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

S_VA PASS-01 — Virginia provider market access and consumer fees

Requested baseline: October 22, 2026, Pacific. Actual public-source access: October 23, 2026, Pacific.

Virginia has separate statutory licensing paths for debt settlement and debt management plans. Noncustodial settlement is not categorically prohibited. Compensated debt pooling outside an authorized path can, however, constitute unlawful practice of law. The current consumer-fee structures verified here are:

• Debt settlement: either a maximum of 20% of enrolled debt principal, or a maximum of 30% of the statutory settlement savings base, with allocation, timing, and additional-charge restrictions.
• DMP: a setup fee of at most $75, plus monthly maintenance of at most 15% of funds actually sent to creditors, capped at $60 per month, with narrowly specified actual-cost reimbursements.
• Neither ceiling establishes permission to collect an advance fee. Virginia’s settlement timing provision and an independently applicable federal Telemarketing Sales Rule must be applied separately. law.lis.virginia.gov+5

This component establishes the principal statutory routes and fee calculations. It retains the specific interpretation and verification gaps identified below. It does not establish SettleADebt.com’s authorization, complete the Virginia dossier, or constitute state or A066 acceptance.

ID convention: References such as S001 and C001 below mean S_VA-P1-S001 and S_VA-P1-C001. The source and claim registers provide the fully qualified IDs.

A. Substantive findings

1. Classification follows the conduct, funds arrangement, and customer—not the marketing label

Both principal chapters define the relevant consumer as a Virginia-resident individual owing personal, family, or household debt, including joint obligations. Their licensing provisions expressly reach providers without a Virginia office, agent, facility, or other physical presence. A remote provider does not avoid these requirements merely by contracting or operating elsewhere. C001, C007.

The statutory settlement definition is broad enough to include concessions that leave principal intact. Conversely, a provider saying it “never touches the money” has not answered the DMP question: control also matters. The regulation expressly addresses third parties handling funds on a DMP licensee’s behalf. law.lis.virginia.gov+2

Two narrower definition provisions should not become broad exemptions:

• Section 6.2-2026 excludes specified facilitation of enrollment or qualification in government student-loan forgiveness/payment-reduction programs widely available at no cost to similarly situated consumers. This is not an exemption for every student-loan negotiation or a general authorization to charge for enrollment assistance.
• The creditor definitions exclude specified professionals receiving installment payment for their own services and persons merely honoring credit cards. That does not resolve every medical, professional-service, purchased-debt, or financed-service arrangement. The CPA language in § 6.2-2000 is an exclusion from the credit-counselor definition for customary CPA services, not a blanket exemption from DMP licensing. C004, C006.

The state definitions do not contain the federal TSR’s express unsecured-debt limitation. That observation does not clear mortgage, secured-debt, or other sector-specific activity; those investigations remain open.

2. Authorization, exclusions, and prohibited models

Ordinary provider routes

The issuing authority is the Virginia State Corporation Commission, administered through its Bureau of Financial Institutions:

• Chapter 20.1, §§ 6.2-2026–2049, with 10VAC5-230: debt settlement services providers.
• Chapter 20, §§ 6.2-2000–2025, with 10VAC5-110: agencies providing DMPs.

These are statutory licenses, not merely ordinary business registrations. An application, corporate registration, counseling certificate, website claim, or regulator category listing is not an issued provider license. C007, C016–C017, C041.

Exclusions require the actual qualifying person or entity

Both chapters exclude banks, savings institutions, credit unions, and persons licensed to practice law in Virginia. Neither contains a general nonprofit exclusion. A nonprofit conducting covered activity ordinarily needs the relevant license unless it satisfies an actual statutory exception. DMP disclosure requirements expressly contemplate both for-profit and nonprofit licensees. C008–C009.

The attorney exclusion cannot be established merely by employing, retaining, referring to, or associating with an attorney. I did not retrieve a controlling Virginia construction establishing that an attorney-affiliated nonlaw-firm entity qualifies. Nor does an out-of-state law license alone satisfy the Virginia statutory wording. law.lis.virginia.gov+2

Some applicants or activities are barred

Sections 6.2-2005(C) and 6.2-2031(D) prohibit issuing the respective license to a collection agency, creditor or association of creditors, or credit-granting organization or association. This cannot be converted into a normal licensing route because an agency website lists debt services generally.

