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 your West Virginia collection agency bond needs.
What Are They?
West Virginia collection agency bonds are a type of license and permit surety bond. This is because they’re required for obtaining a Business Registration Certificate, which serves as a business license for collection agencies operating in West Virginia. They serve these important purposes:
- They guarantee that West Virginia collection agencies operate in compliance with applicable state laws, namely Chapter 7, article 16 of West Virginia’s Code.
- They ensure that funds will be available to pay claims for damages filed by collection agency clients who experience a financial loss because of the unlawful collection practices of a third-party collection agency licensed in West Virginia.
A West Virginia collection agency bond entitles the state or any member of the public experiencing a financial loss because of a collection agency’s noncompliance with state laws governing the debt collection industry to file a claim against the collection agency’s bond.
Who Needs Them?
Any third-party collection agency applying for registration with the West Virginia State Tax Division is subject to this bonding requirement. The required $5,000 bond amount, also known as the bond’s “penal sum,” is the maximum aggregate amount that will be paid out on all claims.
Collection agencies with multiple offices in West Virginia must purchase a separate $5,000 West Virginia collection agency bond for each branch.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The surety bond agreement underlying a West Virginia collection agency bond is a legally binding contract between three parties, each of which has its own role and responsibilities:
- The West Virginia State Tax Division, the party requiring the bond, is the “obligee”.
- The collection agency purchasing the bond is the “principal”.
- The bonding company underwriting and authorizing the bond is the “surety”.
The terms of a West Virginia collection agency bond make the principal legally responsible for paying valid claims for losses caused by infractions such as falsifying records of collections, commingling client funds, or failing to remit collected funds to the client in a timely manner. Typically, the surety will pay the claimant directly and then be reimbursed by the principal for the resulting debt.
What Do They Cost?
The annual premium cost for a West Virginia collection agency bond is a small percentage of the bond’s $5,000 penal sum. The surety determines what the premium rate will be on a case-by-case basis taking into account the principal’s personal credit score, personal and business financials, and collection industry experience. A highly qualified principal poses the least risk to the surety and will typically be assigned a standard market premium rate in the range of 1-2%.
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Our surety bond professionals will get you the West Virginia collection agency bond you need at a competitive rate.