Collection agency bond cost
The amount of bond coverage needed for a collection agency in Michigan is based on the balance of all debts the principal (collection agency) collected in the previous year. Applicants entering their first year of business must post a surety bond in the amount of $5,000 since they have no previous collection balances.
The cost of this specific bond is typically credit based; however, collection agencies in their first year can purchase their bond for just $100 when they work with us. The amount an established collection agency will pay for their surety bond is subject to underwriting.
Why this bond
According to Section 339.901 of the State of Michigan Legislature, a collection agency includes a person representing himself or herself as a collection agent or a person acting on behalf of a collection agency.
Michigan collection agency surety bonds hold the principal (collection agency) accountable for the reporting of accurate records of the accounts that he or she is collecting on. This specific bond also guarantees that collection agencies will not divert collected debt payments to unauthorized accounts or misuse any monies they have acquired for their clients. This bond also ensures that collection agencies will not engage in any activities associated with debt management companies or real estate brokers.
Collection agency bond details
Michigan collection agency surety bonds are continuous in nature. The surety company must provide the Department of Licensing and Regulatory Affairs with 30 days’ notice prior to cancellation.
Why this bond
Depending upon the structure of the collection agency, you will need to furnish the following documentation.
For in-state agencies:
- proof of being the agency owner/sole proprietor
- certificate of assumed name
- if the collection agency will be doing business under a name other than the owner’s, sole proprietors may obtain an assumed name certificate (known as a “D.B.A.”) from their local county clerk’s office
- certificate of co-partnership
- the certificate must include names, addresses and signatures of all partners
- the certificate may be obtained from your local county clerk’s office
- the partnership’s assumed name certificate (if applicable)
For corporations and limited liability companies:
- Michigan corporation identification number
- assumed name certificate, if applicable
Become a collection agency
According to Article 9, section 911 of the Occupational Code, Act 299 of 1980, all applicants must meet the following minimum criteria:
- have a high school diploma, G.E.D or demonstrate to the satisfaction of the department that the applicant possesses the equivalent of a high school education
- have had at least 6 months of full-time experience in the business of account collection
- have passed the examination approved by the department
- is at least 18 years of age
- is of good moral character, to be determined by the department
Each branch must furnish its own license for each separate physical location. All applicants must pass the aforementioned exam consisting of 50 multiple choice questions and proctored by PSI Exams. Additional information on the exam may be found on the PSI Exams website.
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