Colorado Collection Agency Bonds Explained
If you are planning on launching a collection agency business in Colorado, you have to meet the licensing requirements of the state. The procedure entails posting a collection agency bond.
The bond that you provide to get licensed serves as an extra layer of protection for the state and your future customers. It guarantees your legal compliance and can serve as a compensation mechanism in case you don’t follow the law in your operations as a collection agency.
Your bond represents a three-party contractual agreement, with your agency being the principal that needs the bonding. The Colorado Department of Law is the obligee that imposes the requirement, while the surety is the bond provider.
Questions about Collection Agency Bonds in Colorado
Who is required to obtain a collection agency bond in Colorado?
Running a collection agency in Colorado entails getting licensed with the state Department of Law. As a part of the process of getting the Colorado collection agency license, you have to obtain a surety bond in an amount between $12,000 and $20,000. The bonding guarantees your compliance with the Colorado Fair Debt Collection Practices Act and all other applicable laws.
How much does it cost to get a collection agency bond in Colorado?
The bond amount that you have to provide as a Colorado collection agency is between $12,000 and $20,000. It depends on the average annual amount collected by your business. On its basis, your exact surety bond cost is calculated. It represents a percentage of the bond amount called the bond premium. If your finances are in good shape, you can expect rates in the range of 0.75% to 5%.
In order to assess your precise bond cost, your surety needs to take a close look at a number of factors. The most important ones include your personal credit score, business financials, and liquidity and assets that you may have. By assessing them, it can measure the level of the bonding risk involved. Your bond price depends on this, and it will be cheaper if the risk is lower.
|Surety bond name||Surety bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Colorado collection agency bond||$12,000 to $20,000||$100-$180 to $150-$300||$120-$300 to $200-$5,00||$300-$600 to $500-$1,000||$600-$1,200 to $1,000-$2,000|
Can I get bonded with problematic finances?
With Lance Surety Bonds, you can obtain the bond that you need even if you are facing financial issues. We have created our Bad Credit Surety Bonds program for applicants struggling with low credit scores, tax liens, bankruptcies, and civil judgements.
The higher bonding risk requires slightly increased rates in the range of 5%-10%. Still, due to our excellent partnerships with a number of A-rated, T-listed surety companies, we can offer you a top bonding rate.
What is the bonding process like?
The process for obtaining a collection agency bond in Colorado is as follow:
You will be contacted with a free, no-obligation quote by one of our collection agency bond experts
If you are happy with your quote, you will be able to pay for your bond online
We will then send you a digital and a hard copy of your bond
Interested in learning more about the bonding process? You can delve into the details on the extensive How to Get Bonded page.
Lance Surety Bonds’ specialists can help with your queries or bond application. You can reach us at (877) 514-5146 to get assistance.
What happens in case of a bond claim?
A claim can be brought against your collection agency bond if you fail to follow your obligations under the Colorado Fair Debt Collection Practices Act and any other relevant laws. The maximum sum that can be sought as compensation is the bond amount that you have posted.
Initially, your surety may step in to cover the costs on proven claims and thus to ensure a fast reimbursement to the claimants. However, you need to repay it fully shortly after. Thus, claims are to be avoided, as they can lead to serious financial consequences.