Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your New Jersey collection agency bond needs.
What Are They?
Collection agencies are in the business of collecting or receiving payment of any outstanding account, bill, or other indebtedness on behalf of the creditor. The collection agency keeps a portion of the money collected and turns the rest over to the creditor. There are strict laws governing the operation of a collection agency, and the state of New Jersey requires a collection agency bond as a condition for doing business within the state.
A New Jersey collection agency bond guarantees that the agency turns over the sums collected on debts, minus the agency’s fee, to the creditors for whom the funds were collected. It also ensures the collection agency complies with all applicable laws governing collection agencies. A collection agency bond provides recourse for anyone that has suffered a financial loss as a result of the bonded agency’s unlawful or unethical actions.
Who Needs Them?
The New Jersey Department of the Treasury, Division of Revenue and Enterprise Services (DOR) requires every collection agency operating in New Jersey, whether as a sole proprietorship or corporation, to purchase a $5,000 collection agency bond. This is a bond with a one-year term and is required to be renewed each year in business.
Collection Agency Bond applications are reviewed by DOR only in January, April, July, and October, and any application received after the first day of each of those months may not be reviewed that month.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A New Jersey collection agency surety bond functions as a source of funds for paying valid claims against the bond. The surety bond agreement is a legally binding contract bringing together three parties with very different concerns and responsibilities:
- DOR is the “obligee”—the party requiring the bond
- The collection agency owner is the “principal”—the party required to purchase the bond
- The surety company providing the bond is the “surety”
Violating the terms of the surety bond agreement exposes the principal to the risk of a claim being filed against the bond by DOR or anyone who has suffered a financial loss as a result of that infraction.
The agreement makes the principal solely responsible for paying claims, but in practice, the surety will review the claim and issue payment for a valid claim directly to the claimant. That payment is made from the principal’s bond line, and the principal must then repay that amount to the surety.
What Do They Cost?
What you will pay as the annual premium for a New Jersey collection agency bond depends primarily on your personal credit score. If your credit is excellent, you’ll pay as little as $100 for the $5,000 bond. With poor credit, the annual premium could be as high as $300 to $500.
Get a Quote
Request a convenient online quote today, or call us to discuss the collection agency bond you will need in order to do business in New Jersey.