Maine Debt Management Service Provider Bond: A Comprehensive Guide
June 14, 2021
This guide provides information for insurance agents to help their customers obtain Maine Debt Management Service Provider Bonds
At a Glance:
- Average Cost: Between $750 to $2,500 per year based on the applicant’s credit
- Bond Amount: $50,000
- Who Needs it: All debt management service providers operating in Maine
- Purpose: To ensure the public will receive compensation for any damages should the debt management service provider fail to comply with registration law
- Who Regulates Debt Management Service Providers in Maine: The Maine Department of Professional and Financial Regulation
Background
Maine statute 6173 requires all debt management service providers operating in the state to register with the Department of Professional and Financial Regulation. The Maine legislature enacted the registration laws and regulations to ensure that debt management service providers engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, debt management service providers must purchase and maintain a $50,000 surety bond to be eligible for registration.
What is the Purpose of the Maine Debt Management Service Provider Bond?
Maine requires debt management service providers to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the debt management service provider fails to comply with the regulations set forth in Maine statutes 6171-6183. Specifically, the bond protects the public in the event the debt management service provider engages in any acts of fraud or mishandles consumer funds. In short, the bond is a type of insurance that protects the public if the debt management service provider breaks registration laws.
How Can an Insurance Agent Obtain a Maine Debt Mangement Service Provider Surety Bond?
BondExchange makes obtaining a Maine Debt Management Service Provider 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 Management Service Provider Bond?
Surety companies will run a credit check on the owner’s of the debt management services company to determine eligibility and pricing for the Maine Debt Management Services Provider 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 Management Services Provider Bond Cost?
The Maine Debt Management Services Provider bond can cost anywhere between $750 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.
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $750 |
| 650 – 799 | $1,000 |
| 600 – 649 | $2,000 |
| 450 – 599 | $2,500 |
*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 Management Services Provider?”
Maine statute 6172 defines a debt management service provider as any business entity who provides one or more of the following services:
- Receives money from consumers to distribute this money to creditors of the consumer
- Arranges or assists consumers in setting up payments to creditors
- Exercises control over the arrangement of payments to a consumer’s creditors
- Acts as an intermediary between consumers and their creditors
How do Debt Management Service Providers Apply for Registration in Maine?
Debt management service providers in Maine must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – The Maine Debt Management Service Provider Registration expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Debt management services providers must purchase and maintain a $50,000 surety bond
Step 2 – Appoint a Designated Agent
Applicants are required to appoint a designated agent who will receive any legal summons or notices (service of process) on behalf of the company
Step 3 – Complete the Application
All regulatory Maine Debt Management Service Provider registration applications should be mailed to the following address:
Bureau of Consumer Credit Protection
35 State House Station
Augusta, ME 04333-0035
Debt management service providers must complete the application in its entirety, and submit the following items:
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- Evidence of certification for all debt counselors employed by the company
- Sample of the company’s consumer education program
- Copy of the company’s fee schedule
- Company financial statements
- Sample written contract
- Name and address of each referral company (if applicable)
- Copy of a sample periodic report given to consumers
Debt management service providers must pay a $500 fee when submitting their application. Additionally, debt management service providers must submit a separate branch application for each additional office location.
How Do Maine Debt Management Service Providers Renew Their Registration?
Debt management service providers should mail their completed renewal application to the following address:
Bureau of Consumer Credit Protection
35 State House Station
Augusta, ME 04333-0035
The Maine Debt Management Service Provider Registration expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Maine Debt Management Service Provider Registration?
The State of Maine does not require debt management service providers to obtain any form of liability insurance as a prerequisite to obtaining a business registration. Debt management services providers must purchase and maintain a $50,000 surety bond.
How Do Maine Debt Management Service Providers File Their Bond?
Maine debt management service providers should mail the completed bond form, including the power of attorney, to the following address:
Bureau of Consumer Credit Protection
35 State House Station
Augusta, ME 04333-0035
The Maine debt management service provider 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 location of entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Date the bond is signed and goes into effect
What Can Maine Debt Management Service Providers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt management service providers in Maine must follow all registration regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not mishandle consumer funds
- Do not purchase any debt or obligation of a consumer
- Do not lend money or provide credit to consumers
- Do not obtain a mortgage or other property security interest of a consumer
- Do not act as a debt collector
- Do not structure agreements that would result in any negative amortization of any of the consumer’s obligations to creditors
What Other Insurance Products Can Agents Offer Debt Management Service Providers in Maine?
Maine does not require debt management service providers to purchase any form of liability insurance as a prerequisite to obtaining a registration. 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 Management Service Provider Customers?
Maine conveniently provides a public database to search for active debt management service providers 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.
