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Overview of West Virginia Collection Agency Bonds
Before collection agencies can get licensed to legally operate in West Virginia, they must procure a surety bond known as a collection agency bond. The bond acts as protection to the state and the clients of the agency, and represents an agreement between three sides:
- The collection agency (principal)
- The West Virginia State Tax Division (obligee)
- The surety bonds company (surety)
The principal pledges to adhere to applicable state laws and regulations, or face legal consequences. The role of the surety is to provide an extra layer of protection in case the principal triggers a claim but fails to pay it.
Collection agencies in West Virginia must comply with the terms of Chapter 47, Аrticle 16 of the Official Code of West Virginia in order to avoid claims against their bond.
West Virginia Collection Agency Bond Cost
The required total amount (also known as the penal sum) of this bond is $5,000, which refers to its maximum compensation but not its cost. If a valid claim if filed against your business, you may owe claimant(s) up to a total of $5,000.
The actual cost for collection agency is usually quite small. In fact, most people will be able to get bonded for just $175 paid every two years. This is because West Virginia collection agency bonds– unlike many other types of bonds– don’t require credit checks or submitting financial statements.
Handling and Avoiding Claims - Tips for West Virginia Collection Agencies
As mentioned in the beginning, the surety bond acts as protection to the state and clients of collection agencies. Collection agencies must handle collected funds in an honest and lawful manner if they want to stay out of claims. More specifically, agencies must be well-versed with Chapter 47, Article 16 of the Code of West Virginia, which outlines the terms and regulations they must adhere to.
It is illegal to operate without obtaining the proper registration with the state first, and you must get a license for each principal office and its branches. A different bond will be needed as well, which means you may need multiple bonds.
Provided you don’t commit any violations, you shouldn’t worry about claims. However, if you fail to adhere to all applicable regulations, a claim can be filed by “any person to whom the licensee fails to account and pay as set forth in such bond.”
When the claim is filed, a court will determine what amount is a reasonable compensation for you to provide.
Actions that are prohibited under the law include: operating without licensing all of your branches, failing to keep records of all collected sums (or falsifying such records), or failing to keep client’s funds in separate trust accounts in a bank.
At the end of each 30-day period, you must pay clients the sums you have collected on their behalf during that period.
Apply for Your West Virginia Collection Agency Bond Today!
You can apply quickly and easily with our simple one-page application. All you have to do is complete some information about your business, and we’ll be in touch with you shortly to help you through the next steps.
Under normal circumstances we have fast turnaround, so we can issue your bond within two business days. For any information or assistance, you can call us at (866)-450-3412.
You must renew your bond every two years in order to keep your license.
West Virginia Collection Agency License Application
Obtaining a collection agency license in West Virginia is not a complicated process. Just like every other business in the state, you must obtain a Business Registration Certificate. You can do so either online, at the Business for West Virginia website, or through filing a WV/BUS-APP with the Tax Commissioner.