North Dakota Collection Agency Bonds Explained
Launching a collection agency in North Dakota, as in most other states, means that you have to obtain a state license that allows your legal operations. One of the requirements you have to meet to obtain is to post a collection agency bond.
The purpose of the bond is to protect the interests of your clients and the state. It also guarantees you will follow state laws in the activities of your collection agency.
The required bond works as a three-party contract, with the principal being your business. The North Dakota Department of Financial Institutions is the obligee to which you have to provide it, and the surety is the bond provider.
Questions about Collection Agency Bonds in North Dakota
When do I have to obtain this bond?
Any entity that wants to get a North Dakota collection agency license has to obtain a surety bond. The licensing authority in the state is the Department of Financial Institutions, but the Nationwide Multistate Licensing System and Registry (NMLS) handles the actual procedure.
The surety bond that you post as part of the licensing, ensures you will follow the North Dakota Statutes, Title 3, Chapter 5, and other applicable laws.
How much does the bonding cost?
The bond amount required for a North Dakota collection agency licensing is $20,000 until August 1st, 2020. After that date, applicants will have to provide a $50,000 bond.
However, you have to cover only a bond premium, which is a small percentage of that amount. If your finances are in good shape, the rates can be between 0.75% to 5%.
In order to formulate your exact surety bond cost, your surety has to take a close look at your personal credit score, business finances, and any fixed and liquid assets that you demonstrate. In this way, it can assess the level of risk that your bond application poses. The stronger your finances are, the lower your bond premium is likely to be.
|North Dakota 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|
|North Dakota collection agency bond (until August 1st, 2020)||$20,000||$150-$300||$200-$500||$500-$1,000||$1,000-$2,000|
|North Dakota collection agency bond (after August 1st, 2020)||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
Can I get bonded with less-than-stellar credit?
It is possible to get bonded even if your finances are problematic.. You can use our Bad Credit Surety Bonds program, which is designed for applicants with low credit scores, tax liens, bankruptcies, and civil judgments.
Since the risk in the bonding is increased, you can expect bonding rates in the range of 5%-10%. As we foster close partnerships with a long list of A-rated, T-listed surety companies, we are still able to find a top bonding option for your particular case.
How do I get bonded?
The process for getting a North Dakota collection agency bond is as follows:
You will receive from a free, no-obligation quote
Once you review it, if you are happy with it, you can buy the bond online
We will provide you with a digital and hard copy of your bond
Interested in learning more about the way in which bonding functions? Don't miss our in-depth guide on the How to Get Bonded page.
If you have questions or need assistance with your application, Lance Surety Bonds' experts are here to help. You can reach us at (877) 514-5146.
What happens if a bond claim is filed against me?
The goal of the bonding that you get as a North Dakota collection agency is to provide a safety net for your customers. It protects them against potential fraud, misrepresentation, and other illegal activities you may engage in. If a party suffers damages due to such actions on your side, they can file a claim against your bond.
The maximum compensation that can be sought is up to the bond amount you have provided. If the case is proven, you are liable to pay these costs. At first, your surety may make the payments to ensure fast reimbursement. However, you are ultimately liable for all the costs. Thus, it is best to avoid claims, as they are harmful to your finances and business reputation.