Customers who have fallen behind on their credit payments often turn to debt settlement companies for relief. These companies provide debt relief by acting as an intermediary between the debtor and his creditor in order to reduce the original debt amount or help him save enough money to pay off the debt. These companies are highly regulated and must adhere to strict regulations about collecting methods and financial advising.

Things You Will Need
  • Liability insurance

  • Bond

  • License

  • Debt settlement agreement

  • Financial statements

  • Accreditation

Step 1.

Contact your state’s Department of Commerce to verify that you are eligible to open a debt settlement company. Some states prohibit for-profit debt settlement companies. Additionally, a poor credit history or financial situation could prevent you from opening your business.

Step 2.

Establish your business entity through incorporating, setting up a partnership or forming a limited liability company. Then register your business with your secretary of state and obtain a federal tax ID from the IRS.

Step 3.

Review all state and federal laws governing debt settlement companies, including the Credit Repair Organizations Act. Ask your Department of Commerce to provide you with state literature. You may be regulated on the amount of fees you can charge, collecting methods and disclosure information.

Step 4.

Obtain a surety bond from your Department of Commerce and liability insurance in the amounts required by your state.

Step 5.

Collect financial statements from each partner or owner of your business.

Step 6.

Become accredited with the Association of Settlement Companies as a credit counseling provider, if you intend to provide those services. Otherwise, you may need to present an affidavit verifying that you will not provide such services.

Step 7.

Develop a standard debt settlement services agreement that you will provide to your clients. This should include a general payment plan and how you intend to collect fees.

Step 8.

Apply for your debt settlement services provider license with your Department of Commerce and pay the registration fee.

Step 9.

Join the United States Organizations for Bankruptcy Alternatives, which is an organization committed to ensuring that debt negotiators' voices are heard. A membership with USOBA will keep you abreast of the latest industry regulations and amendments, as well as help you voice concerns about impending regulation. Additionally, membership with USOBA gives your debt settlement business a degree of legitimacy and ensures customers that you are a legitimate and honest debt agency who adheres to state and federal laws.


Many customers are wary of debt settlement companies. Always be honest with your clients in laying out the risks associated with the financial action you are advising them to take.