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

S_VA PASS-02 — Virginia narrow construction follow-up

Research scope: only the three unresolved state-law issues carried forward from PASS-01:

1. Whether §§ 6.2-2040(3) and 6.2-2041(B) permit a Virginia settlement licensee, after the first qualifying debt has met § 2040(3), to charge a fee attributable to a later debt that has been settled but has not itself received a consumer payment.
2. Whether §§ 6.2-2040(6) and 6.2-2041(A)–(C) permit or restrict an independent account administrator’s charge to the consumer, apart from the settlement provider’s own fee.
3. Whether the short-window cancellation refunds required by § 6.2-2014(1)(v) include the two actual-cost reimbursements permitted by § 6.2-2016.

Baseline supplied: October 22, 2026 Pacific. Actual research/access date: October 24, 2026 Pacific.

Bottom line

This pass did not locate a controlling Virginia appellate holding, SCC adjudicatory order, or published SCC formal interpretation that definitively resolves any of the three edge questions. The remaining holds therefore should not be converted into categorical permissions.

The evidence did materially narrow them:

• Later-debt timing: the best reading of the statutory structure is still that § 6.2-2040(3) supplies an initial program-level condition using “at least one debt,” while § 6.2-2041(B) allocates principal-method fees by the individual settled debt. But Virginia has not supplied, in the primary authorities located here, the missing sentence saying that a later settled debt may be charged before that debt receives its own creditor payment. Because the federal TSR independently uses a per-debt payment trigger where applicable, no operational permission should be inferred from the Virginia ambiguity alone. Hold remains.
• Independent account charge: § 6.2-2041(C) bars a licensee from charging or receiving “any other fee or compensation from a consumer for providing debt settlement services,” while § 6.2-2040(6) expressly contemplates a genuinely independent account administrator and forbids referral compensation between that administrator and the settlement provider. Those provisions show that an independent administrator can exist, but they do not expressly authorize a separate consumer account fee. Nor did the final SCC regulation or materials located here supply such authorization. Hold narrows to the legal character of a truly independent administrator’s own charge.
• DMP reimbursement cancellation: § 6.2-2014(1)(v) requires refund of “all fees paid” in the first five days, or “all fees paid less the set-up fee” after day five but before day 31. Section 6.2-2016 separately labels the two permitted additional amounts as “reimbursement” of actual costs. The original 2004 enactment used the same structural distinction. That gives a real textual basis for treating reimbursements differently from “fees,” but no controlling source located here resolves whether the cancellation phrase nevertheless reaches those reimbursements. Hold remains; a licensee should not assume nonrefundability from terminology alone.

The detailed evidence follows.

A. Substantive findings

1. Later debt settled without its own creditor payment

What Virginia actually says

Section 6.2-2040(3) provides that a settlement licensee may not request or receive compensation until:

• it has altered “at least one debt,” and
• the consumer has made “at least one payment to a creditor” following the alteration of “at least one debt” owed to that creditor. Virginia Law+1

Section 6.2-2041(B), however, changes focus when multiple debts are enrolled. Under the 20%-of-principal method, the licensee may collect only the proportion of the total permissible fee corresponding to the “individual settled debt.” Virginia Law+1

The annual-reporting rule likewise separately asks for the number of settled debts and for aggregate fees charged and received under § 6.2-2041. That operational reporting structure is consistent with debt-by-debt settlement accounting, but it does not answer when the fee for each debt becomes collectible. Virginia Register+1

What the SCC rulemaking does—and does not—resolve

The final 2021 SCC rulemaking was read directly. The order says comments were filed by four organizations, the Bureau filed a “Response to Comments” on October 1, 2021, and the Commission adopted modified rules effective December 15, 2021. The published final order discusses affiliate treatment, fidelity coverage, outside-originator agreements, reporting, and other implementation matters. It does not publish an interpretation resolving whether § 2040(3)’s first successful creditor payment unlocks fees on later settled-but-unpaid debts. Virginia Register

The final regulation also does not add a later-debt timing rule. Its outside-originator provision requires aggregate fees to comply with § 6.2-2041, but it does not redefine § 2040(3)’s payment trigger. Virginia Law

Legislative-history signal

The SCC’s fiscal-impact statement for HB 1553 summarized the bill as prohibiting acceptance of a fee “prior to providing the consumers’ requested debt settlement services.” That is useful contemporaneous agency description, but it is not operative statutory text and does not resolve a multi-debt sequence. Legislative Information System

The enacted 2020 law contains the same “at least one debt” language now codified, and § 2041(B)’s separate allocation to an “individual settled debt.” Legislative Information System

Current conclusion

S_VA-P2-C001 — HELD, narrowed.