A creditor’s compromise of its own receivable is analytically different from acting as a paid consumer representative. That is a classification distinction, not a verified general self-creditor exemption or permission to charge a separate debt-adjustment fee. Actual exempt banks and similar institutions must be distinguished from ordinary creditor applicants. C010–C011.

A DMP license also does not authorize buying consumers’ debt, lending to consumers, taking security interests, operating as a debt collector, or providing legal advice. C050. law.lis.virginia.gov+2

Debt pooling and unauthorized practice of law remain separate

Under § 54.1-3905, compensated advice or services connected with a plan under which a debtor deposits money for distribution among creditors is deemed practicing law, subject to the statutory authorization for Chapter 20 licensees and Virginia State Bar members.

The provision excludes mere payment transmission without negotiating, undertaking to negotiate, or holding out as negotiating from that practice-of-law rule. That exclusion is not itself a Chapter 20 licensing exemption. A settlement license alone is not the DMP authorization named in § 54.1-3905. C013. law.lis.virginia.gov

Substantive licensing conditions

Both paths require findings concerning fitness, financial responsibility, conflicts, independently certified counselors, limited creditor representation on governing bodies, fidelity coverage, and regulatory history. The DMP path additionally requires accreditation and an appropriate separate trust account.

At the market-entry level, the verified surety framework is at least $25,000, with statutory limits up to $350,000. Current fidelity minimums differ: $250,000 for DMP licensees; $50,000 for settlement licensees. These are provider obligations, not consumer charges. Full bond administration remains for the later bond/funds pass. C014–C015.

There is also an operational distinction: a DMP must be established by a counselor employed by the licensee; settlement agreements originating elsewhere are addressed through the final regulation’s compliance and aggregate-fee conditions. Outsourcing does not erase the licensee’s obligations. C021, C051. law.lis.virginia.gov+5

3. Consumer fee bases, ceilings, additional charges, and currentness

Verified licensee fee structures

C018–C026. law.lis.virginia.gov+4

The settlement chapter’s separately defined capitalized term “Principal” concerns ownership/control of a business. It does not supply an accounting definition for the principal amount of a consumer debt. Capitalized interest, disputed charges, mixed balances, and re-enrollment resets should not be assumed into a fee base. C044.

No CPI escalator or annual consumer-fee adjustment mechanism was found in the operative provisions establishing these caps. The verified amounts therefore remain $75/$60 and 20%/30%. No inflation calculation has been invented. A DMP lifetime aggregate dollar cap was not established by these provisions; the setup, monthly, actual-cost, timing, and refund restrictions still apply. C036.

Cancellation and credits

For a DMP, § 6.2-2014(1)(v) requires return of undisbursed creditor-payment funds and:

• Within five days: all fees paid.
• More than five but fewer than 31 days: all fees except the setup fee.

The provision uses “days”; this report does not convert them to business days. After that period, it does not itself establish a blanket refund of every previously earned fee. Whether the permitted actual-cost reimbursements are included within “all fees” for this purpose remains held. C024, C045. law.lis.virginia.gov

For settlement accounts, § 6.2-2040(6)(e) requires withdrawal without penalty and return of account funds except permissible fees earned for completed services. Previously paid fees must be accounted for against the total permitted fee; they cannot be charged again. The worked examples make that accounting explicit. C020–C021, C028.

Exempt lawyers have a different fee framework

The SCC licensee caps should not simply be assigned to a person actually excluded as a Virginia lawyer. That does not make the lawyer’s charges unlimited.

Current Virginia professional rules require reasonable, adequately explained fees; contingent arrangements require the specified written calculation terms. Unearned advances remain subject to safekeeping and refund duties. Rule 1.5(g), effective July 15, 2025, prohibits nonrefundable advanced legal fees. A genuine availability retainer is distinguished from prepayment for future services; a label alone does not establish that distinction. Independently applicable TSR restrictions remain separate. C049. vacourts.gov+3

No general numerical debt-settlement percentage cap for an actually exempt lawyer was established by these professional rules. Institution-specific permissible fees for excluded banks, savings institutions, and credit unions were not established in this component.

