Overview of Debt Adjuster Bond Requirements
Some of the states that currently require debt adjusters to post a surety bond when applying for a business license are Connecticut, Kentucky, Missouri, New Jersey, and Vermont. The bond amounts vary between $25,000 and $100,000 and are determined on a state level.
Why do debt adjusters need a bond?
This bond serves as a guarantee that licensed debt adjusters will comply with applicable state and federal laws, such as laws regarding debt collection. It is required to protect the public and the state.
If a debt adjuster misuses their position and commits any wrongful acts that harm people who make use of the adjuster's services, then an action can be brought against the bond to secure compensation.
Such an action is called a bond claim. When this happens, the surety company that backs the bond investigates the claim to determine whether the adjuster has indeed violated any laws and what amount of damages have been caused. If a claim is proven right, then the surety extends compensation to claimants to cover for damages. Compensation can be as much as the full amount of the bond.
If you want to know more about surety bonds and how they work, see our detailed ‘What is a surety bond' guide!!
For any questions about getting this type of bond, call our bond experts at 866.450.3412 anytime!
What Is The Cost of Getting a Debt Adjuster Bond?
The surety bond premium is the cost you need to pay to get bonded. It is equal to a percentage of the full bond amount. Sureties determine the bond premium on the basis of a number of different indicators of an applicant's financial status.
Factors that determine your bond premium
The primary factor that influences your bond cost is your personal credit score.
High credit scores are a signal of credibility and reliability and, typically, the higher an applicant's score, the lower their bond rate will be.
Applicants with very high credit scores can expect to get bonded at a rate between 0.75% and 1.5% of their bond amount. Those with good or average scores fall within a second category and are often bonded at rates between 1.5% and 5%. Finally, applicants who currently have a low credit score, can expect to be offered a rate of 5% and up to 15%.
Along with your credit score, your surety will likely also request to review some of the following:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
If you want to get an estimate of your bond cost, try our calculator below!
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What Can Cause a Bond Claim?
Claims are caused by a violation of the bond agreement's conditions. Your bond agreement will require you to comply with your state's debt adjuster law and regulations.
If you violate these conditions and thereby cause losses to any individual who you provide services to, that person may file a claim against your bond in order to secure compensation.
Your surety will then begin an investigation of the claim in order to determine whether you have actually committed a violation or not. If the claim is legitimate, the surety will need to extend payment in a sufficient amount to compensate the claimant, yet not higher than the full amount of the bond.
If the surety extends compensation, you will be liable to repay it in full, as part of the conditions of your bond agreement. The surest way to avoid having to deal with claims against your bond is to remain compliant with your bond agreement!
How Can I Get a Bond?
To get a bond, click on the banner below and complete the surety bond form. You'll then receive a free quote on your bond, along with further details on how to finalize your application.
If you want to know more about how to get a debt adjuster bond in a particular state, call us at 866.450.3412 anytime!