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Sample report · Debt resolution services agreement
Annotated contract analysis · Sample report

Debt Resolution Services Agreement

A five-year debt settlement program, sold as a simple way out of $30,667 in credit card debt. Read clause by clause, most of what it saves goes to fees and tax, and the debt keeps growing while you wait.

Fairness Score
24/ 100
Critical
5High-severity flags across fees, term, credit, debt growth and tax
2Moderate flags on cancellation and arbitration
$9,177Paid to the vendor in fees over the program
60%Of the debt forgiven goes to fees, not to you
What the client was told

The agreement was presented on the sales call as a straightforward debt resolution service. None of the risks below came up in any sales or onboarding conversation, and the client signed without spotting them. Stipulex flagged seven material risks within minutes of upload.

Document
Debt Resolution Services Agreement
Vendor
Debt settlement company, name withheld
Client
J. Miller (fictional name)
Client ID
Redacted
Enrolled debt
$30,667.00
Monthly payment
$408.51, drafted twice a month
Program length
60 months, extendable by the vendor
Disputes
Binding arbitration, jury trial waived

Illustrative sample. The contract is a synthetic composite. The vendor appears as [Vendor] in quoted contract text, and the client’s name is invented. Not legal advice.

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Sample report · Debt resolution services agreement
01The money, traced

60 payments of $408.51. Here is where they go.

The program collects $24,510.60 over five years. A little under two thirds reaches your creditors. The rest is fees, and none of them depend on how good a settlement the vendor gets.

Where your $24,510.60 goesEstimated · 60-month program
$15,333.50Settlements paid to your creditors
$9,177.09Fees paid to the vendor and its administrator
Settlement fee · § 8
$7,666.75 · 25% of enrolled debt
Settlement review fee · § 8
~$613.34 · 2% per settled account
Dedicated account fee
~$897.00 · $14.95 a month for 60 months
What you actually keepRounded to the dollar
Debt forgiven by creditors50% settlement, estimated
$15,333
FeesSettlement, review and account fees
−$9,177
Advertised savingsThe figure on the sales sheet
$6,156
Estimated tax on forgiven debtForm 1099-C, 22% bracket · § 12
−$3,373
Left after tax
$2,783
Interest and late feesAccrue for the full program · § 11
Not disclosed
The fee outruns the savings

The settlement fee alone, $7,666.75, is larger than the $6,156.40 the program promises to save you.

The last line is the one that matters

Five years of interest and late fees on $30,667 come out of the $2,783 that tax leaves you. The vendor does not estimate them.

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Sample report · Debt resolution services agreement
02Deal at a glance

Every number in the agreement, in one place

Figures come from the signed agreement and the program’s own payment schedule. Estimates are marked.

ItemAmountFlag
Total enrolled debt$30,667.00
Estimated settlements paid to creditors$15,333.5050% of enrolled debt
Settlement fee · § 8$7,666.7525% of enrolled debt, not of the settled amountHigh
Settlement review fee · § 8~$613.342% of each account’s enrolled balanceHigh
Dedicated account fee~$897.00$14.95 a month for 60 monthsModerate
Monthly program payment$408.51Drafted twice a month
Program length · § 960 monthsExtendable by the vendor, no capHigh
Total estimated program cost$24,510.60
Advertised savings$6,156.40
Potential tax on forgiven debt · § 12~$3,373Form 1099-C, 22% federal bracketHigh
Savings left after tax~$2,783Before interest and late feesHigh
Monthly cash left after payment · § 7$91.49Moderate
How to read the findings

Each finding quotes the signed agreement verbatim, marks the language that matters, and explains what it does in practice.

1Carries the risk

The phrase to read first. Its number matches the reading beside it.

2Compounds it

Language that makes it worse, or that is easy to skim past.

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Sample report · Debt resolution services agreement
03Findings, clause by clause

Seven findings, highest risk first

Every quote is the signed agreement, word for word, with the vendor’s name withheld.