Historical and current-law reconciliation

C036–C040. 2020 session > Legislation+4

4. When a fee may be requested or received

Virginia settlement timing

Section 6.2-2040(3) prohibits requesting or receiving payment or other compensation until:

1. The licensee has negotiated, settled, reduced, or otherwise altered at least one debt pursuant to its services agreement with the consumer; and
2. The consumer has made at least one payment to the relevant creditor following that alteration.

The written services agreement and required fee disclosure do not make the fee immediately payable. C027.

The Virginia provision uses “at least one debt.” Section 6.2-2041(B) separately limits principal-method collections to the proportion represented by an individual settled debt. I did not retrieve controlling Virginia authority resolving the precise state-only treatment of a later settled but unpaid debt. That issue is held rather than silently importing the federal construction into state law. C047. law.lis.virginia.gov+1

Virginia DMP timing

The DMP statute authorizes charges for establishing and maintaining a plan and bases maintenance on actual creditor disbursements. It does not reproduce Chapter 20.1’s settlement-success trigger. That difference does not establish permission for every proposed advance-billing practice.

The earliest permissible state-only collection before establishment, and billing maintenance against projected rather than actual remittances, were not resolved by an authoritative interpretation retrieved here. C025.

Federal TSR: separate common context

Where the TSR independently applies, 16 CFR 310.4(a)(5) supplies an additional advance-fee restriction. Its coverage concerns qualifying telemarketing and debt-relief services involving unsecured creditors or collectors. Covered inbound responses to debt-relief advertising are not protected by the ordinary advertising-response exemptions. It should not be treated as a universal rule for every transaction regardless of channel, entity, or exemption. C029.

For a covered individually resolved debt, the rule and FTC explanation require a valid customer-executed creditor arrangement, at least one payment under that arrangement, and a compliant allocated fee. Fee allocation uses either:

• A proportional share based on enrollment debt amounts; or
• A consistent percentage of savings measured using the enrollment amount, with the required satisfaction amount properly accounted for.

The TSR does not itself impose Virginia’s 30% ceiling. Its enrollment-based savings rule and Virginia’s settlement-date ceiling are different requirements. C030–C031. ecfr.gov+3

The FTC’s final-rule explanation expressly addresses genuine installment settlements: an appropriate fee can become collectible after the first creditor-agreed installment. A provider cannot split a creditor-required lump sum into artificial installments to manufacture that trigger. For savings calculations, the full satisfaction amount matters, not merely the first installment. C032.

For covered DMPs, the same explanation states that setup fees must wait until enrollment and the first payment; subsequent monthly servicing fees are not categorically prohibited. C033. govinfo.gov+3

Accounts and withdrawal

Virginia settlement law prohibits requiring an account as a condition of service. A requested account must satisfy the FDIC-insurance, consumer ownership, independence, and referral-compensation conditions. It also prohibits requiring a power of attorney as a condition of settlement services.

The TSR permits a qualifying account arrangement but requires return of the consumer’s funds, less lawfully earned fees, within seven business days of the withdrawal request. That federal allowance does not override Virginia’s prohibition on requiring the account. The seven-business-day deadline is attributed here to the federal rule, not invented as wording in § 6.2-2040. C028, C034. law.lis.virginia.gov+1

5. Actual public application and verification routes

The SCC’s Application Forms page was opened, along with the actual application PDFs:

The ordinary statutory application charge is $500, nonrefundable, for each license path. Filing and payment do not confer permission before issuance. Licenses identify the licensed entity/names and locations and continue until surrendered, suspended, or revoked; annual regulatory assessments are separate. C016–C017, C042. Application Forms+4

The DMP application contains a “Chapter 10” reference in an instruction item; its heading and the controlling statute identify Chapter 20. The form does not amend the statute.

Named-provider status remains unverified. The public verification page was useful procedural evidence, but the failed lookup supplied no license number, active status, authorized location, or entity match. A marketing statement cannot fill that gap. C041. scc.virginia.gov+1

6. Worked examples

Section D supplies calculations for lower-debt settlement, partial settlement, genuine installments, previous fees, monthly DMP bases, fee-inclusive payments, reimbursements, cancellation, attorney advances, and provider assessments. Each states its assumptions and distinguishes arithmetic from legal authorization.

