Summary on Virginia Debt Settlement Law

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30 Jan 2023

Summary on Virginia Debt Settlement Law

Dear Debt Settlement Industry Stakeholders,

As many of you know, Virginia enacted comprehensive debt settlement regulation and licensing.  There was a prior email alert bring this to your attention.

Below is a summary of some of the requirements that Virginia imposes on debt settlement companies.

Please note that this email is not comprehensive of all requirements, and solely intended to summarize the bigger issues in Virginia to be aware of.


  • Company must be:

    • Licensed;

    • File a surety bond with the state of initially $25,000, which will be adjusted depending on the size of the company; and

    • Maintain at least $50,000 in fidelity coverage.

  • The Company must file an annual report, maintain records, and must report certain events to the state. The reporting requirements can be found here.

  • Must provide a written, signed contract to the consumer that:

    • Highlights in bold type, of the costs to the consumer;

    • A statement that the agreement may be terminated for any reason;

    • An explanation of the method of dispute resolution;

    • An explanation of the obligations of the consumer and the licensee; and

    • Notification of privacy policies. 

  • Prior to entering into an agreement provide the consumer with written documents that disclose:

    • The time necessary to achieve the results;

    • The time that the company will make an offer to each creditor;

    • The amount of money or the percentage of each outstanding debt that the customer must accumulate before an offer is made; and

    • That the use of the debt settlement services will likely adversely affect the consumer's creditworthiness, may result in the consumer being subject to collections or sued by creditors or debt collectors and may increase the amount of money the consumer owes due to the accrual of fees and interest.

  • Advertisements must include:

    • The name of the licensee as set forth in the license;

    • The statement that the licensee is “licensed by the Virginia State Corporation Commission;"

    • The license number assigned by the commission to the licensee.

      • Note: must retain all advertisements for three years.



  • Cannot require a consumer to open a dedicated savings account. (Will require a contract change for some companies)

    • Note: may request that a consumer open an account provided that:

      • The account is FDIC insured;

      • The consumer owns the funds held in the account;

      • The account is not under common ownership and control as the company;

      • Consumer can withdraw from the account at any time without penalty and receive all funds minus fees owed to the company; and

      • The company does not accept compensation for referrals.

  • Cannot require a consumer to execute a power of attorney.

  • Cannot receive direct or indirect compensation for arranging credit for the consumer besides government-sponsored educational or counseling services.

  • Fees must be either:

    • 20 percent of the principal amount of the debt enrolled; or

    • Less than 30 percent of the settled amount and amount paid by the consumer.

  • Advertising cannot include:

    • Any other name besides that on the license;

    • A mailer that gives the impression of an official communication from a governmental entity; and

    • Must not be false, misleading, or deceptive.

Other than the limitation on fees, Virginia is fairly consistent with other states.

If you have questions, please call me.

Robby H. Birnbaum, Esq.

Greenspoon Marder, LLP

100 West Cypress Creek Road, Suite 700

Fort Lauderdale, Florida 33309

Direct Telephone: (954) 343 6959

Direct Facsimile: (954) 343 6960