A Comprehensive Guide to Indiana Collection Agency Bond
A crucial requirement for collection agencies seeking to operate in Indiana is obtaining the Indiana Collection Agency Bond. This article provides an in-depth look at this obligation.
What is an Indiana Collection Agency Bond?
Indiana Collection Agency Bond is a type of surety bond mandated by the Indiana Secretary of State for all collection agencies aiming to get a license in the state. The bond amount is set at $5,000 per licensed branch location. The bond is designed to guarantee that collection agencies will comply with all rules and regulations stipulated in Indiana Code 25, Article 11. If a collection agency fails to adhere to these laws, the surety will cover any damages up to the full bond amount.
This bond is written and maintained within NMLS as an electronic surety bond (ESB), so there is no paper version of it. The main location bond will need to be increased by $5,000 for each additional branch location. Individual branch bonds are not required.
Why is this Bond Necessary?
This bond serves as a financial guarantee that collection agencies will conduct their business ethically and in accordance with state laws. The bond is a form of insurance that protects the public if the collection agency violates licensing laws. Specifically, it safeguards consumers if the collection agency does not handle funds received from debtors correctly or fails to forward funds to creditors.
Renewing Your Indiana Collection Agency Bond
The Indiana Collection Agency Bond is continuous, meaning it remains in effect until cancelled. However, the state requires surety companies to provide at least 30 days’ notice before cancelling a bond. To renew your bond, you’ll need to review and update your information and pay for your renewal. You’ll receive reminders to renew your bond starting 90 days prior to your renewal date. Cornerstone ensures this is completed without hassle.
How to Avoid Claims Against Your Indiana Collection Agency Bond
The best way to avoid claims against your bond is to ensure that you follow all license regulations in the state. Specifically, collection agencies must ensure they handle all funds received from debtors correctly. If a collection agency fails to do this, the surety will cover any damages up to the full bond amount, and the principal (the collection agency) will be liable for reimbursing the surety.
The Indiana Collection Agency Bond is a critical requirement for collection agencies seeking to operate in Indiana. It serves as a financial guarantee, ensuring that collection agencies will conduct their business ethically and in accordance with state laws. By obtaining this bond, collection agencies can protect their business, safeguard their reputation, and ensure they remain compliant with state regulations. At Cornerstone Surety Bonds, we can expedite the process of writing your bonds, so you can focus on what you do best – growing your agency.