What is a New Jersey collection agency bond?
Collection agency bonds are a surety bond requirement for all parties who are collecting funds on behalf of others. Their purpose is to make sure these funds are properly collected and distributed and that collectors do not engage in fraudulent or unethical deeds.
For example, if a collection agency or officer chargers a higher fee than already agreed with the client, the bond can act as protection to the client. If the client’s claim is proven, they can receive compensation up to the total bond amount, which in this case is $5,000. To make sure you understand your bond obligation, it’s important that you get to know the provisions of Title 45, Chapter 18, of the New Jersey Revised Statutes.
You can start your application now and obtain a free bond quote, or continue to the Q&A section for some useful tips and information on these bonds. If you still have questions, you can call us at (877)-514-5146 and we’ll assist you.
Questions about Collection Agency Bonds in New Jersey
Who needs a New Jersey collection agency bond?
According to New Jersey law, “no person can operate a collection agency, collection bureau or collection office, or engage in the business of collecting or receiving payment for others of any account, bill, or other indebtedness without having a sufficient bond on file with the Secretary of State.”
How much does the New Jersey collection agency bond cost?
The full amount of the bond is $5,000, but this only refers to the compensation it provides. The actual bond cost is an annual premium, which is a percentage of the total amount. How much your end price will be depends mostly on your credit score. The table below contains expected premiums based on the applicant’s credit score.
|Bond Type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|New Jersey Collection Agency Bond||$5,000||$100||$100-$125||$125-$250||$250-$500|
Keep in mind that these are only estimates, and the only way to get an exact quote is to submit our online application.
There are other factors that determine your surety bond costs as well, such as financial stability of your business, years in business, and others. For more information, visit our bond cost page.
How do I apply for my collection agency bond?
The application process is simple and may not even require a credit check. Once you submit your online application, we will contact you with your bond quote.
Depending on the information you provided, we’ll let you know if we need any additional documentation so we can process your application. Each surety bonds company has different standards for the underwriting process.
How do I file my bond?
The bond form which you must fill out is called New Jersey Collection Agency Bond Application. It is a notarized affidavit that you need to submit with your licensing application. When submitting the bond form, you will also need to include:
- A finance statement from the surety company
- A power of attorney which shows that the Attorney-in-Fact is legally authorized to represent the surety
- The signatures of two witnesses other than you or the surety
After you have completed all of the above, you can submit the form to:
NJ Division of Revenue
Collection Agency Bond Section
PO Box 453
Trenton, NJ 08646
The processing fees for filing the bond is $25, payable to Treasurer, State of New Jersey. You can call (609)-633-8258 to make sure your collection agency bond is properly processed.
What happens in case of a claim?
It’s best to avoid claims in all scenarios, as they can be quite costly. Moreover, businesses with prior claims might see their next bond applications rejected due to the higher risk involved for sureties.
If you are notified of a valid claim, you need to pay it in full. Otherwise, the state will get the surety to cover the costs, but you will then be sued for all expenses, including legal fees. Understanding applicable provisions is essential in order to avoid claims against your business. Typical violations which lead to a bond claim are:
- Charging fees the client did not agree to
- Not transferring collected fees as per the contract
- Using unlawful methods for debt collection
New Jersey Collection Agency Bond Renewal
Collection agency bonds in New Jersey need to be renewed annually in order to remain in force. The process of renewing your bond is quite simple, but it’s important to do it on time so you don’t get your license revoked. The Division of Revenue does not offer an expedited service for these type of bonds.
Lance Surety Bonds’ sends out renewal reminders to all of its clients, because we are dedicated to helping you keep your bonding obligations.
Remember that operating a debt collection business without a valid bond is illegal. Furthermore, the Division of Revenue allows anyone to perform a collection agency bond search in writing. Therefore, not having a bond can also hurt your business, as people are less willing to work with an agency which does not have the proper licensure in place.