Is it illegal for a debt-relief company to charge a fee before doing anything?

The Bankruptcy Code approaches this through contract and disclosure rules rather than a flat ban. A debt relief agency must execute a written contract explaining its services, fees, and payment terms not later than 5 business days after first providing bankruptcy assistance services and before your petition is filed (11 U.S.C. § 528(a)(1)). A non-compliant contract is void and unenforceable against you.

How can I tell whether a debt-relief company is legitimate?

Start with documents. Ask for the written contract stating services and fees, and ask to see it before hiring anyone — § 527(b) tells consumers to do exactly that. Then check whether any required credit counseling or debtor-education course the company sells is from a provider on the U.S. Trustee Program's approved list. A refusal to put terms in writing is the clearest signal.

Can I get my money back if a company misled me?

There is a statutory route. Under 11 U.S.C. § 526(c)(2), a debt relief agency that intentionally or negligently fails to comply with §§ 526, 527, or 528 may be liable to the assisted person for the fees or charges it received, for actual damages, and for reasonable attorneys' fees and costs, after notice and a hearing. Whether it applies to your situation is a question for a lawyer.

Does signing a waiver give up these protections?

Not against you. Section 526(b) states that any waiver by an assisted person of a protection or right provided under that section is not enforceable against the debtor by any federal or state court or any other person — though it may be enforced against the debt relief agency. In practice, a waiver clause in a debt-relief contract does not remove the statutory duties the company owes you.

Where do I report a debt-relief company I think is a scam?

The U.S. Trustee Program publishes consumer information on reporting suspected fraud and abuse in bankruptcy matters. Complaints about debt-relief and debt-settlement companies more generally can go to your state attorney general's consumer protection office and to the Federal Trade Commission, which also publishes consumer guidance on debt problems.

Do I have to use a debt-relief company to file bankruptcy?

No. Federal law allows you to represent yourself, hire an attorney, or in some localities get help from a bankruptcy petition preparer who is not an attorney (11 U.S.C. § 527(b)). Court materials note that many people find self-representation extremely difficult and urge hiring a qualified attorney, but the choice is yours.

Bankruptcy basics

Debt-Relief Scams and Upfront-Fee Warning Signs

Federal bankruptcy law regulates who may charge you for bankruptcy help and what they must tell you. A debt relief agency must give you a written contract explaining its services and fees, and must not misrepresent what it will do or what results you may get (11 U.S.C. §§ 526, 528). A company that promises guaranteed results or discourages written terms is showing a warning sign.

Key points

A debt relief agency must execute a written contract with you explaining its services and fees, and give you a copy (11 U.S.C. § 528).
Federal law prohibits a debt relief agency from misrepresenting the services it will provide or the benefits and risks of filing (11 U.S.C. § 526).
A contract that does not comply with these requirements is void and unenforceable against you (11 U.S.C. § 526(c)(1)).
Advertising that offers a "federally supervised repayment plan" without disclosing that bankruptcy is involved is specifically addressed by federal law (11 U.S.C. § 528(b)).
Credit counseling and debtor-education providers must be approved by the U.S. Trustee Program, and the approved lists are published.

If you are behind on payments, your phone probably rings with offers to make the debt disappear. Some of those callers are legitimate providers; others are selling a promise nobody can keep. This page explains what federal bankruptcy law actually requires of anyone charging you for bankruptcy help, so you can tell a real service from a pitch.

How do the federal rules on debt-relief providers actually work?

The Bankruptcy Code creates a category called a "debt relief agency" and puts duties on anyone who fits it. Two sections carry most of the weight. Section 526 lists things such an agency must not do: it must not fail to perform a service it said it would provide, must not make or advise you to make an untrue or misleading statement in a filed document, and must not misrepresent the services it will provide or the benefits and risks of becoming a debtor (11 U.S.C. § 526(a)).

Section 528 sets out what the agency must do. It must execute a written contract with you that clearly and conspicuously explains the services it will provide and the fees or charges for those services and the terms of payment, and it must give you a copy of the fully executed contract (11 U.S.C. § 528(a)).

Those two lists are your practical checklist. A provider that will not put its services and its fees in writing is not meeting the standard federal law sets.

What separates a warning sign from an ordinary business practice?

Charging money is not itself a red flag. Attorneys and petition preparers charge fees, and the U.S. Trustee Program notes that attorneys providing bankruptcy services are required to disclose certain information in writing, including the services they will provide and the cost for those services (USTP Frequently Asked Questions – Consumer Information).

What changes the picture is refusal to document, and promises about results. Section 526(a)(3) reaches misrepresentation about the benefits and risks that may result if you become a debtor. A pitch built entirely on the upside, with no mention of risk, is describing something the statute treats as a two-sided disclosure.

