Maine Debt Collector Bond: A Comprehensive Guide
June 3, 2021
This guide provides information for insurance agents to help their customers obtain Maine Debt Collector Bonds
At a Glance:
- Average Cost: Between 1.5% to 7.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Based off of the type of debt collection and the gross collections on behalf of Maine consumers
Bond Amount for New License Applicants:
| Type of Debt Collection | Bond Amount |
|---|---|
| Direct collections | $20,000 |
| Repossessions | $15,000 |
| Letter writing company | $5,000 |
Bond Amount for Renewal License Applicants (Direct Collections Only)
| Gross Collections Over Past Year (Monthly Average) | Bond Amount |
|---|---|
| $40,000 or greater | $50,000 |
| Between $30,000 to $40,000 | $45,000 |
| Between $20,000 to $30,000 | $35,000 |
| Between $10,000 to $20,000 | $25,000 |
| Under $10,000 | $15,000 |
Repossession agents and letter writing companies are not required to alter their bond amount when renewing their license
- Who Needs it: All debt collectors, repossession agents, and letter companies operating in Maine
- Purpose: To ensure the public will receive compensation for any damages should the debt collector fail to comply with licensing law
- Who Regulates Debt Collectors in Maine: The Maine Bureau of Consumer Credit Protection
Background
Maine statute 11031 requires all debt collectors operating in the state to obtain a license with the Bureau of Consumer Protection. The Maine legislature enacted the licensing laws and regulations to ensure that debt collectors engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, debt collectors must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Maine Debt Collector Bond?
Maine requires debt collectors 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 collector fails to comply with the licensing regulations set forth in Maine statutes 11001 – 11054. Specifically, the bond protects the public in the event the debt collector engages in any acts of fraud or engages in illegal debt collection practices. In short, the bond is a type of insurance that protects the public if the debt collector breaks licensing laws.
How Can an Insurance Agent Obtain a Maine Debt Collector Bond?
BondExchange makes obtaining a Maine Debt Collector 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 Maine Debt Collector Bond?
Surety companies will run a credit check on the owners of the debt collection company to determine eligibility and pricing for the Maine Debt Collector 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 Maine Debt Collector Bond Cost?
The Maine Debt Collector bond can cost anywhere between 1.5% to 7.5% of the bond amount 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 a $20,000 bond requirement
$20,000 Debt Collector Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $300 |
| 650 – 799 | $400 |
| 600 – 649 | $800 |
| 500 – 599 | $1,500 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Maine Define “Debt Collector?”
Maine statute 11002 defines a debt collector as any individual or business entity who collects debts, including physical property, owed to a third party.
How do Debt Collectors Apply for a License in Maine?
Debt collectors in Maine must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the application guidelines for details on the process.
License Period – The expiration date for the Maine Debt Collector License is based on the letter the applicant’s trade name begins with:
- July 31 of even-numbered years (2022, 2024, etc) for applicants whose trade name begins with letters A – M
- July 31 of odd-numbered years for applicants whose trade name begins letters N – Z
Step 1 – Meet the Net Worth Requirements
Applicants for the Maine Debt Collector License must have a company net worth (assets – liabilities) of at least $10,000. Applicants must submit either an audited or reviewed financial statement, prepared by a CPA, verifying their net worth when submitting their license application.
Step 2 – Purchase a Surety Bond
Debt collectors must purchase and maintain a surety bond (limits outlined above)
Step 3 – Hire a Qualifying Individual
Debt collectors must employ a qualifying individual with the necessary experience and competencies to run the day to day operations of the debt collection business. Debt collectors must submit proof of work experience for the qualifying individual with their license application.
Step 4 – Complete the Application
All regulatory Maine Debt Collection License applications must be mailed to the following address:
State of Maine
Bureau of Consumer Protection
35 State House Station
Augusta, ME 04333-0035
Debt collectors must complete the application in its entirety, and submit the following items:
-
- Audited or reviewed financial statements indicating a company net worth of at least $10,000
- Proof of experience for the qualifying individual
- Company formation documents
- Fingerprint cards for the top three company owners/officers
- Statement describing the nature of the proposed operations
- The following sample documents:
- Contract with client
- Listing sheet
- Debtor’s work card
- Debtor’s receipt
- Remittance sheet
- Creditor’s attorney authorization
- All collection form letters to be used in Maine
Debt collectors must pay a $600 license fee when submitting their application (the fee is $300 if there are fewer than 12 months between the date of application and the date of expiration).
How Do Maine Debt Collectors Renew Their License?
Debt collectors in Maine should mail their completed renewal application, including the $600 renewal fee, to the following address:
State of Maine
Bureau of Consumer Protection
35 State House Station
Augusta, ME 04333-0035
The expiration date for the Maine Debt Collector License is based on the letter the applicant’s trade name begins with:
- July 31 of even-numbered years (2022, 2024, etc) for applicants whose trade name begins with letters A – M
- July 31 of odd-numbered years for applicants whose trade name begins letters N – Z
What are the Insurance Requirements for Debt Collectors in Maine
Maine does not require debt collectors to obtain any form of liability insurance as a prerequisite to obtaining a business license. Debt collectors must purchase and maintain a surety bond (limits outlined above).
How Do Maine Debt Collectors File Their Bond?
Debt collectors should mail the completed bond form, including the power of attorney, to the following address:
State of Maine
Bureau of Consumer Protection
35 State House Station
Augusta, ME 04333-0035
The debt collector surety bond requires signatures from both the surety company that issues the bond and a representative from the debt collection 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 state of incorporation
- Bond amount
- Date the bond is signed and goes into effect
What Can Maine Debt Collectors Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt collectors in Maine 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 engage in any illegal debt collection practices
What Other Insurance Products Can Agents Offer Debt Collectors in Maine?
Maine does not require debt collectors to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable businesses will seek to obtain this insurance anyway. 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 Maine Debt Collector Customers?
Maine conveniently provides a public database to search for active debt collectors 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.
