Texas Third Party Debt Collector Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Texas Third Party Debt Collector Bonds
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $10,000
- Who Needs it: All third party debt collectors operating in Texas
- Purpose: To ensure the public will receive compensation for any damages should the debt collector fail to comply with licensing law
- Who Regulates Third Party Debt Collectors In Texas: The Texas Secretary of State
Background
Texas statute 392.101 requires all third party debt collectors operating in the state to file a $10,000 surety bond with the Secretary of State. The Texas legislature enacted the bonding requirement to ensure that debt collectors engage in ethical business practices. There is no statewide licensing requirement for third party debt collectors in Texas. However, debt collectors may need to obtain a local license or tax certification and should check with their local municipal authority prior to conducting business.
What is the Purpose of the Texas Third Party Debt Collector Bond?
Texas requires third party debt collectors to purchase a surety bond as a prerequisite to conducting business operations. The bond ensures that the public will receive compensation for financial harm if the debt collector fails to comply with the regulations set forth in Texas statute 392.101. Specifically, the bond protects the public in the event the debt collector engages in any acts of fraud or fails to pay funds owed to creditors. In short, the bond is a type of insurance that protects the public if the third party debt collector acts unethically.
How Can an Insurance Agent Obtain a Texas Third Party Debt Collector Bond?
BondExchange makes obtaining a Texas Third Party Debt Collector 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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Is a Credit Check Required for the Texas Third Party Debt Collector Bond?
No, a credit check is not required for the Texas Third Party Debt Collector Bond. Because the bond is considered relatively low risk, the same low rate is offered to all debt collectors in Texas regardless of their credit history.
How Much Does the Texas Third Party Debt Collector Bond Cost?
The Texas Third Party Debt Collector Bond costs just $100 per year or $10 per month.
Who is Required to Purchase a Bond?
Texas statute 392.001 requires all business entities who engage in one or more of the following activities to purchase a surety bond:
- Gathers, reports, and disseminates information regarding the creditworthiness of another person
- Solicits debts for collection
- Makes contact with debtors for the purpose of debt collection
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
Do Texas Third Party Debt Collectors Need to Obtain a License?
There is no statewide licensing requirement for third party debt collectors in Texas. However, debt collectors may need to obtain a local business license or tax certification and should check with their local municipal authority prior to conducting business.
What Are the Insurance Requirements for Texas Third Party Debt Collectors?
Texas does not require third party debt collectors to obtain any form of liability insurance as a prerequisite to conducting business operations. Third party debt collectors must purchase and maintain a $10,000 surety bond.
What Can Texas Third Party Debt Collectors Do to Avoid Claims Against Their Bond?
To avoid claims against their bond, third party debt collectors in Texas must ensure that they comply with all provisions set forth in the bond form, including:
- Do not engage in any acts of fraud
- Pay all funds owed to creditors
What Other Insurance Products Can Agents Offer Third Party Debt Collectors in Texas?
Texas does not require third party debt collectors to obtain any form of liability insurance as a prerequisite to conducting business operations. However, most reputable businesses will seek to obtain this insurance anyway. 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 Texas Third Party Debt Collector Customers?
Texas conveniently provides a public database to search for active third party debt collectors 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
