TN Enacts New Framework for Debt Resolution Providers

Tennessee Enacts New Licensing Framework for Debt Resolution Providers

Overview

Tennessee has enacted the Debt Resolution Services Act, establishing a new licensing regime for entities providing debt resolution services to Tennessee consumers. Beginning January 1, 2026, covered providers must be licensed before offering or marketing debt settlement or negotiation services in the state.

Scope of Impact

The Act applies to entities that, for compensation, negotiate, settle, or otherwise alter unsecured consumer debt on behalf of Tennessee consumers. Unlicensed activity is prohibited.

Key Requirements

• Licensure through TDCI’s CORE system
• Submission of financial statements, consumer agreements, and fee schedules
• Surety bond of up to $50,000
• Criminal background checks for executive officers, as applicable

Licenses are issued for two-year terms and subject to renewal and ongoing compliance obligations.

Consumer Protection Highlights

• Advance fees are prohibited
• Fees may only be collected after a successful debt resolution and consumer payment
• Enhanced disclosures and written agreements are required

Exemptions

Exemptions apply to certain attorneys, financial institutions, nonprofit entities, creditors negotiating their own debts, and administrative or marketing-only service providers.

Additionally, any licensees who are currently licensed as a Debt Management Services Provider can continue to operate under that license until it expires. At expiration, if the company meets the criteria to be considered a Debt Resolution Services Provider, they can apply for an initial Debt Resolution Services license.

How FS Vector Can Help

FS Vector supports debt resolution providers with Tennessee licensing assessments, application and compliance support, and ongoing regulatory management through the APPROVED platform.

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