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A collection agency bond sometimes referred to as a debt collector bond, is a type of surety bond collection agencies need to obtain to get their business license. Because collection agencies collect debts and regularly manage clients’ personal information, the government requires them to obtain a bond that ensures legal and ethical performance. With the collection agency bond, companies that pursue payment on debts by businesses and individuals guarantee proper handling of received funds and protect clients from fraud.
A collection agency bond works like any other surety bond, involving three parties in the agreement: the principal, the obligee, and the surety. The principal is the collection agency that purchases the bond required by the obligee, which is usually the government agency. The surety is the agency that issues the bond.
The cost of a collection agency bond varies among the states. Some of them require bonds that cost only $5,000 to $10,000, while other states demand a higher bond amount. The good thing is, you don’t have to pay the full bond amount to get bonded. Collection agencies only need to cover the bond premium, which is anywhere from 1-15% of the total bond amount.
Your collection agency bond premium will largely depend on your financial statement and credit score. Bonding Solutions offer surety bonds at the most affordable rates. Apply for a free quote and get the exact price of your bond from the comfort of your home.
Collection agencies need to obtain a collection agency bond in order to receive their business license. Many states require this type of surety bond to protect the public from misdeeds. The bond is required to ensure that collection agencies follow industry regulations when collecting money and sending it to the clients afterward. A collection agency bond is, therefore, a type of license and permit bond that enables collection agencies to engage in the business of collecting money in certain states.
Applying for a collection agency bond is easy when you work with Bonding Solutions. Our easy online application allows you to submit information quickly so that our team can start processing your bond request immediately. We offer competitive rates and are known, nationwide, for our quick turn-around time when underwriting bonds. If you have more questions about collection agency bonds, please contact our office directly and one of our team members will be happy to assist you!Get Started