Virginia’s text clearly establishes an initial no-fee condition before any compensation can be requested or received. It clearly ties the principal-method allocation to each settled debt. What remains missing is controlling Virginia authority joining those provisions and answering this exact sequence:

Debt A has been altered and received a qualifying consumer payment. Debt B is later settled, but the consumer has not yet made any payment to B’s creditor. May the licensee immediately collect B’s allocated Virginia fee?

No primary source located in this pass says yes. None located says no.

Accordingly:

• Do not promote PASS-01 C047 into permission.
• For a covered telemarketing transaction, the separate federal per-debt payment condition remains independently applicable and should continue to control timing where stricter. This pass does not repeat that federal rule.
• For a state-only transaction outside the TSR, the Virginia-only later-debt question remains unresolved.

Confidence: High that the ambiguity exists; low that either operational answer can presently be asserted as settled Virginia law.

2. Independent account administrator charges

Virginia expressly contemplates an independent account administrator

Section 6.2-2040(6) says a settlement provider may request that a consumer open an account if, among other things:

• the consumer owns the funds,
• the account administrator is not owned, controlled, or affiliated with the settlement provider,
• and the account administrator does not give or accept compensation in exchange for referrals involving the provider. Virginia Law+1

That is meaningful. Virginia did not draft the account mechanism as though the settlement provider itself were the administrator.

But § 2041 does not supply a separate account-fee authorization

Section 6.2-2041(A) authorizes the settlement licensee’s two alternative fee structures. Subsection C then provides that a licensee may not charge or receive any other consumer fee or compensation for providing debt settlement services. Virginia Law+1

The final SCC rule adds a particularly relevant principle: when some other person sets up or establishes the settlement agreement, the total fees charged to the consumer in connection with the debt settlement services, including enrollment/setup fees, cannot exceed § 2041’s limits. Virginia Law+1

That rule shows the SCC is willing to look beyond the licensee’s invoice where another person charges a fee in connection with the settlement service.

But the rule does not expressly mention bank/account-administration fees.

The account provision itself regulates compensation—but only referral compensation expressly

Section 2040(6)(d) prohibits the administrator from giving or accepting money or compensation in exchange for referrals involving the settlement provider. It does not say “the administrator may charge the consumer X,” nor does it say “the administrator may not charge the consumer.” Virginia Law

Subsection (6)(e) addresses withdrawal and says the consumer receives the account funds except the settlement provider’s earned fee, subject to § 2041. Again, it does not expressly identify an administrator charge as a permitted deduction. Virginia Law+1

Rulemaking search result

I specifically searched the published proposed and final 10VAC5-230 rulemaking for “account administrator,” independent account fees, referral compensation, and related fee language. The published final rule and order contain no express administrator-fee authorization located in that material. The final changes were directed elsewhere. Virginia Register+1

Current conclusion

S_VA-P2-C002 — PARTIAL / HELD.

The following propositions are now defensible:

1. A qualifying independent administrator is contemplated by § 2040(6).
2. The administrator cannot be affiliated with the settlement provider or participate in referral compensation prohibited by § 2040(6)(d).
3. A settlement provider itself cannot re-label a prohibited extra settlement charge as an “account fee” to escape § 2041(C).
4. A third party’s fee may fall inside the SCC’s aggregate-fee principle if, in substance, it is a charge for enrollment, setup, establishment, or otherwise part of providing the settlement service. Virginia Law
5. What remains unresolved is whether a genuinely independent financial institution/account administrator may impose its own ordinary account-maintenance or transaction charge directly on the consumer, outside the settlement-services fee cap, and under what conditions.

No Virginia authority located here authorizes a hypothetical account fee amount, so none is supplied.

A strong compliance posture is therefore:

Do not characterize an independent account charge as Virginia-approved unless its legal basis can be independently established from the administrator’s applicable banking/account law and the charge is not compensation to or for the settlement provider, not referral consideration, and not a disguised settlement-service charge.

That is a boundary conclusion, not a finding that such a fee is lawful.

