Use one date and include every enrolled account
Choose an enrollment baseline and a later comparison date. For each account, record the starting balance, creditor payments, current unresolved balance and whether written completion exists. Then add provider fees, account charges, legal or court costs and any attributable tax that can actually be determined.
| Line | Treatment |
|---|---|
| Creditor payments | Cash paid toward settlements, including installments already made. |
| Unresolved accounts | Carry the balance still owed; do not treat silence or an outstanding offer as completion. |
| Provider compensation | Record the fee basis and amount earned or paid for each account. |
| Other costs | Include account, payment, legal and court charges without double counting. |
| Cancellation tax | Use a tax calculation for the relevant year and facts, including applicable exclusions and exceptions; mark unknown rather than zero. |
| Funds still in your account | Show separately as your asset, not as money already paid to a creditor. |
The difference from the starting balance is a reconciliation under the stated assumptions. It is not proof of what you would have paid without settlement, and it does not monetize credit damage, lost financing access or stress.
Decode the percentage before comparing providers
A fee based on enrolled balances differs from a fee based on savings. Ask which balance date is used and how fees are allocated across accounts. For covered telemarketed services, the federal rule requires an executed agreement and at least one payment under it before the debt-relief fee, with restrictions on allocation across separately resolved debts. State requirements may be additional. 16 CFR 310.4: Debt relief fees and dedicated accounts
A fee earned after the first settlement payment can reduce funds needed for later installments or other debts. Put the actual fee withdrawal dates into the funding calendar rather than assuming every deposit goes to creditors.
A partial program can look better before the ledger is complete
Illustration only: two accounts began at $10,000 each. One is completed for $5,000. The second remains unresolved at $11,000. Add $2,000 in provider compensation and $200 of account charges. Creditor payment + unresolved debt + those costs equals $18,200. Against the stated $20,000 starting baseline, the arithmetic difference is $1,800 before unknown tax or other costs.
The completed account’s $5,000 reduction is real within the example, but calling the whole program “50% savings” would omit the unresolved account and costs. This illustration does not predict a creditor offer or the no-settlement alternative.
Keep tax and credit outcomes in their own columns
Canceled debt can be taxable, but exclusions and exceptions may apply. The amount reported on a Form 1099-C is not automatically the tax due, and receiving or not receiving the form does not settle every legal or tax question. IRS Topic 431: Canceled debt
Compare any tax estimate with the appropriate tax year and facts. For credit reporting, verify accurate balances and status rather than treating a payment as a promise of deletion or a score increase.
Ask a provider for an account-level accounting at cancellation or completion. If a claimed savings figure excludes dropouts, fees or unresolved balances, label that narrower measure before using it to decide whether the service is worthwhile.
Sources and further reading
- 16 CFR 310.4: Debt relief fees and dedicated accounts
- IRS Topic 431: Canceled debt
- 16 CFR 310.3: Debt relief disclosures and claims
General educational information. The original evidence, dates and recorded qualifications are available in the optional archive below.