One more item is specifically named in the statute. A debt relief agency must not advise you to incur more debt in contemplation of filing, or to borrow in order to pay an attorney or petition preparer for bankruptcy work (11 U.S.C. § 526(a)(4)). Advice to run up a card or take a loan to cover the fee is not a gray area.

What does federal law say about how these services can be advertised?

Advertising is regulated directly. Under 11 U.S.C. § 528(a)(3)–(4), a debt relief agency advertising bankruptcy assistance or the benefits of bankruptcy to the general public must clearly and conspicuously disclose that the services concern bankruptcy relief, and must use the statement "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code." or something substantially similar.

The statute also anticipates advertising that hides the ball. Section 528(b)(1)(B) names phrases such as "federally supervised repayment plan" and "Federal debt restructuring help" — language that could lead a reasonable consumer to believe debt counseling was being offered when the service is really bankruptcy assistance with a chapter 13 plan.

And under § 528(b)(2), an advertisement offering help with credit defaults, mortgage foreclosures, eviction, excessive debt, collection pressure, or inability to pay consumer debt must disclose that the assistance may involve bankruptcy relief and carry the same statement.

Ad language the statute flags: "federally supervised repayment plan"
Ad language the statute flags: "Federal debt restructuring help"
Required disclosure: that the assistance may involve bankruptcy relief
Required statement: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code."

Do state or local rules change any of this?

The bankruptcy provisions described here are federal and apply the same way across the country. Federal courts have exclusive jurisdiction over bankruptcy cases, and a bankruptcy case cannot be filed in a state court (Bankruptcy Administrator for the Northern District of Alabama, Understanding Bankruptcy).

States also regulate debt-settlement and credit-repair businesses under their own consumer-protection statutes, and those rules vary. We do not publish a verified summary of every state's debt-settlement licensing regime, so treat your state attorney general's office as the authority on that question rather than anything a salesperson tells you.

What is worth knowing is that state law can protect money you already hold. Virginia, for example, requires a financial institution receiving a garnishment summons to review the account for recently deposited benefit payments and treat that protected amount as automatically exempt from garnishment (Va. Code § 34-4.4). Rules like that are state-specific. Your state hub page is the place to look, and a company that claims to override them is overstating what it can do.

What does a questionable pitch look like in practice?

The calls tend to sound similar. Someone tells you they can settle everything for a fraction of what you owe, asks for a payment today, and gets vague when you ask for the agreement in writing. Under 11 U.S.C. § 528(a)(1), an agency providing bankruptcy assistance must execute that written contract not later than 5 business days after it first provides services, and before your petition is filed.

The consequences for skipping it are real. A contract that does not comply with the material requirements of §§ 526, 527, or 528 is void and may not be enforced against you by any federal or state court (11 U.S.C. § 526(c)(1)). An agency that intentionally or negligently fails to comply can be liable for the fees it received, for actual damages, and for reasonable attorneys' fees and costs after notice and a hearing (11 U.S.C. § 526(c)(2)).

You also cannot sign those protections away. A waiver of any right under § 526 is unenforceable against you, though it may be enforced against the agency (11 U.S.C. § 526(b)).

What documents and disclosures should you actually receive?

Before a consumer case begins, the clerk gives you a written notice describing chapters 7, 11, 12, and 13, their general purpose, benefits and costs, and the types of services available from credit counseling agencies (11 U.S.C. § 342(b)).

A debt relief agency owes you more. Within 3 business days of first offering to provide bankruptcy assistance services, it must give you a clear and conspicuous written notice that everything you provide must be complete, accurate, and truthful; that all assets and liabilities must be disclosed; and that your information may be audited, with failure to provide it risking dismissal or other sanction, including a criminal sanction (11 U.S.C. § 527(a)(2)).

Section 527(b) requires a separate document telling you, among other things, that the law requires an attorney or bankruptcy petition preparer to give you a written contract specifying what they will do and how much it will cost — and to ask to see that contract before you hire anyone.

Required disclosures and their timing
Disclosure	Who provides it	When	Authority
Notice describing the chapters, costs, and credit counseling services	Clerk of court	Before the case is commenced	11 U.S.C. § 342(b)
Written notice on accuracy, disclosure of assets, and audits	Debt relief agency	Not later than 3 business days after first offering services	11 U.S.C. § 527(a)(2)
Separate statement on attorney and petition-preparer contracts	Debt relief agency	At the same time as the § 342(b) notice	11 U.S.C. § 527(b)
Written contract stating services, fees, and payment terms	Debt relief agency	Not later than 5 business days after first providing services, and before the petition is filed	11 U.S.C. § 528(a)(1)

How can you check a provider and report a bad one?

Two checks are free. First, credit counseling before filing and the debtor-education course after filing must come from an approved provider, and the U.S. Trustee Program publishes both lists — the list of approved credit counseling agencies and the list of approved providers of personal financial management instruction (Bankr. N.D. Fla. official page — Chapter 13 - Individual Debt Adjustment). If a company selling you a required course is not on the list, that is checkable in minutes.

