What Is an Illinois Collection Agency Bond?
Collection agencies in Illinois have to get licensed with the state Department of Financial and Professional Regulation. If you want to start an agency, you will need to post a collection agency bond as a part of the licensing criteria.
The purpose of your Illinois surety bond is to guarantee your legal compliance. The bond protects the state and your customers from potential fraud or misuse you may engage in. A harmed party can file a claim against your bond to seek a reimbursement.
The bond is, in essence, a contract between three entities. Your collection agency is the principal, which has to obtain a bond. The Illinois Department of Financial and Professional Regulation is the obligee imposing the bond requirement. The bond itself is provided by the third party, the surety.
Frequently Asked Questions
Who has to get this bond?
In order to start a collection agency in Illinois, you need to undergo a licensing procedure. The authority that regulates your trade is the state Department of Financial and Professional Regulation. It requires you to obtain a $25,000 surety bond prior to conducting business. You need to provide the bond in the official form,
BD-COL, which is a part of the application package.
Your collection agency bond guarantees that you will follow your obligations set in the Illinois Collection Agency Act.
What are the collection agency bond costs?
Collection agencies in Illinois need to obtain a $25,000 surety bond. This is referred to as the bond amount. Your actual bond premium is only a fraction of this amount. The usual rates for collection agencies with stable finances are in the range of 1%-5%.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Illinois collection agency bond||$25,000||$187.5-$375||$250-$625||$625-$1,250||$1,250-$2,500|
Your surety bond cost depends on the bond amount you need to post, but also on other factors, such as your personal credit score, business finances, and assets and liquidity. The surety you apply with needs to assess the level of bonding risk to determine your bond price. If your finances and business profile are strong, you can expect a lower bond rate.
What if I have bad credit?
With Lance Surety Bonds, you are able to obtain the bond you need even if you are struggling with low credit scores, tax liens, bankruptcies, or civil judgements. Our Bad Credit Surety Bonds program is tailored for you.
The bonding rates for bad credit applicants are often between 5% to 10%. This is needed in order to compensate for the increased risk. As we foster close connections with numerous A-rated, T-listed surety companies, we can handpick the best bond option for you.
How do I obtain a collection agency bond?
Our How to Get Bonded page is an in-depth resource about the way bonding works. If you have more questions, you can reach us at (877) 514-5146. Lance Surety Bonds’ experts will assist you.
What happens if a claim is brought against me?
Your bond does not work like insurance for your business. Instead, it protects your customers. If you fail to remit collections you’ve made to your creditor client, you can get a bond claim. In this way, the affected party can seek a reimbursement up to the penal sum of your bond, which is $25,000.
The surety that bonded you may cover the claim costs at first. You need to fully compensate it afterwards. This means that the indemnity remains yours. Staying away from bond claims is the wisest course of action, as they can be a heavy financial burden and can harm your business reputation.