What is a Texas collection agency bond?
In Texas, the Secretary of State’s Registrations Unit requires third-party debt collectors and credit bureaus to post a third-party debt collector surety bond. These businesses may not engage in debt collection before filing the $10,000 bond with the state. To obtain a Texas collection agency bond, debt collectors and credit bureaus must promise to run their businesses according to Chapter 392 of the Finance Code and other applicable federal and state laws. In short, they must agree to practice ethically and legally. If they violate their bond contract, they could face claims against their bond.
What are third-party debt collectors?
A third-party debt collector is someone who directly or indirectly collects debt. This includes individuals selling (or offering to sell) forms represented as devices, collection systems, or schemes to collect consumer debts (Texas Secretary of State). Certain attorneys who act on behalf of clients may be exempt.What are credit bureaus?
A credit bureau is an organization that (for compensation) gathers, records, and disseminates information related to someone’s financial responsibility, creditworthiness, and paying habits. The purpose of these tasks is to furnish the data to another person (Texas Secretary of State).Get Your Texas Collection Agency Bond:
Quick Takeaways
- Third-party debt collectors and credit bureaus may not engage in debt collection activities before filing a $10,000 bond with the state of Texas.
- A third-party debt collector is someone who directly or indirectly collects debt.
- If a Texas debt collector violates the law and breaks their bond agreement, the party harmed by the violation may file a claim against the bond.
- A Texas debt collection bond could cost as little as $100 to obtain and file.
How does a Texas collection agency bond work?
If a Texas debt collector violates the law and breaks their bond agreement, the party harmed by the violation may file a claim against the bond. The surety will step in to investigate and pay the costs to settle the claim if it’s legitimate. The debt collector responsible for causing the damage must eventually repay the surety – up to the total amount of the bond ($10,000). Texas collection agency bonds will remain in effect until canceled. If you wish to cancel your bond, you must provide the Texas Secretary of State with written notice at least 60 days before you cancel. Your surety may also cancel the bond by giving 60 days’ notice.
How much does a third-party debt collector bond cost?
To get your $10,000 bond, you’ll pay a small percentage of the bond amount. Many applicants qualify for a 1% annual rate – or $100 per year. Your rate is based on your credit score, business financials, and other factors. Low-risk applicants will pay less, but those with poor credit scores can often still get bonded.
Do third-party debt collection agencies need a license to work in Texas?
No license requirement exists in the state of Texas for third-party debt collectors. Instead, the surety bond acts as your “permit,” allowing you to work legally.
How to Get a Texas Collection Agency Bond
To get your third-party debt collector surety bond, simply apply below or call ZipBonds at 888-435-4191. We offer the fastest and most secure option for getting license and permit bonds. Just apply, pay for, and print your bond!
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.