*TO THOSE WHO ARE THINKING OF SENDING YOUR PHONE BACK TO AT&T PLEASE READ. WHILE THIS MAY NOT HAPPEN TO YOU, IT CAN HAPPEN*
They do not require you to put down a deposit. They are waiting for your phone to arrive after you've received your new one. However, I did the trade in last year through AT&T so I could have the rest of my payments waived, didn't go as planned.
I bought an iPhone 6S in 2015 on the AT&T Next 12 with Down Payment plan that allowed me to put 30% down and then have the rest of the payments spread out over 28 months. This plan allowed me to upgrade after 12 payments, which I did to get my 7. There was $300 left on the plan, and per the contract in the box I could send my phone back and the rest of the payments would be waived if it came back in good working order.
I sent the phone back in the box my 7 came in. I did everything I was supposed to in terms of getting the phone reset and removing the find my iphone lock. The phone was in near perfect condition when I sent it in. I get an email from AT&T that my phone was received damaged. The email did not tell me what the damage was, just that it could be one of these 5 things (it listed 5 items that could have happened but didn't say what it was). After 3, almost hour long, conversations with AT&T I finally got someone to tell me that it arrived and wouldn't turn on. The phone arrived in great condition, it just wouldn't turn on. They supposedly tried charging it, but it wouldn't work.
I have emails of me removing the services off of my 6S specifically. I even had AppleCare for the device up until after the phone was sent in. If I knew it was broken I would have brought it to Apple to get it replaced before sending it in. I know I sent the phone back exactly how they want it, but they were trying to make me pay $248 because they claim it arrived damaged and will only give me $52. Also, they couldn't send the phone back to me.
After a lot of back and forth I was finally able to get them to remove the $248 charge. I will not be sending my phone back to AT&T. I will have a better chance of selling it on my own.