Collection Agency Bond
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Collection Agency Bond Information
A collection agency bond is a finance license bond that guarantees collection agency agents will follow the regulations deemed appropriate by their state. A collection agency cannot operate legally or obtain a license without a collection agency bond. Because collection agencies operate a business that collects debts, they have a negative connotation in the eyes of the public. These companies handle sensitive details that include private information such as financial and personal details. For these reasons, collection agency bonds are highly recommended.
For collection agency bonds, the cost is determined by calculating portions of the total bond amount. These bonds are not considered low risk bonds, but are not as high risk as most other bonds. Each state has different requirements for collection agency bonds, so interested agencies will need to inquire with their own state’s agencies in order to find out what needs to be purchased for them to obtain a license and operate legally.
Collection agency bonds are put in place to mainly protect the public by ensuring that the collection agency is operating a legitimate business. It does not protect the collection agency like some other bonds. In order for the collection agency to guarantee their own protection, insurance from a property and casualty agent will be needed.
Collection agencies can also get bonded for all 50 states if they purchase a bulk underwriting programs that raise overall credit limits so bonds can be obtained in other areas.