, settled, reduced, or otherwise altered under a valid customer-executed settlement agreement, DMP, or comparable agreement;
2. The customer has made at least one payment under the agreement with the creditor or debt collector; and
3. Where debts are handled individually, the fee satisfies the required allocation method.

That allocation must either be proportional to the individual debt’s share of total enrolled debt, using enrollment balances, or use the same savings percentage across individual debts. The federal savings-percentage alternative does not authorize a savings-percentage fee prohibited by South Carolina’s schedule. The first qualifying settlement does not unlock all fees attributable to unresolved debts. C044–C045. ecfr.gov+2

The dedicated-account provision is also conditional: insured institution, consumer ownership and interest, independent/unaffiliated administrator, no specified referral compensation, and withdrawal without penalty with return of funds—less properly earned fees—within seven business days. Depositing savings is not the same as paying an earned provider fee. South Carolina’s ten-day DMP cancellation notice cannot be assumed to extend this separate federal return requirement. C046.

Credit improvement has a separate federal timing issue. TSR §310.4(a)(2) contains its own waiting-and-credit-report requirements for covered credit-repair representations. The 2024 GPO text of 15 U.S.C. §1679b(b) additionally bars charging or receiving payment before the agreed service is fully performed; the FTC’s current statute summary confirms the advance-payment prohibition. The current OLRC statutory pages failed to open, so this pass does not claim complete 2026 CROA verification or full credit-repair federal clearance. C047.

5. Public licensing procedure and actual status verification

The current DCA licensing page expressly identifies distribution, credit improvement, and negotiation/settlement as licensed activities. The current Forms page supplies organization and individual counselor application materials. The public Licensure Gateway page is accessible. S014–S019, S022; C035.

These are payments to the regulator, not additional authorized consumer charges. C033–C034.

The currently linked organization application is revised June 2020, the counselor application November 2021, and the organization instructions November 2019. They are current-linked documents with those actual revision dates, not newly issued 2026 forms.

The organization application requests the service categories, contracts and fee schedule, education program, financial information, bond, locations, counselor applications, organizational documents, and applicable Secretary of State evidence. Its nonprofit-document request does not create a blanket nonprofit exemption. S017, pp.2–3. Consumer Affairs+4

Renewal: The statute provides annual December 31 expiration and a complete renewal application at least thirty days beforehand. DCA posts a September 1–December 1 renewal window, consistent with that advance-filing requirement. The currently linked renewal reminder is dated October 24, 2022; it is historical, not a 2026 notice.

DCA also posts that licenses issued after August 31 are valid through December of the following year. I did not locate the operative legal or interpretive basis explaining that initial-license practice. It remains an attributed administrative statement; the actual license’s expiration and the governing basis must be checked. C034–C036.

Lookup: DCA’s public lookup page identifies “Credit Counselors” as an active-license list and links:

https://consumer.sc.gov/sites/consumer/files/Documents/License%20Lookup/2026-10%20Credit%20Counseling.xlsx

The browsing tool returned 400, unsupported spreadsheet content type. I verified the official lookup route but could not read roster rows, expiration dates, restrictions, or named-provider status. No authorization for SettleADebt.com or any partner is established here. C037.

6–7. Worked examples and component coverage

Section D supplies the requested calculations, boundary examples, coverage statuses, and exact next investigations. The examples distinguish an amount ceiling from actual permission to collect that amount.

B. Source register

Access convention: Every entry was checked on October 23, 2026, Pacific. “Read” means the specified substantive passage was actually retrieved. “Partial” identifies a limited reading. “Held” means the relevant contents were not readable or retrievable.

The legislative website is an official governmental source, but its own disclaimers describe the online Code and regulations as unannotated, unofficial compilations and identify the published official editions as controlling. That distinction is preserved below.

Statutes, regulations, decisions, and adjustment materials

Licensing procedure and administrative interpretations

Federal context and currentness checks

Additional failed federal routes relevant to S038’s currentness hold:

• https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section1679b&num=0&edition=prelim — HTTP 500.
• https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-chapter41-subchapterII-A&num=0&edition=prelim — HTTP 500.
• https://uscode.house.gov/us/usc/119-121/t15/s1679b/ — HTTP 500.
• https://www.govinfo.gov/content/pkg/USCODE-2025-title15/html/USCODE-2025-title15-chap41-subchapII-A-sec1679b.htm — not accessible through the tool.

Search snippets and secondary statutory reproductions were discovery aids, not substitutes for the operative readings above.

C. Claim table

Confidence convention: “High” means strong support for the stated, bounded proposition from the identified primary text. It does not mean a particular provider or contract has been approved. “Qualified” identifies interpretation or application limits. “Held” means no affirmative clearance.

D. Worked examples and coverage/gap table

D1. Bounded plain-text examples

All amounts below are U.S. dollars. Calculations are exact whole-dollar results; no special statutory rounding rule has been inferred.

Unless an example expressly demonstrates a prohibition or hold, assume the provider has the required licenses, the correct primary-purpose branch applies, the contract permits the stated charge, required education/budget/benefit conditions are met, and the fee is earned. Actual collection additionally requires every applicable federal timing/allocation condition.

Example 1 — Distribution DMP with eight creditors

Inputs: 8 creditors in the DMP when the monthly fee is assessed.

Base and operator: 8 creditors × $10 per creditor per month = $80 per month.

Apply monthly ceiling: lesser of $80 and $70 = $70 maintenance for that month.

If a separate related DMP service has prior DCA approval: $70 + no more than $10 = up to $80 for maintenance plus that approved service.