Second, for attorney referrals, the U.S. Trustee Program points to state bar associations, local law schools, and legal aid clinics, and notes that your bankruptcy court clerk or state bar may have information on free or reduced-fee bankruptcy services (USTP Frequently Asked Questions – Consumer Information).

The U.S. Trustee Program also maintains consumer information on reporting suspected fraud and abuse. Complaints about a debt-relief company can also go to your state attorney general and the Federal Trade Commission.

What should you ask a lawyer about a debt-relief offer?

Bring the paperwork. A lawyer can read the actual contract against the requirements in §§ 526, 527, and 528 far faster than you can, and the answer often turns on documents rather than on what was said over the phone.

Useful questions include: does this contract meet the § 528(a)(1) requirements, and if not, what does § 526(c) mean for money already paid? Am I being asked to borrow to pay a fee, which § 526(a)(4) addresses? Did I receive the § 527 notices at all?

Cost is a fair question too. The statutory Chapter 7 filing fee is $245 (28 U.S.C. § 1930(a)(1)(A), (f)(1)), plus a $78 administrative fee (Bankruptcy Court Miscellaneous Fee Schedule, Item 8) and a $15 trustee surcharge (Bankruptcy Court Miscellaneous Fee Schedule, Item 9). Chapter 13 carries a $235 filing fee (28 U.S.C. § 1930(a)(1)(B)) plus the same $78 administrative fee. Knowing the court's own fees makes an inflated quote easier to spot.

Frequently asked questions

Is it illegal for a debt-relief company to charge a fee before doing anything?: The Bankruptcy Code approaches this through contract and disclosure rules rather than a flat ban. A debt relief agency must execute a written contract explaining its services, fees, and payment terms not later than 5 business days after first providing bankruptcy assistance services and before your petition is filed (11 U.S.C. § 528(a)(1)). A non-compliant contract is void and unenforceable against you.
How can I tell whether a debt-relief company is legitimate?: Start with documents. Ask for the written contract stating services and fees, and ask to see it before hiring anyone — § 527(b) tells consumers to do exactly that. Then check whether any required credit counseling or debtor-education course the company sells is from a provider on the U.S. Trustee Program's approved list. A refusal to put terms in writing is the clearest signal.
What does "federally supervised repayment plan" actually mean in an ad?: Federal law treats that phrase as a warning sign. Under 11 U.S.C. § 528(b)(1)(B), statements such as "federally supervised repayment plan" or "Federal debt restructuring help" are ones that could lead a reasonable consumer to believe debt counseling was being offered when the service is really bankruptcy assistance with a chapter 13 plan. Such advertising must disclose that bankruptcy relief is involved.
Can I get my money back if a company misled me?: There is a statutory route. Under 11 U.S.C. § 526(c)(2), a debt relief agency that intentionally or negligently fails to comply with §§ 526, 527, or 528 may be liable to the assisted person for the fees or charges it received, for actual damages, and for reasonable attorneys' fees and costs, after notice and a hearing. Whether it applies to your situation is a question for a lawyer.
Does signing a waiver give up these protections?: Not against you. Section 526(b) states that any waiver by an assisted person of a protection or right provided under that section is not enforceable against the debtor by any federal or state court or any other person — though it may be enforced against the debt relief agency. In practice, a waiver clause in a debt-relief contract does not remove the statutory duties the company owes you.
Where do I report a debt-relief company I think is a scam?: The U.S. Trustee Program publishes consumer information on reporting suspected fraud and abuse in bankruptcy matters. Complaints about debt-relief and debt-settlement companies more generally can go to your state attorney general's consumer protection office and to the Federal Trade Commission, which also publishes consumer guidance on debt problems.
Do I have to use a debt-relief company to file bankruptcy?: No. Federal law allows you to represent yourself, hire an attorney, or in some localities get help from a bankruptcy petition preparer who is not an attorney (11 U.S.C. § 527(b)). Court materials note that many people find self-representation extremely difficult and urge hiring a qualified attorney, but the choice is yours.

Sources

11 U.S.C. § 526 — Restrictions on debt relief agencies · official source
11 U.S.C. § 527 — Disclosures · official source
11 U.S.C. § 528 — Requirements for debt relief agencies · official source
11 U.S.C. § 342 — Notice · official source
USTP Frequently Asked Questions (FAQs) – Consumer Information
Bankr. N.D. Fla. official page — Chapter 13 - Individual Debt Adjustment
Bankruptcy Administrator for the Northern District of Alabama, Understanding Bankruptcy
Va. Code § 34-4.4
28 U.S.C. § 1930(a)(1)(A), (f)(1) · official source
28 U.S.C. § 1930(a)(1)(B) · official source
Bankruptcy Court Miscellaneous Fee Schedule, Item 8
Bankruptcy Court Miscellaneous Fee Schedule, Item 9

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Sources verified August 1, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.

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