1Carries the risk2Compounds itEach number ties a phrase to its reading.
§ 8Fees
High

The fee is set on your original debt, not on what actually gets settled

Verbatim · Agreement § 8

[Vendor] will not charge a settlement fee until it reaches a settlement on one or more of your debts. Settlement Fees: A fee of $7,666.75 1equaling 25% of Enrolled Debts, based on the debt amounts at enrollment and subject to verification. This fee is earned by [Vendor] upon the successful settlement of a debt and first payment upon such settlement, or the otherwise successful resolution of the Enrolled Debt. Additional Fees: 2A settlement review fee of 2% for each settled account, based upon the account balance at enrollment and payable upon an accepted settlement offer and first payment on the settlement.

What it means

1You pay 25% of the original $30,667 whatever the settlement turns out to be. A creditor who agrees to take 40 cents on the dollar triggers the same $7,666.75 as one who takes 60.

2A second fee, 2% per account, sits in the next sentence and adds about $613.

Bottom line

$7,666.75 settlement fee, against $6,156.40 in promised savings.

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Sample report · Debt resolution services agreement
§ 9Timing for settlement of debt
High

Five years is the estimate, not the limit. The vendor can extend it.

Verbatim · Agreement § 9

[Vendor] does not and 1cannot guarantee a particular result and cannot guarantee that Client’s debts will be resolved within a defined timeframe. If Client fails to save sufficient funds, [Vendor] will not be able to negotiate and/or settle Client’s debts. 2[Vendor] may extend Client’s estimated program length to complete the settlement and payment of all accounts.

What it means

1The vendor promises no result and no timeline. Settlement depends on how fast your savings build.

2It also reserves the right to lengthen the program on its own, with no maximum, no penalty to itself and no exit right for you. You commit to $408.51 a month for 60 months; when month 60 arrives, some accounts may still be open.

Bottom line

No cap on how long the program can run.

§ 10Credit reporting
High

Your credit takes damage for the whole program. That is how the program works.

Verbatim · Agreement § 10

[Vendor] does not report to credit bureaus, but Client’s creditors may. [Vendor] has no control over creditors and makes no assertions that [Vendor] can prevent creditors from reporting negative information to the credit reporting agencies. 1Failure to make timely payment to creditors will likely result in a reduction to Client’s creditworthiness. [Vendor] is not a credit repair company or credit services organization and does not provide credit advice. 2[Vendor] makes no representation that it can improve credit.

What it means

1Settlement works by stopping payments to creditors until they are willing to negotiate. Every missed month is reported. This is not a side effect; it is the mechanism.

Meanwhile the largest creditor, owed $18,816, can sue, garnish wages or levy the dedicated savings account at any time.

2And the vendor makes no promise about your credit at the end of it.

Bottom line

60 months of missed payments reported to the credit bureaus.

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Sample report · Debt resolution services agreement
§ 11Risks of debt resolution
High

The vendor confirms in writing that your debt will grow while you are enrolled

Verbatim · Agreement § 11

Debt resolution is an aggressive approach to resolving debt. No payments are made to Client’s creditors until a negotiated settlement is in place. [Vendor] 1cannot prevent creditors from taking legal action, including lawsuits, against Client, and [Vendor] cannot prevent an increase in collection activity. 2Client’s Enrolled Debts will increase because creditors will add interest and late fees during this program due to nonpayment.

What it means

1Any creditor, including the largest, can sue and pursue a judgment at any point during the program.

2Interest and late fees accumulate on the full $30,667 while payments are stopped, so the balance you owe rises through the program. None of that growth appears in the advertised savings.

Bottom line

Rising: the balance you owe during non-payment, by the contract’s own terms.

§ 12Tax implications
High

A tax bill the advertised savings never mention

Verbatim · Agreement § 12

If a debt is settled for a difference greater than $600.00, 1this savings may be reported to the Internal Revenue Service as income and may be taxable. For more information, contact a tax professional. 2[Vendor] does not provide tax advice.

What it means

1If $15,333 of debt is forgiven, you may receive Form 1099-C for the full amount, taxed as ordinary income. That liability appears nowhere in the vendor’s savings figure.

At a 22% federal bracket, tax takes $3,373 of the $6,156 you were promised, leaving about $2,783 before interest and late fees.

2The vendor points you elsewhere for the answer.

Bottom line

~$3,373 in estimated federal tax on the forgiven debt.