If an initial consultation and plan establishment separately qualify: $60 consultation + $50 setup + $70 maintenance = $180 across those three categories. This is not permission to collect $180 at enrollment before the applicable timing conditions.

Authorities: C018–C019, C025, C027–C029, C044.

Example 2 — Partial settlement reduces the remaining-creditor count

Inputs: 6 creditors remain at the first assessment.

Calculation: 6 × $10 = $60; lesser of $60 and $70 = $60 monthly state ceiling.

Before the next assessment, one creditor’s settlement is fully paid and the debt released. Five creditors now remain.

Calculation: 5 × $10 = $50; lesser of $50 and $70 = $50 next-month state ceiling.

Assumption: “fully paid and released” is intentional. This example does not decide whether signing an installment settlement, while payments remain due, immediately removes the creditor from the count.

These are state amount ceilings. Settling one debt does not itself establish that all accumulated fees may be collected under the TSR.

Authorities: C020, C023, C044–C045, C048.

Example 3 — Low debt and an unauthorized success-fee formula

Inputs: One remaining creditor; enrolled balance $400; negotiated satisfaction amount $200.

Permitted monthly-base calculation: 1 creditor × $10 = $10 monthly state maintenance ceiling.

Proposed enrolled-debt success fee: $400 × 25% = $100.

Proposed savings fee: ($400 − $200) × 25% = $200 × 25% = $50.

Neither success-fee calculation identifies an authorized category under the negotiation schedule. Both proposed success-fee pathways are rejected under that schedule, even if the settlement is completed.

The $10 ceiling also does not eliminate the required consumer-benefit/suitability finding; a low balance can make that determination consequential.

Authorities: C020, C022, C025.

Example 4 — Previous maintenance charged in the same month

Inputs: Four creditors remain; $25 of maintenance has already been assessed for the same month.

Monthly ceiling: 4 × $10 = $40.

Remaining amount room: $40 − $25 = $15.

The result means no more than $15 of additional maintenance could fit within that month’s state amount ceiling. It does not authorize another billing event, an unearned fee, or a fee exceeding the contract.

If two accounts are owed to the same legal creditor, the rule’s creditor count cannot automatically be replaced with an account count.

Authorities: C023, C025, C027.

Example 5 — Setup refund and cancellation

Unsuitable DMP: A $50 setup fee was lawfully received. On day 30 after establishment, lack of creditor consent makes the plan unsuitable.

Required setup refund: $50. Required additional action: close the account under §109(A). Completed setup work does not remove this express refund condition.

Separate cancellation scenario: When cancellation becomes effective under the applicable state conditions, $600 paid to the licensee remains unexpended.

Unexpended-fund refund: $600. DMP rescission fee: $0.

Previously retained fees require their own earned/lawful-fee analysis. Unlawfully received money is separately returnable under R.B(4). For a qualifying federal dedicated account, apply its independent withdrawal and seven-business-day return requirements.

Authorities: C028–C031, C046.

Example 6 — Dishonored payments

Inputs: A consumer makes a third dishonored payment within a twelve-month period.

Maximum charge for that triggering event: $25.

Express period ceiling: 3 permitted charges × $25 = $75 in the same twelve-month period.

The rule does not authorize $25 on the first dishonor plus $25 on the second plus $25 on the third. No later-event sequence beyond the actual text is assumed.

Authorities: C024, C048.

Example 7 — Credit-improvement amount calculation

Inputs: One qualifying initial consultation and two qualifying months of maintenance under the credit-improvement branch.

Calculation: $60 + (2 months × $50/month) = $60 + $100 = $160 state amount ceiling across those categories.

This is not an advance-payment example. For a covered telemarketed credit-repair service, §310.4(a)(2)’s separate timing/documentation conditions must be met; applicable CROA performance restrictions also require examination.

Authorities: C021, C025, C047.

Example 8 — Paid-referral boundary

Inputs: A licensee offers a website $200 for each prospective customer referred; ten referrals are proposed.

Commercial calculation: 10 referrals × $200/referral = $2,000.

Legal result: The calculation does not identify an authorized arrangement. On those stated facts, §116(A)(6)’s prohibition on offering compensation for prospective-customer referrals applies. A genuinely different advertising-services arrangement must be evaluated on its actual conduct and compensation terms; relabeling the payment does not resolve the issue.

Authority: C032.

D2. Component coverage and exact remaining investigations

E. Researcher self-check

This is a researcher self-check, not independent review.

Actually read: The Chapter 7 statutory text; relevant consumer-definition, indexing and opt-in provisions; the full operative R.28-700; relevant 2006, 2009 and 2016 adoption texts; the Supreme Court’s Lexington exemption analysis and Naderi application; the actual 2026 adjustment notice; current DCA licensing, forms, application, renewal, lookup and public Gateway materials; the exact TSR provisions used; and the later Register tables of contents with targeted full-text checks.

Not substantively read or not established:

• The body of the two scanned 2010 administrative interpretations.
• The active-license spreadsheet’s rows or any named provider’s current status.
• The scheduled October 23, 2026 Register issue.
• The complete current OLRC CROA text.
• Every unrelated page in the State Registers.
• A comprehensive citator review, full South Carolina legal dossier, or publication-ready compliance determination.

Historical fee rules, a historical renewal reminder, current operational materials, controlling court holdings, and inaccessible evidence have been kept distinct. No proposed fee, inferred inflation adjustment, marketing claim, or search snippet has been substituted for an operative fee authorization. No application, account change, contact, purchase, local deliverable, or publication was performed, and no claim is made that a model-selection UI was inspected or changed.

END S_SC PASS-01