7. Component coverage and adjacent conduct

The core definitions, ordinary licensing paths, principal exclusions, consumer fee formulas, effective-date reconciliation, and state/federal timing distinction are answered. The remaining questions are specifically retained in the coverage table.

One adjacent boundary matters now: paid promises to improve credit or obtain credit may trigger the Virginia Credit Services Businesses Act, including its separate registration regime with the Commissioner of Agriculture and Consumer Services. Its exclusions differ from the SCC chapters. Its performance-before-payment rule has a specified cancellable written-subscription exception, but that exception does not establish compliance with federal credit-repair or telemarketing law. No credit-repair or credit-procurement add-on fee pathway is cleared here. C043. law.lis.virginia.gov+1

B. Source register

Access notation: R23 = relevant substantive text actually opened/read on October 23, 2026, Pacific; D23 = discovery only; F23 = attempted access failed. A chapter retains one source ID across its sections.

Virginia statutes, regulations, and enactments

SCC operational evidence

Federal baseline and attorney authorities

Access failures and recovery status

C. Claim register

Confidence: High means directly supported by the cited operative text or observed procedural evidence; it does not decide unknown provider facts. Bounded means a stated inference or limited conclusion. Held means the missing authority or facts prevent the proposed extension.

Classification and market access

State consumer fees and timing

Federal timing and accounting context

Currentness, operational evidence, and retained limits

D. Worked examples and component coverage

Worked examples

All amounts are U.S. dollars. These are hypothetical calculations, not findings that any named provider is licensed.

Unless an example is expressly a classification hold, assume the appropriate actual authorization, compliant agreement, accurate debt figures, and applicable performance/payment conditions. Consumer-fee calculations below use exact cents where possible. No statutory consumer-fee rounding convention was established; the fractional-cent example rounds the fee down to avoid exceeding the ceiling.

E1. Lower and higher DMP remittances

Inputs: One DMP; actual creditor remittances during the month are $200.00.

Base: $200.00 actually sent to creditors.

Calculation: 15% × $200.00 = $30.00. Compare $30.00 with $60.00.

Result: Maximum monthly maintenance = $30.00.

If actual remittances instead equal $600.00: 15% × $600.00 = $90.00; the $60.00 ceiling reduces the maximum to $60.00.

Rounding: Exact cents. A setup fee is separately limited and subject to its own lawful timing.

Authority: C022, C025, C033.

E2. Weekly payments do not multiply the monthly cap

Inputs: Four creditor remittances of $100.00 within the same month.

Base: $100.00 + $100.00 + $100.00 + $100.00 = $400.00.

Calculation: 15% × $400.00 = $60.00.

Result: Maximum maintenance for that month = $60.00, not four separate $60.00 charges.

Rounding: Exact cents.

Authority: C022.

E3. A $400 payment inclusive of maintenance

Inputs: Consumer pays $400.00 total; no setup charge or reimbursement is included. Let F be maintenance and D be creditor remittances.

Relationship: D + F = $400.00.

Ceiling: F ≤ 15% × D.

Substitution: F ≤ 0.15 × ($400.00 − F).

Intermediate: 1.15F ≤ $60.00; therefore F ≤ $52.173913…

Result using cents without exceeding the ceiling: F = $52.17; D = $347.83.

Check: 15% × $347.83 = $52.1745, so $52.17 is within the ceiling.

Rounding: Down to cents for this example. If $400.00 were instead the amount actually sent to creditors, the permissible maintenance would be $60.00 and the combined payment $460.00.

Authority: C022; original arithmetic.

E4. Deposit without creditor disbursement

Inputs: $500.00 deposited for distribution; $0.00 actually sent to creditors in the relevant month.

Base: $0.00.

Calculation: 15% × $0.00 = $0.00.

Result: The monthly maintenance formula produces $0.00.

Condition: This is not permission to retain creditor-payment funds indefinitely. Section 6.2-2014(11)’s disbursement-practice requirement remains applicable.

Authority: C022, C025; S002 § 2014(11).

E5. Actual-cost reimbursements

Inputs: One credit report and related information actually costs $8.00; the bank actually charges $1.25 for an automatic debit used for debt repayment.

Calculation: $8.00 + $1.25 = $9.25.

Result: $9.25 can fit the statutory reimbursement categories if amounts were disclosed and the consumer gave advance permission.

