What Is a Michigan Collection Agency Bond?
Are you planning on starting a collection agency business in Michigan? You will need to obtain a Michigan collection agency license. As a part of the process, you will have to post a collection agency bond.
The surety bond aims to protect your customers and the state against potential fraud and misuse on your side. It is a safety mechanism which can provide a compensation if parties suffer damages as a result of your unethical or illegal actions.
The collection agency bonds works like a contractual agreement between three entities. Your collection agency company is the principal that has to get the bond. The Michigan Department of Licensing and Regulatory Affairs is the obligee to which you present the bond. The surety provides your business with the needed bond.
Questions about Collection Agency Bonds in Michigan
When do I need this surety bond?
All collection agencies in the state have to get licensed with the Michigan Department of Licensing and Regulatory Affairs. An essential element of this process is posting a surety bond. The required amount for the first year of licensing is $5,000. After that, the amount is based on the debts you’ve collected in the previous year, but it has to be between $5,000 and $50,000. The bond ensures your compliance with Article 9, Act 299 of 1980 of the Michigan Occupational Code/mileg.aspx?page=getObject&objectName=mcl-299-1980-9).
What is the Michigan collection agency bond cost?
The bond amount that you have to post to get your license as a Michigan collection agency is between $5,000 and $50,000. However, this is not the bond price that you have to pay. In fact, the surety bond cost is only a few percents of the bond amount. It is called the bond premium. If your overall finances are in good shape, you can expect it to be around 1% to 5%.
What factors determine your bond price? The most important ones include your personal credit score, business financials, and even liquidity and assets. By considering them, your surety aims to assess how risky it is to get you bonded. The more stable your application is, the smaller your bond premium is likely to be.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Michigan collection agency bond||$5,000 to $50,000||$100 to $375-$750||$100-$125 to $500-$1,250||$125-$250 to $1,250-$2,500||$250-$500 to $2,500-$5,000|
Can I get the bond with bad credit?
Struggling with problematic finances is tough when you have to get bonded. At Lance Surety Bonds, though, we have your back . We’ve designed our Bad Credit Surety Bonds program -for applicants with low credit scores, tax liens, bankruptcies, and civil judgements.
You can expect bonding rates in the range of 5%-10%, which compensate for the higher bonding risk. Due to our close partnerships with numerous A-rated, T-listed surety companies, however, we can still offer you top bonding prices whatever your credit score is.
How do I get a collection agency bond?
Want to expand your knowledge about the bonding process? We’ve gathered the essential information in our How to Get Bonded page.
We are here to help. If you need to get in touch with one of our bonding specialists,. just call us at (877) 514-5146.
What if I get a bond claim?
The purpose of your collection agency bond is to protect the state in which you operate and your customers. It is there to provide a reimbursement to harmed parties if you engage in illegal activities that lead to damages.
The claimants can seek a compensation up to the penal sum of your bond. You are fully liable for claim costs, though your surety may take on the payments at first. As a whole, bond claims are a serious financial threat for your business. They can also prevent you from getting bonded in the future.