Connecticut Collection Agency Bonds Explained
Planning on launching a collection agency business in Connecticut? You need to meet a number of licensing requirements, including posting a collection agency bond.
The bond is a prerequisite for obtaining a Connecticut collection agency license. It serves as a safety mechanism against potential illegal activities you may engage in. The bond is, in essence, an extra layer of protection for the state and your customers.
Your collection agency bond represents a three-party contract between your collection agency as the principal and two more entities. The Connecticut Department of Banking is the obligee that requires you to get bonded, while the surety is the third party that provides you with the bond.
Questions about Collection Agency Bonds in Connecticut
Who is required to obtain a collection agency bond in Connecticut?
Any entity that wants to operate as a collection agency has to get licensed with the state Department of Banking. One of the requirements you have to meet is to provide a $25,000 surety bond. The process is handled via the Nationwide Multistate Licensing System and Registry (NMLS). The bond ensures you will follow your obligations under the Banking Law of Connecticut and any other applicable legislation.
How much does it cost to get a collection agency bond in Connecticut?
The bond amount that you have to post as a Connecticut collection agency is $25,000. However, your surety bond cost is only a fraction of this amount. Your actual bond premium would be between 0.75% and 5% if your finances are in good shape.
What factors influence your bond cost? The most important ones include your personal credit score, company financials, and liquidity and assets. You may also provide proof of your professional experience. By examining these indicators, your surety assesses the level of bonding risk that you pose. The lower it is, the smaller your bond premium is likely to be.
|Surety bond name||Surety bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Connecticut collection agency bond||$25,000||$187.5-$375||$250-$625||$625-$1,250||$1,250-$2,500|
Can I get bonded with financial issues?
Yes, you can get the needed bond even if you struggle with problematic finances. Lance Surety Bonds operates its Bad Credit Surety Bonds program for applicants with issues such as low credit scores, tax liens, bankruptcies, and civil judgements.
The rates that you can expect for a bad credit bond are between 5%-10% because the bonding risk is higher. As we partner with a number of A-rated, T-listed surety companies, you can count on a great bonding rate from us, irrespectively of your credit score.
How do I obtain this bond?
To obtain a collection agency bond in Connecticut, you need to follow the steps below:
We will then send you your free, no-obligation quote
You will then be able to pay for your bond online
Once we receive your payment, we will send you a digital and a hard copy of your bond
Interested in delving further in the nitty-gritty details of the bonding process? Make sure you refer to our in-depth How to Get Bonded page.
We are here to assist you with your queries or bond application. Just reach us at (877) 514-5146 to get help from our bonding experts.
How to proceed in case of a bond claim?
The purpose of your collection agency bond is to safeguard the interests of your customers and the state of Connecticut where your operations are based. In case you fail to follow your obligations under applicable laws, and a party suffers damages as a result, you can receive a claim against the bond. This is how a fair reimbursement can be sought.
The claimants can demand compensation of up to $25,000, which is the bond amount you have posted. If the case is proven, you are liable to cover these costs. The surety that bonded you may pay them at first, but you have to fully repay it soon after. Thus, staying away from situations that can lead to claims is the best course of action, since they can lead to grave financial damages.