Failure case: Calling the bank charge a $12.00 “processing fee” does not establish permission for an additional $10.75 markup.

Rounding: Exact cents. Whether the $9.25 must be refunded under the short-period cancellation language remains held.

Authority: C023, C045.

E6. DMP cancellation at different times

Inputs: Setup fee $75.00; maintenance already paid $30.00; undisbursed creditor funds $200.00. Assume the maintenance arose from a separate $200.00 already remitted to creditors, and any applicable federal first-payment condition was satisfied.

Cancellation on day 4:

• Fee refund = $75.00 + $30.00 = $105.00.
• Total returned = $105.00 + $200.00 = $305.00.

Cancellation on day 10:

• Fee refund = $30.00.
• Total returned = $30.00 + $200.00 = $230.00.
• The $75.00 setup fee may be retained under this particular cancellation formula if otherwise lawful.

Cancellation on day 31:

• The $200.00 undisbursed funds remain returnable.
• This subsection alone does not supply the same blanket refund of all previously earned fees; other grounds for recovery remain unexamined.

Rounding: Exact cents. No actual calendar deadline is calculated.

Authority: C024.

E7. Lower-debt settlement: the alternatives differ

Inputs: Enrolled principal $1,000.00; amount owed at settlement $1,000.00; creditor accepts and receives $800.00 in full satisfaction.

Principal method: 20% × $1,000.00 = $200.00.

Savings method:

• Savings base = $1,000.00 − $800.00 = $200.00.
• 30% × $200.00 = $60.00.

Result: The chosen lawful method produces a maximum of $200.00 or $60.00. The statute does not authorize adding them to $260.00, and does not automatically require taking the smaller alternative. A contractual minimum cannot override the applicable ceiling.

Rounding: Exact cents; performance/payment conditions assumed satisfied.

Authority: C018–C021, C027, C030.

E8. Partial portfolio settlement, genuine installments, and previous fees

Inputs: Two enrolled debts. A = $8,000.00; B = $12,000.00. For this example, principal equals enrollment balance. Total agreed principal-method fee = 20% × $20,000.00 = $4,000.00.

Debt A is settled through a genuine creditor agreement for eight installments of $400.00, totaling $3,200.00. The consumer pays the first installment.

Allocation:

• A’s proportion = $8,000.00 ÷ $20,000.00 = 0.40.
• A’s allocated fee = 0.40 × $4,000.00 = $1,600.00.

Previous-fee credit: If $600.00 of that fee was already lawfully collected after the trigger, remaining collectible fee for A = $1,600.00 − $600.00 = $1,000.00.

Debt B: No settlement/performance trigger has occurred; no $2,400.00 fee is assumed collectible.

Failure case: If the creditor actually required a $3,200.00 lump sum, the provider cannot invent eight installments and treat a $400.00 partial payment as the federal trigger.

Rounding: Exact cents. Later failure of an authentic installment settlement is a separate held issue.

Authority: C020, C027, C030, C032, C046.

E9. Virginia and federal savings bases

Inputs: Enrollment debt $8,000.00; amount owed when settled $10,000.00; creditor receives $4,000.00 in full satisfaction. The contract specifies a fee of 30% of enrollment-based savings, consistently applied.

Virginia statutory ceiling:

• $10,000.00 − $4,000.00 = $6,000.00.
• 30% × $6,000.00 = $1,800.00.

Contract/federal enrollment-based calculation:

• $8,000.00 − $4,000.00 = $4,000.00.
• 30% × $4,000.00 = $1,200.00.

Result: Under the assumed contract, the fee is $1,200.00, within Virginia’s $1,800.00 ceiling. The provider cannot substitute $1,800.00 for the agreed calculation.

Important boundary: This does not mean the TSR universally caps fees at 30% of enrollment savings. The 30% contractual rate is an explicit example assumption.

Rounding: Exact cents.

Authority: C019, C031.

E10. Settlement withdrawal without deducting an earlier fee twice

Inputs: Current account balance $2,500.00. A completed settlement generated a lawful total earned fee of $1,600.00. The provider previously received $600.00, which is already outside the current account balance. No other fee is earned.

Unpaid earned fee: $1,600.00 − $600.00 = $1,000.00.

Returnable balance: $2,500.00 − $1,000.00 = $1,500.00.

