---
title: "Who Pays When Your Agent Charges Back? Debt Rollup Clauses Every Agency Owner Should Negotiate"
meta_description: "Chargeback debt from your downline can roll up to you. Moe Ray explains debt rollup, advance caps, and the IMO contract terms agency owners should negotiate before signing."
slug: chargeback-debt-rollup-imo-contract
datePublished: 2026-11-05
---

# Who Pays When Your Agent Charges Back? Debt Rollup Clauses Every Agency Owner Should Negotiate

An agent on your team writes a policy, gets advanced nine months of commission, and the client cancels in month three. The carrier wants its money back. The agent is gone.

So who pays?

In a lot of contracts, you do. That's called debt rollup, and it's one of the most expensive clauses agency owners never read.

## How debt rollup works

Most life carriers advance commissions. When a policy lapses before the advance is earned, the unearned part becomes a chargeback. The carrier tries to collect from the writing agent first. If that agent can't or won't pay, the debt can move up the hierarchy: to you, then to your upline, sometimes all the way to the IMO.

Bigger team, bigger exposure. One bad recruit with a stack of advanced business can wipe out months of your overrides.

## 4 terms to negotiate before you sign

### 1. Your rollup cap

Ask whether your liability for downline debt is capped, and at what. Without a cap, you are personally on the hook for whatever someone below you writes. A cap tied to the overrides you actually earned on that agent's business is a fair starting point.

### 2. Advance limits on new agents

You can't control every recruit, but you can control how much they're advanced. Negotiate the right to set lower advance percentages, or as-earned pay, for new or high-chargeback agents in your hierarchy. Less advanced means less to roll up.

### 3. Collection order and timing

Get it in writing that the carrier and IMO must pursue the writing agent first, and for how long, before the debt touches you. "Immediately rolls up" and "rolls up after 90 days of documented collection efforts" are very different deals.

### 4. What happens to the debt when you leave

If you move IMOs, does old downline debt follow you? Can they hold your renewals against it? Pair this with the offset and holdback language in your agreement. Debt that survives termination with no time limit is a liability you'll carry for years.

## Questions to ask in writing

- **Am I liable for my downline's chargebacks, and up to what amount?**
- **Who chooses the advance percentage for agents I recruit?**
- **How long must you try to collect from the writing agent before charging me?**
- **Does any downline debt survive if I terminate?**

If the answers are vague, the risk is yours.

## Why I care about this

I'm grateful for what this business has given me, and I've seen good agency owners go into the red for mistakes they didn't make. Building a team should build your wealth, not stack up someone else's debt on your name.

You're not just signing a commission schedule. You're signing for every agent below you. Negotiate like it.

**Bringing a team to a new IMO, or already stuck with rolled-up debt?** [Talk to TheImoNegotiator](/?apply=1) before you sign, so you know exactly what you're on the hook for.

*This post is general information, not legal or tax advice. Carrier and IMO terms vary. Have an attorney review any contract before you sign it.*