Massachusetts Collection Agency Bonds Explained
In Massachusetts, collection agencies have to undergo a licensing procedure with state bodies. You have to provide a collection agency bond in order to fulfill the licensing conditions.
This surety bond aims to protect the state and your customers. Its purpose is to guarantee that you will abide by the law in your operations as a collection agency.
Your bond represents a contract between three entities. Your collection agency is the principal that has to get the bonding. The Massachusetts Division of Banks is the obligee that requires it, while the surety is the bond provider.
Questions about Collection Agency Bonds in Massachusetts
Who is required to obtain a collection agency bond in Massachusetts?
In order to obtain a Massachusetts collection agency license, you need to post a surety bond. The licensing authority is the state Division of Banks, but the process is handled via the Nationwide Multistate Licensing System and Registry (NMLS). The bonding ensures that your collection agency business will conduct its activities in compliance with the General Laws of Massachusetts and the state Fair Debt Collection Act.
How much does it cost to get a collection agency bond in Massachusetts?
The bond amount that you have to provide to get licensed as a Massachusetts collection agency is set on a case-by-case basis. It depends on the volume of your yearly collections.
In order to get bonded, you need to provide only a percentage of it, called the bond premium. For applicants with a solid financial profile, the common bond rates are between 0.75% and 5%.
Your surety bond cost is formulated on the basis of a number of factors, such as your personal credit score, business financials, and liquidity and assets. You surety examines these indicators to assess the risk involved in the bonding. The more stable your finances and business stats are, the smaller your bond cost.
Is bonding possible if I have bad credit?
Obtaining your collection agency bond can be difficult if your finances are not stellar. However, with Lance Surety Bonds, you can still get bonded, even if you are struggling with low credit scores, tax liens, bankruptcies, and civil judgements. Our Bad Credit Surety Bonds program is for applicants like you.
Since the bonding risk is higher, the bonding rates are usually between 5%-10%. Nevertheless, you are guaranteed a top bond price with us due to our close partnerships with a number of A-rated, T-listed surety companies.
How do I obtain my bonding?
To obtain a collection agency bond in Massachusetts, you need to follow the steps below:
Receive your free, no-obligation quote
Pay for your bond online
Receive your collection agency bond (digital and a hard copy)
Want to expand your knowledge about how bonding works? Don’t miss out our extensive How to Get Bonded page.
Lance Surety Bonds’ specialists can help you with your bond application or other questions. You can reach us at (877) 514-5146.
What is the procedure in the case of a bond claim?
A claim can be brought against your collection agency bond if you fail to follow applicable state laws and a party suffers damages as a result of that. The claimant can demand compensation that is up to the bond amount that you have posted when getting licensed.
At first, your surety may pay the claim costs on proven cases. This is how bonds ensure a fast reimbursement to the harmed parties. However, you need to repay it fully, since this is set in the bond indemnity agreement. This means claims are to be avoided since they can lead to a serious financial burden for your company.