3. Cancellation refunds and § 6.2-2016 actual-cost reimbursements

The cancellation text

Section 6.2-2014(1)(v) requires a DMP agreement to say that, upon termination:

• the consumer receives all funds not disbursed to creditors; and
• if termination occurs within five days, the consumer receives “all fees paid”;
• if termination occurs more than five but fewer than 31 days after execution, the consumer receives “all fees paid less the set-up fee.” Virginia Law+1

The permitted additional charges use different terminology

Section 6.2-2016 says no other amount may be charged or recovered with respect to a DMP except, after advance disclosure and permission, “reimbursement” for:

1. actual cost of one credit report and related information; and
2. actual bank charges for automatic account debiting for debt repayment. Virginia Law+1

The statute therefore distinguishes:

• § 2015 “fees and contributions,”
• § 2016 “reimbursement,”
• § 2014 cancellation refund of “all fees paid.”

The distinction is original, not a recodification accident

The 2004 enactment creating the modern DMP framework used essentially the same architecture. It separately created “Fees and contributions” and then allowed specified “reimbursement” under the “Additional charges” section. Legislative Information System

An even earlier 2000 Virginia debt-counseling enactment similarly described the credit-report and bank-debit amounts as sums for which the agency could be reimbursed, distinct from its monthly fee. Legislative Information System

That historical consistency makes the terminological distinction more significant than if “reimbursement” first appeared accidentally during recodification.

But the missing legal step remains missing

The problem is that § 2014(1)(v) does not expressly say:

• “fees and reimbursements,” nor
• “all amounts paid,” nor
• “fees under § 2015 only.”

No SCC regulation located in this pass defines the term “fees paid” for this cancellation provision to include or exclude § 2016 reimbursements.

No controlling Virginia judicial passage located in the searches performed here decides it.

Practical distinctions within the unresolved issue

Two fact patterns should not automatically be treated the same:

A. Actual cost already irreversibly incurred before cancellation. Example: with advance permission, the agency actually purchased the one permitted credit report before the consumer terminated.

B. Amount collected in anticipation of a cost never incurred. Example: the agency collected $10 for a credit report but never purchased one before cancellation.

For B, § 2016 itself authorizes only reimbursement for actual cost. If no actual cost exists, the statutory premise for retaining the amount disappears; no separate cancellation interpretation is needed to establish that point. Virginia Law

For A, the narrower question remains: despite being an actual-cost reimbursement authorized by § 2016, is it included within § 2014(1)(v)’s “all fees paid” refund mandate?

This pass found no controlling answer.

Current conclusion

S_VA-P2-C003 — HELD, materially narrowed.

• An unincurred or excess “reimbursement” is not justified under § 2016’s actual-cost wording.
• An actually incurred, disclosed, advance-authorized § 2016 reimbursement is textually distinct from the “fees” named in § 2015.
• But that distinction alone is insufficient to assert that the amount is nonrefundable during § 2014’s cancellation windows.
• No hypothetical retained reimbursement should therefore be presented as affirmatively lawful under current verified Virginia authority.

B. PASS-02 source register

C. PASS-02 material claim register

D. Original PASS-01 claim patch map

E. Failed-route and dependency table

Failed or incomplete routes

Exact remaining dependencies

These are dependencies, not recommendations to contact an agency.

F. Granular scope coverage

G. No new worked fee example

No new numerical fee example is appropriate in this pass.

All three assigned questions are construction questions, and the missing authority goes to whether a charge may be taken or retained at all. Creating a dollar example for a later unpaid debt, an independent account fee, or a retained reimbursement would risk converting unresolved legal permission into an implied lawful scenario.

H. Researcher self-check

I actually read the current Virginia statutory passages for §§ 6.2-2040, 2041, 2014–2016; the operative SCC Chapter 230 provision; the 2021 proposed and final Chapter 230 rulemaking; the original 2020 settlement enactment; the SCC fiscal-impact statement; the current settlement annual-report form; and the retrieved 2004/2000 enactment language relevant to the reimbursement terminology. Virginia Law+5

I did not obtain the underlying October 1, 2021 Bureau Response to Comments as a separately readable primary document. The final SCC order confirms that the Response existed and informed amendments, but its contents cannot be reconstructed from that statement. Virginia Register

Targeted searches did not surface a controlling Virginia court decision or SCC adjudicatory order resolving the three assigned issues. That is reported as a search result and evidence gap, not as a claim that no such authority exists.

The coordinator-supplied PASS-01 review references were treated only as provenance. I did not claim access to those files or characterize this as independent review.

No browser-permission request, Chrome control, additional chat, Deep Research, Work, Codex, API, purchase, contact, account change, private borrower data, site modification, publication, or local-save claim was used or made.

PASS-02 result: the three original holds were materially narrowed, but none should be converted into affirmative legal permission on the present verified evidence.

END S_VA PASS-02.