Five Lakes Law Group Debt Settlement: Fees, Risks & Structure

Five Lakes Law Group’s debt settlement program is a Michigan-based attorney-run service that negotiates reduced payoffs with creditors on unsecured debts, typically credit cards and personal loans, for a fee of 27% of the total enrolled balance.¹ The firm advertises a 24-to-48-month timeline and says it has resolved over $500 million in debt for more than 200,000 clients since 2021.² Public reviews skew positive, but BBB complaints and independent reviewers document recurring problems with fee disclosure, timeline extensions, and unauthorized settlements that anyone considering the program should weigh before enrolling.

How the Program Works

After a free consultation, clients enroll and stop paying their creditors directly. Instead, they deposit money into a dedicated account, similar to an escrow account, and Five Lakes uses those accumulated funds to negotiate lump-sum settlements for less than the full balance.³ The firm markets this as an attorney-driven model: licensed attorneys oversee cases, handle creditor communication, and provide what the firm calls lawsuit assistance if a creditor sues during the program.⁴

Read that assistance carefully. Five Lakes says it will draft pro se legal documents and provide attorney guidance at no extra cost, but its public materials do not clearly state that it will represent clients in court, and independent reviewers describe the attorney support as oriented toward settlement work rather than courtroom defense.³

The program targets unsecured debt and typically requires at least $10,000 in qualifying balances. The firm advertises the ability to reduce monthly debt payments by 40% or more.⁴

What the Fee Actually Costs

Five Lakes does not disclose its fee percentage on its website, saying only that it charges no upfront fees and collects payment after delivering results.² BBB complaint records and firm responses confirm the fee is fixed at 27% of the enrolled balance and does not depend on the settlement amount actually negotiated.¹ Most competitors charge between 15% and 25% of enrolled debt, so 27% sits at the high end.³

Run the numbers on $50,000 in enrolled debt. The fee alone is $13,500. If settlements average 50 cents on the dollar, you pay $25,000 to creditors plus that $13,500 in fees, for a total of $38,500. Compared with paying the original $50,000, the net savings is $11,500, or roughly 23%, before any other costs.³ That gap between the “up to 50%” figure clients report hearing in consultations and the actual after-fee savings is worth understanding before signing.

Clients also report a monthly account maintenance fee of roughly $10, which the firm says goes to a third-party account administrator rather than to Five Lakes. Fees are earned once a resolution offer is reached and the client makes the first payment toward that offer.¹

What Clients and Complaints Say

The public review picture is strong. Five Lakes holds an A+ rating with the BBB and has been BBB-accredited since February 2025.⁵ As of early 2026, it had a 4.73 out of 5 rating on the BBB across roughly 1,700 reviews and 4.8 out of 5 on Trustpilot across more than 6,000 reviews.³ Satisfied clients cite responsive customer service, clear case-manager communication, and relief at handing off creditor calls.

Alongside those reviews, the BBB has logged 145 complaints against the firm in the last three years, with 57 filed in the most recent 12-month period.¹ Several themes recur:

Fee disclosure. Clients say the 27% fee was not clearly explained at enrollment, or that fee deductions slowed progress on settling actual debts.
Timeline extensions. Programs originally quoted at 48 months stretched to 60 months or longer, with some clients calling the extensions a bait-and-switch.
Unauthorized settlements. Multiple complaints allege the firm finalized settlements or paid creditors without explicit written approval from the client.
Accounting disputes. Consumers report discrepancies between their deposits and the firm’s records, difficulty getting a full audit of disbursements, and unauthorized Power of Attorney forms sent to creditors.
Communication gaps. Clients describe contradictory answers from different staff and trouble reaching their case managers.

In its BBB responses, Five Lakes maintains that all fees are earned under the signed retainer, that clients were educated about fees and risks at enrollment, and that timelines are estimates rather than guarantees.¹

Risks Built Into the Program

Some risks come with the program’s design, not with this firm specifically. They still belong on your list.

Your credit will take damage. Because the program requires you to stop paying creditors, accounts go delinquent, and that damage can sit on your credit report for up to seven years.³ Five Lakes acknowledges on its website that diverting creditor payments is necessary to create negotiating leverage and may temporarily affect FICO scores.⁴

You could be sued. When payments stop, creditors have the right to file collection lawsuits. Some Five Lakes clients report being sued during the program despite being told at enrollment that a suit was an “unlikely scenario.”³ The firm’s document drafting help does not amount to a promise of courtroom representation.

Settled debt can trigger a tax bill. The IRS treats forgiven debt of $600 or more as taxable income, and the creditor is required to report it on Form 1099-C.⁶ Exceptions include insolvency at the time of settlement and debts discharged in bankruptcy, but confirm eligibility with a tax professional before assuming you qualify. Residents in the 41 states with a state income tax may owe state taxes on forgiven debt as well.⁷

Why the Attorney-Firm Structure Matters

Under the FTC’s Telemarketing Sales Rule, for-profit debt settlement companies cannot collect fees until they have obtained an agreement to reduce at least one debt and the client has made at least one payment on that agreement. Most state laws regulating debt relief companies explicitly exempt licensed attorneys, so firms structured as law practices face different and often lighter oversight than their non-attorney competitors.⁸

Consumer advocates have flagged that some debt settlement companies use attorneys as fronts. Nolo’s red flags include firms that don’t allow face-to-face meetings with an attorney, charge for negotiations but won’t provide legal representation if a client is sued, or have non-attorney staff handle creditor negotiations.⁸ Five Lakes operates as a PLLC, a structure that requires attorney ownership, and claims more than 50 attorneys on staff. It does not publicly identify its founding or principal attorneys on its website.²

In Michigan, the Department of Insurance and Financial Services regulates debt management companies, and the DIFS licensee list does not include Five Lakes. That likely reflects the attorney exemption rather than a deficiency.⁹ You can verify attorney licenses through state bar association records and search complaints through the CFPB’s consumer complaint database.

Questions to Settle Before You Sign

The complaint patterns point to specific terms worth pinning down in writing before signing the retainer:

The exact fee percentage and the base it applies to.
What event triggers fee collection, and how fees are paid out of your deposits.
A realistic timeline range, not just the marketed 24 to 48 months.
What the firm will and will not do if a creditor sues you, including whether an attorney will appear in court.
The cancellation terms and what portion of your deposits (and any fees already collected) can be refunded.

Multiple consumers have alleged that these terms were not adequately explained at enrollment even though the retainer addressed them, so verbal reassurance is not enough.¹

Alternatives are worth pricing against the program. Nonprofit credit counseling agencies charge minimal fees and can set up debt management plans with reduced interest rates. Direct negotiation with creditors avoids settlement fees entirely. For debts that are truly unmanageable, a consultation with a bankruptcy attorney may show that Chapter 7 or Chapter 13 offers a faster, more predictable path to relief than a multi-year settlement program.

1
Better Business Bureau. Five Lakes Law Group PLLC Complaints
2
Five Lakes Law Group. About Us
3
Finder. Five Lakes Law Group Review
4
Five Lakes Law Group. Five Lakes Law Group Home
5
Better Business Bureau. Five Lakes Law Group PLLC BBB Profile
6
IRS. Topic No. 431 Canceled Debt – Is It Taxable or Not
7
InCharge Debt Solutions. Tax Consequences of Debt Settlement
8
Nolo. Lawyer v Debt Settlement Company: Which Should I Use
9
Michigan Department of Insurance and Financial Services. Consumer Finance Licensees