Montana Debt Management License Bond: A Comprehensive Guide
July 9, 2021
This guide provides information for insurance agents to help their customers obtain Montana Debt Management License Bonds
At a Glance:
- Average Cost: Between $500 to $2,500 per year based on the applicant’s credit
- Bond Amount: $50,000
- Who Needs it: All debt management companies operating in Montana
- Purpose: To ensure the public will receive compensation for any damages should the debt management company fail to comply with licensing law
- Who Regulates Debt Management Companies in Montana: The Montana Office of Consumer Protection
Background
Montana statute 30-14-2004 requires all debt management companies operating in the state to obtain a license with the Office of Consumer Protection. The Montana legislature enacted the licensing laws and regulations to ensure that debt managers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, debt management companies must purchase and maintain a $50,000 surety bond to be eligible for licensure.
What is the Purpose of the Montana Debt Management License Bond?
Montana requires debt management companies to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the debt manager fails to comply with the regulations set forth in the Montana Consumer Debt Management Services Act. Specifically, the bond protects the public in the event the debt management company engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the debt management company breaks licensing laws.
How Can an Insurance Agent Obtain a Montana Debt Management License Bond?
BondExchange makes obtaining a Montana Debt Management Bond easy. Simply login to your account and use our keyword search to find the “debt” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
Is a Credit Check Required for the Montana Debt Management License Bond?
Surety companies will run a credit check on the owners of the debt management company to determine eligibility and pricing for the Montana Debt Management License bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Montana Debt Management License Bond Cost?
The Montana Debt Management License Bond can cost anywhere between $500 to $2,500 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $50,000 bond requirement.
$50,000 Debt Management License Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $500 |
| 680 – 799 | $750 |
| 650 – 679 | $1,000 |
| 600 – 649 | $2,000 |
| 450 – 599 | $2,500 |
How Does Montana Define “Debt Management Company?”
Montana statute 30-14-2003 defines a debt management company as any business entity who receives funds from consumers and distributes these funds to creditors of the consumer in full or partial payment of the consumer’s debt obligations.
How do Debt Management Companies Apply For a License in Montana?
Debt management companies in Montana must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.
License Period – The Montana Debt Management License expires on February 1 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Debt management companies must purchase and maintain a $50,000 surety bond
Step 2 – Purchase Insurance
Montana requires debt management companies to purchase liability or fidelity insurance coverage (limits not specified) and to submit proof of insurance with their license application
Step 3 – Complete the Application
All Montana Debt Management Company License Applications should be mailed to the following address:
Office of Consumer Protection
P.O. Box 200151
Helena, MT 59620-0151
Debt managers must complete the application in its entirety, and submit the following items:
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- A Certificate of Compliance for all individuals who complete any portion of the application
- Company formation documents
- Certificate of Good Standing for the state the company is chartered in (Montana’s Certificate of Good Standing can be found here)
- Names, addresses, and telephone numbers of all company owners/officers
- Detailed description of the company’s ownership structure
- List of all states the company is licensed to perform debt management services in
- Business credit report no older than three months
- Audited company financial statements prepared by a CPA
- Proof of accreditation
- Copy of company’s plan to ensure all company debt management counselors are certified
- List of all debt management counselors, including phone numbers, with a description on how each of them obtained certification
- Name and address of each financial institution the company maintains operating and/or trust accounts with
- Sample debt management agreement plan used with Montana consumers
- List of all initial and recurring fees for services or materials
- Notarized statement by the highest-ranking company officer stating that the majority of company owners, directors, and officers do not have a conflict of interest regarding the company’s mission
Debt management companies must pay a $1,000 fee when submitting their license application.
How Do Montana Debt Management Companies Renew Their License?
Debt managers should mail their completed renewal application, including the $1,000 renewal fee, to the following address:
Office of Consumer Protection
P.O. Box 200151
Helena, MT 59620-0151
The Montana Debt Management License expires on February 1 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for the Montana Debt Management Company License?
Montana requires debt management companies to purchase liability or fidelity insurance coverage as a prerequisite to obtaining a business license. Debt management companies must purchase and maintain a $50,000 surety bond.
How Do Montana Debt Management Companies File Their Bond?
Debt management companies should mail the completed bond form, including the power of attorney, to the following address:
Office of Consumer Protection
P.O. Box 200151
Helena, MT 59620-0151
The Debt Management License surety bond requires signatures from both the surety company that issues the bond and a representative from the debt management company. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Montana Debt Management Companies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt management companies in Montana must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Debt Management Companies in Montana?
Montana requires debt management companies to purchase liability or fidelity insurance as a prerequisite to obtaining a business license. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Montana Debt Management Company Customers?
Montana conveniently provides a public database to search for active debt management companies in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
