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A debt relief company that sells by phone cannot charge you up front. Here is exactly when it can, and how much of the fee each settled debt may carry.
16 CFR 310.4(a)(5), read Oct 2, 2026. See source
The Telemarketing Sales Rule, at 16 CFR 310.4(a)(5), bars a seller or telemarketer of debt relief services from requesting or receiving any fee until three things are true1:
1. It has renegotiated, settled, reduced or otherwise changed the terms of at least one debt under a settlement agreement, debt management plan or other valid contract that you signed.
2. You have made at least one payment under that agreement.
3. If debts are settled one at a time, the fee for each is either a share of the total fee in proportion to that debt's enrolled amount, or a fixed percentage of the amount saved on it (the same percentage for every debt)1.
The rule does let a company require you to put money into a dedicated account for its fees and for payments to creditors, under conditions set out in the rule1. The CFPB notes you might be charged fees for that account2.
An illustration with $15,000 enrolled across two cards.
Settlement companies often charge expensive fees, and the dedicated account may carry its own2.
Stopping payments brings late fees, penalty interest, collection and possibly a lawsuit2.
Some creditors refuse to deal, and penalties on unsettled debts can wipe out the gains2.
Credit scores usually suffer, and forgiven debt may count as taxable income2.
The CFPB suggests considering a nonprofit credit counselor, negotiating directly with creditors, or talking to a bankruptcy attorney2.
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Good for checking how one company applies the fee rule
Also on National Debt Relief's site
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Fees, prices and program terms belong to each provider and can change. The provider's own page is the final word, and the provider decides every application.