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Sample report · Debt resolution services agreement
§ 7General responsibilities of client
Moderate

Two missed payments in any six months, and the vendor can cancel

Verbatim · Agreement § 7

1Client agrees to not incur additional debt during this Agreement. Client agrees not to negotiate personally with creditors on the Creditors List. [Vendor] reserves the right to 2cancel this Agreement if Client misses two (2) or more payments in any six (6) month period. Failure to make scheduled payments may result in the loss of structured settlements, additional costs including late fees, and may result in the loss of the benefit secured from a settlement.

What it means

1You agree to take on no new debt of any kind for the full five years.

2After the program payment, $91.49 a month is left. One car repair or medical bill can turn into two missed drafts and a cancelled program, with negotiated settlements lost.

Bottom line

$91.49 a month is the margin between you and cancellation.

§ 15Governing law and arbitration
Moderate

You give up a jury trial, with a 30-day window to take it back

Verbatim · Agreement § 15

In the event of any controversy, claim or dispute between the Parties… the parties agree it shall be determined by arbitration in [county withheld], Michigan or in the county in which the consumer resides. Binding Arbitration means 1both Parties give up the right to trial by jury… 2The Parties shall share the cost of arbitration, including attorneys’ fees, equally. YOU MAY REJECT THIS AGREEMENT TO ARBITRATE BY CALLING 000-000-0000 WITHIN THIRTY (30) DAYS.

What it means

1Signing waives your right to go to court or join a class action.

2You also split the cost of arbitration, including lawyers, down the middle.

The way out is one capitalized sentence at the end of the clause: a phone call within 30 days of signing.

Bottom line

30 days to reject arbitration by phone. The contract stays in force either way.

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Sample report · Debt resolution services agreement
04Overall risk summary

Seven findings. Five of them high.

ClauseSeverityFindingImpact
§ 8FeesHighFee set on original debt, not the settled amount$7,667 fee vs. $6,156 saved
§ 9TimingHighVendor can extend the program, with no capOpen-ended payments
§ 10CreditHighCredit damaged for the full program5 years of reported non-payment
§ 11RisksHighDebt grows while you are enrolledRising balance, lawsuit risk
§ 12TaxHighTax on forgiven debt left out of savings~$3,373 federal tax
§ 7Client dutiesModerateTwo missed payments allow cancellation$91.49 monthly margin
§ 15ArbitrationModerateJury trial and class action waived30 days to reject by phone
The overall reading

Read as a whole, the agreement moves the program’s risk onto the client. The vendor’s fee is fixed at enrollment; the timeline, the credit damage, the growing balances and the tax bill are not, and none of them appear in the savings the client was shown.

That is the gap Stipulex is built to close: the distance between what a contract was sold as and what it says.

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Sample report · Debt resolution services agreement
05Recommended actions

Before you sign an agreement like this

  1. Ask for the fee to be set on the amount actually settled§ 8
    A fee on enrolled debt pays the vendor the same whether it negotiates well or badly. Get the basis in writing.
  2. Get a maximum program length in writing§ 9
    Ask what happens at month 60 if accounts are still open, and whether you can exit with the funds in your dedicated account.
  3. Price the tax before you enroll§ 12
    Ask a tax professional what a 1099-C on about $15,333 of forgiven debt would cost you, and whether any exclusion applies.
  4. Ask how a lawsuit would be handled§ 10–11
    Your largest creditor is owed $18,816 and is free to sue during the program. Ask what the vendor does if it does.
  5. Build a buffer first§ 7
    With $91.49 a month of margin, one unexpected bill can cancel the program and the settlements it has reached.
  6. If you sign, decide on arbitration within 30 days§ 15
    The clause can be rejected by phone. Rejecting it keeps your right to court and does not cancel the contract.
  7. Compare the alternatives
    Ask a nonprofit credit counseling agency whether a debt management plan, which keeps paying creditors, would cost less.
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This sample report was produced by the Stipulex contract intelligence engine. It is an illustrative sample; the contract is a synthetic composite. Stipulex identifies risk; it does not provide legal counsel. Stipulex, Inc. is not a law firm and does not provide legal advice. Consult a licensed attorney before making decisions based on any contract analysis. © 2026 Stipulex · Redwood City, California