New York Collection Agency Bonds Explained
If you want to launch a collection agency business in the state of New York, you have to obtain a license on the city level if you are based in New York City or Buffalo. One of the requirements that you have to meet is to provide a collection agency bond.
The goal of the required bond is to ensure that you will follow all applicable city and state laws in your operations as a debt collector. It works as a safety mechanism protecting your customers and the licensing authorities against potential illegal activities on your side.
The collection agency bond functions as a three-party contractual agreement. Your collection agency is the principal, the relevant city authority is the obligee that demands it, and the surety is the bond provider.
Questions about Collection Agency Bonds in New York
Who has to obtain a collection agency bond in New York?
There is no comprehensive requirement for a New York state debt collection agency license and bonding. The cities of New York C and Buffalo require collection agencies to obtain a city license. This process entails obtaining a $5,000 surety bond for both of those cities. For the City of Buffalo, it ensures compliance with Ordinance Chapter 140. In the case of NYC, the bond guarantees compliance with Subchapter S of Section 1. Chapter 2 of Title 6 of the Rules of the City of New York.
How much does bonding cost?
The surety bond amount that you have to post as a New York collection agency based in New York City or Buffalo is $5,000. However, you don't need to cover the whole amount to get bonded. You only need to pay a small percentage of it, which is the bond premium.
The surety bond cost that you will end up paying is based on a thorough assessment of your personal and business finances. It is needed in order to measure the level of bonding risk involved. The factors that shape your bond price are your personal credit score, business finances, and any fixed or liquid assets that you may have. The stronger your financial profile is, the lower your bond premium would get.
|New York Collection Agency Bond Cost Based on Credit Score|
|Surety bond name||Bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|New York City and City of Buffalo collection agency bond||$5,000||$100||$100-$125||$125-$250||$250-$500|
Is it possible to get bonded with bad credit?
If you have problematic finances, it can be more difficult to get a collection agency bond. Applicants with low credit scores, tax liens, bankruptcies, and civil judgments can use Lance Surety Bonds' Bad Credit Surety Bonds program to get the needed bond.
The typical rates for bad credit bonds are between 5%-10%. The slightly higher price is necessary in order to mitigate the increased bonding risk. You can still obtain an excellent bond price with us due to our exclusive partnerships with a number of A-rated, T-listed surety companies.
What is the bonding process like?
To get your New York collection agency bond, you can follow these steps:
You will be contacted with a free, no-obligation quote
The bond can be then bought online
You will receive a digital as well as a hard copy of your bond
Would you like to learn more about the intricacies of the bonding process? You can delve into the details on our How to Get Bonded page.
If you have queries or need help with your application, Lance Surety Bonds' specialists can assist you. You can reach us at (877) 514-5146.
What happens in the case of a bond claim?
If you fail to follow the laws in your city and the common New York state laws, you can end up with a claim against your collection agency bond. Through this, parties who have suffered damages due to your illegal activities can demand fair compensation up to the full amount of your bond.
At first, your surety may cover the reimbursement on proven claims. However, you are liable to fully repay it afterwards, as this is the mechanism of all surety bonds. Thus, it is best to stay away from situations that can create any claims.
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What Our Clients Have To Say?
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