New Mexico Collection Agency Bonds Explained
Similarly to most states, collection agencies in New Mexico need to undergo a licensing procedure. This entails providing a collection agency bond.
The purpose of the bonding is to ensure that you will act in accordance with the law in your operations as a licensed collection agency. It protects the interests of the state and your customers.
The surety bond represents a three-party contractual agreement. Your collection agency is the principal. The New Mexico Regulation and Licensing Department is the obligee that requires the bond, while the third entity is the surety, which is the bond provider.
Questions about Collection Agency Bonds in New Mexico
Who has to get this bond?
You have to obtain a New Mexico collection agency license, so that you can launch your legal operations in the state. To that end, you will have to provide a surety bond, which is one of the main requirements. It guarantees you will follow the law, including the New Mexico Collection Agency Regulatory Act and the Fair Debt Collection Agency Act. The bond amount is between $5,000 and $25,000 and depends on the total amount of proceeds within a year.
What is the New Mexico collection agency bond cost?
The surety bond cost that you have to pay depends on the bond amount that is required to provide as a New Mexico collection agency.
The bond amount is $5,000 unless the paid and due proceeds to your clients divided by six is less than $5,000
In case your company's assets don't exceed your current liabilities: If the proceeds divided by six are more than $5,000, the bond amount equals the respective amount after the division, but cannot be more than $25,000.
In case your company's assets exceed your current liabilities: If the proceeds divided by six are more than $5,000, the bond amount equals the respective amount after the division, even if it is more than $25,000.
Whatever the exact bond amount is, your bond premium is only a fraction of it. It is based on the strength of your finances. Your surety examines your personal credit score, business finances, as well as any liquidity or assets you may have. In this way, it measures the level of bonding risk involved. The stronger your overall profile is, the lower your bond cost will be.
|New Mexico Collection Agency Bond Cost Based on Credit Score|
|Surety bond name||Bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Paid and due proceeds to clients divided by six is less than $5,000||$5,000||$100||$100-$125||$125-$250||$250-$500|
Is bad credit bonding possible?
While it is more complicated to get bonded with bad credit, it is not impossible. Lance Surety Bonds' Bad Credit Surety Bonds program is suitable in case you have a low credit score, tax liens, bankruptcies, or civil judgments.
The bad credit bonding rates are in the range of 5%-10% to compensate for the increased bonding risk. As we work closely with the top A-rated, T-listed surety companies, we are able to shop around for you and offer you an excellent bonding option.
How do I apply for my bond?
To get a New Mexico collection agency bond, you can follow these steps:
You will get a free, no-obligation quote
You can then purchase the bond online if it meets your requirements
We will send you a digital and a hard copy of the bond
In case you want to learn more about the intricacies of the bonding process, you can consult our detailed How to Get Bonded page.
Lance Surety Bonds' specialists are here to help. You can reach us at (877) 514-5146 for help with your queries or application.
How are bond claims handled for collection agencies?
You can receive a claim against your surety bond if you fail to follow your obligations under New Mexico laws, such as engaging in fraud and misrepresentation that leads to damages for your clients. A harmed party can seek compensation up to the bond amount you have posted.
In cases when the claim is proven legitimate, the claimant has to receive the reimbursement. The surety that bonded you may cover these costs initially. However, the bond indemnity language sets you as being fully liable. Thus, you have to repay the surety in due time. Claims can be a serious financial threat, so it is best to avoid them as much as possible.