Result: Return $1,500.00. Do not subtract the earlier $600.00 again, charge for unsettled debts, or add a withdrawal penalty.

Timing: If the federal account provision applies, return within seven business days of the request.

Rounding: Exact cents; the settlement is assumed completed and valid.

Authority: C020–C021, C028, C034.

E11. Actual-lawyer advance: conditional refund arithmetic

Inputs: A person actually qualifying for the Virginia lawyer exclusion; a reasonable, properly explained hourly arrangement of $200.00; $1,000.00 advance held appropriately; three hours of authorized work actually and reasonably performed. Assume independently established facts make the TSR advance-fee prohibition inapplicable.

Earned amount: 3 hours × $200.00/hour = $600.00.

Unearned balance on termination: $1,000.00 − $600.00 = $400.00.

Result: $400.00 remains refundable. Calling the advance “nonrefundable” does not change that result.

Limits: The arithmetic does not establish reasonableness, entity exemption, or TSR noncoverage. If those facts are missing, the proposed collection remains held.

Authority: C008, C035, C049.

E12. Provider assessments are separate from consumer charges

DMP inputs: 251 plans held at the preceding December 31.

Calculation: $500.00 + (251 × $4.33) = $500.00 + $1,086.83 = $1,586.83.

Required rounding: Down to whole dollars.

DMP assessment result: $1,586.00.

Settlement inputs: 251 agreements maintained during the preceding calendar year; provider was licensed at the preceding December 31.

Calculation: $1,000.00 + (251 × $3.44) = $1,000.00 + $863.44 = $1,863.44.

Required rounding: Down to whole dollars.

Settlement assessment result: $1,863.00.

Condition: Different count periods apply. These provider obligations do not authorize adding the amounts to consumer bills. The new-license exceptions in C042 must be checked separately.

Authority: C042.

E13. Classification and permission holds

Inputs: A company negotiates lower monthly payments but no principal reduction and says it is “financial coaching.”

Result: The concession negotiation can fall within Chapter 20.1. The label supplies no exemption. No fee is approved without authorization, a lawful fee basis, and timing facts.

Inputs: A provider never physically receives funds but directs a third-party agent’s creditor distributions.

Result: Investigate the actual control arrangement under the DMP definition and delegated-services regulation. “Noncustodial” is insufficient.

Inputs: A nonprofit commercial-debt pooler or an attorney-affiliated company seeks a fee.

Result: No license-free numerical fee scenario is supplied. Commercial pooling, nonprofit status, and attorney-entity qualification require the missing legal/factual analysis identified below.

Authority: C002–C005, C008–C009, C013, C051.

Full component coverage and gap table

E. Researcher self-check

• Actual reads: operative Virginia statute passages; both relevant regulatory chapters; the 2021 and 2015 final regulatory orders; the settlement enactment and 2026-effective cross-reference amendment; actual July 2026 SCC application PDFs; current federal fee/timing provisions; relevant FTC final-rule explanation; current attorney fee rules and the actual 2025 adoption order.
• Discovery was kept separate: S021 was not substituted for the final regulation. The inaccessible S022 lead supplies no holding. Search snippets, company charts, associations, and marketing statements were not used to establish permission or caps.
• Case-search limitation: targeted searches of official Virginia court, SCC, VSB, and Attorney General sources did not produce controlling merits interpretations resolving the retained edge questions. That is not a statement that such authority does not exist. Cases mentioned inside LEO 1606 were not treated as separately read merits decisions.
• Accounting checks: principal and savings methods were not stacked; state settlement-date savings were distinguished from federal enrollment-based accounting; DMP deposits were distinguished from actual creditor remittances; prior fees were credited; consumer rounding was not invented as statutory law.
• Currentness checks: approval, publication, legal effective date, current posted procedure, historical report, proposal, and inaccessible evidence were kept distinct. The eCFR’s displayed currency limit is disclosed.
• Execution: research remained in this conversation using public web retrieval. No Deep Research, additional Chat sessions, application filing, contacts, account changes, private borrower data, or publication was used. No model-selector label was verified or changed.
• Disposition: substantive findings are complete for the evidence obtained in this component, with the enumerated holds preserved. The rest of the Virginia dossier remains required.

END S_VA PASS-01