Nevada Debt Management Services Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Nevada Debt Management Services Bonds
At a Glance:
- Lowest Cost: $500 per year or $50 per month based on the applicant’s credit
- Bond Amount: Minimum of $50,000 (more on this later)
- Who Needs it: All debt management services providers operating in Nevada
- Purpose: To ensure the public will receive compensation for any damages should the debt manager violate registration law
- Who Regulates Debt Management Services Providers in Nevada: The Nevada Department of Business and Industry
Background
Nevada statute 67A.300 requires all debt management services providers operating in the state to register with the Department of Business and Industry. The Nevada legislature enacted the registration laws and regulations to ensure that debt managers engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, debt managers must purchase and maintain a surety bond to be eligible for registration.
What is the Purpose of the Nevada Debt Management Services Bond?
Nevada requires debt management services providers to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the debt manager fails to comply with the regulations set forth in Nevada revised statutes 676A. Specifically, the bond protects the public in the event the debt manager engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the debt manager breaks registration laws.
How Can an Insurance Agent Obtain a Nevada Debt Management Services Provider Bond?
BondExchange makes obtaining a Nevada Debt Management Services Provider Bond easy. Simply login to your account and use our keyword search to find the “debt” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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How is the Bond Amount Determined?
Nevada statute 676A.390 dictates that the limit on the Debt Management Services bond must be a minimum of $50,000. The Department of Business and Industry may increase the required bond amount to reflect rises in inflation, basing their determination off of reports published by the Department of Labor or similar regulatory agencies.
Is a Credit Check Required for the Nevada Debt Management Services Provider Bond?
Surety companies will run a credit check on the owners of the debt management services company to determine eligibility and pricing for the Nevada Debt Management Services bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Nevada Debt Management Services Bond Cost?
The Nevada Debt Management Services Bond can cost anywhere between 1% to 5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $50,000 bond requirement.
$50,000 Debt Management Services Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $500 | $50 |
| 680 – 799 | $750 | $75 |
| 650 – 679 | $1,000 | $100 |
| 600 – 649 | $2,000 | $200 |
| 450 – 599 | $2,500 | $250 |
How Does Nevada Define “Debt Management Services Provider?”
Nevada statute 676A-140 defines a debt management services provider as any business entity who acts as an intermediary between a debtor and creditor for the purpose of obtaining concessions for the benefit of the debtor. Common services provided include credit counseling, development and implementation of debt management plans, and debt settlement services.
Exemptions to this definition include:
- Licensed attorneys
- Accountants
- Financial planners
How do Debt Management Services Providers Apply for a Registration in Nevada?
Debt managers in Nevada must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – The Nevada Debt Management Services Registration expires annually and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Debt managers must purchase and maintain a surety bond with a minimum limit of $50,000
Step 2 – Purchase Insurance
Applicants for the Debt Management Services Registration must purchase insurance with a minimum limit of $250,000, with a deductible not exceeding $5,000. Debt managers must submit proof of insurance with their registration application.
Step 3 – Complete the Application
All Nevada Debt Management Services Registration applications should be mailed to the following address:
State of Nevada
Financial Institutions Division
Department of Business and Industry
ATTN: Application Processing
1830 E. College Pkwy, STE 100
Carson City, NV 89706
Debt managers should complete the application in its entirety, and submit the following items:
-
- Proof of at least $250,000 of insurance coverage
- Personal history and fingerprints of all company owners/officers authorized to initiate transactions to the company’s trust account
- Nevada state business license
- Certificate of Accreditation from an approved provider
- Certificates of Certification for all credit counselors and debt specialists from an approved provider
- List of all credit counselors and debt specialists and the date of hire
- Disclosure of all company affiliates
- Organizational chart detailing the company’s ownership structure
- Copy of the company’s municipal business license
- Company financial statements
- Detailed descriptions of the three educational programs most commonly used with Nevada consumers
- Detailed description of the company’s financial analysis and initial plan to evaluate Nevada consumers
- Copies of all agreements and forms to be used with Nevada consumers
- Schedule of fees
Debt managers must pay a $2,000 application fee and a $1,000 registration fee when submitting their application.
How Do Nevada Debt Management Services Providers Renew Their Registration?
Debt managers should mail their completed renewal application, including a $1,500 renewal fee, to the following address:
State of Nevada
Financial Institutions Division
Department of Business and Industry
ATTN: Application Processing
1830 E. College Pkwy, STE 100
Carson City, NV 89706
The Nevada Debt Management Services Registration expires annually and must be renewed before the expiration date.
What Are the Insurance Requirements for the Nevada Debt Management Services Registration?
Nevada requires debt managers to purchase liability insurance with a minimum limit of $250,000, including a maximum deductible of $5,000, as a prerequisite to obtaining a registration. Debt managers must purchase and maintain a surety bond with a minimum limit of $50,000.
How Do Nevada Debt Management Services Providers File Their Bond?
Debt managers should mail the completed bond form, including the power of attorney, to the following address:
State of Nevada
Financial Institutions Division
Department of Business and Industry
ATTN: Application Processing
1830 E. College Pkwy, STE 100
Carson City, NV 89706
The debt management services surety bond requires signatures from both the surety company that issues the bond and a representative from the debt management company. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Nevada Debt Management Services Providers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt managers in Nevada must follow all registration regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Debt Managers in Nevada?
Nevada requires debt managers to purchase $250,000 worth of liability insurance as a prerequisite to obtaining a business registration. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Nevada Debt Management Services Provider Customers?
Nevada conveniently provides a public database to search for active debt managers in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
