Your Guide to Collection Agency Bonds

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What is a collection agency?

A collection agency is a business that collects debts and manages clients’ sensitive information (financial and personal). Lenders and creditors often use collection agencies to recover funds that are past due from consumers.

When a borrower fails to make a scheduled payment on time, their creditor may report the incident to the credit bureau. If the borrower defaults on their payment for three to six months, the creditor will turn over the debt to a collection agency.

What are collection agency bonds?

Surety bonds are often required for collection agencies due to the risks involved in the industry. Collection agency bonds (also called debt collector bonds) are part of the business licensing process. The bond guarantees that a collection agency will perform its job – including handling money properly – ethically and according to industry regulations.

Get Your Collection Agency Bond:

Quick Takeaways

  • Collection agency bonds are often required for the collection agency licensing process.
  • The bond ensures that a business performs its job ethically and according to industry regulations.
  • If a collection agent (or agency) misuses money, acts dishonestly, or commits theft or fraud, the injured party can file a claim against the bond.
  • Bond requirements can vary significantly by state but often range from $5,000 to $25,000.

How do collection agency bonds work?

Collection agency bonds are contracts between three parties:

  • Obligee: Government agency that requires the bond
  • Principal: Collection agency that buys the bond
  • Surety: Financial company that underwrites and issues the bond

If a collection agent (or agency) misuses money, acts dishonestly, or commits theft or fraud, the injured party can make a claim against the bond. When someone files a claim, the collection agency can choose to resolve the issue. If it doesn’t, the surety company may investigate to see if the claim is valid.

If valid, the collection agency may have another chance to resolve the issue. If they don’t, the surety may settle the claim for them. However, the agency will need to reimburse the surety for the expenses.

How much does a collection agency bond cost?

The cost of your collection agency bond will depend on the state in which you conduct business. If you do business in multiple states, you may need a separate bond for each one.

While not all states require this bond, many do. Your premium will also depend on your credit score (if you’re the owner). You could pay as little as 1-3% of the total bond amount if you have an excellent credit history. With poor credit, you could pay up to 10% of the bond amount.

Collection Agency Bonding Requirements

This license and permit bond is required in roughly have of the United States. To determine the bond amount you need, contact your state department overseeing the collection agency industry. For example, Colorado offers licensing information on the Colorado Attorney General website. These bonds can vary significantly by state but often range from $5,000 to $25,000.

How to Apply for Your Debt Collector Bond

ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply online or call us at (888) 435-4191 to speak with an agent. Most of our bonds are approved and processed immediately from our site.



Founders Ryan Swalve and Zach Mefferd formed the vision for when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”

Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.