What Is a Dedicated Account in Debt Settlement?
McKenzie Adams editorial team · Last updated
The FDIC-insured account where settlement funds accumulate: who owns it, what it costs, the five federal protections on it, and the fine print worth reading.
What is a dedicated account?
A dedicated account is a savings account opened in your name at an independent, insured bank when you enrol in a debt settlement programme. Instead of paying creditors directly, you deposit a planned amount each month; as balances are negotiated down, settlements are paid from this account — and so are settlement fees, but only after each settlement actually happens.
Ours costs $9.95 to open and $9.95 per month, paid to the bank and passed through at cost. It is never settlement-company revenue, and any provider making margin on the account itself deserves a hard look.
The five protections federal law requires
For a settlement company to use dedicated accounts lawfully under the Telemarketing Sales Rule, all five must be true: the account sits at an insured financial institution; you own the funds and any interest; the administrator isn't owned by or affiliated with the settlement company; neither pays the other referral fees; and you can withdraw at any time, receiving your money (minus fees lawfully earned) within seven business days.
That last one is the safety valve: if you lose confidence mid-programme, the money leaves with you.
What to check before you enrol anywhere
Ask three questions. Who is the account administrator, and can you find them independently of the settlement company? What does the account cost, and does the settlement company profit from it? And is the withdrawal right in writing? A company that hesitates on any of the three has answered all of them.
Questions about your own situation? Book a free 30-minute consultation or start with our published pricing.