License & Permit
Debt Management Bond
A debt management bond is a license bond many states require from companies that collect money from consumers and pay it to their creditors under a debt management plan.
- Required by
- State banking or financial regulators
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond promises the state regulator, and consumers, that the provider will follow the state's debt management law and properly handle consumer funds. The regulator or a consumer with a final judgment can collect from the bond. Claims usually involve consumer money that was not paid to creditors as promised.
Who needs it
- Debt management service providers
- Nonprofit credit counseling agencies that run debt management plans
- Companies licensed under a state Uniform Debt-Management Services Act
What the underwriter looks at
- Volume of consumer funds handled
- Financial condition and experience of the provider
- Personal credit of the owners
- Complaint and regulatory history
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
How much is the bond?
It varies by state. Rhode Island, for example, starts at $50,000 and lets the director raise or lower it based on the provider's finances, experience, and risk to consumers.
Is this the same as a debt settlement bond?
Not exactly. Debt management plans pay creditors on a set schedule, while debt settlement negotiates lower payoffs. Some states license both under one law, others separately.
Who can claim on the bond?
Usually the state regulator and consumers who win a final judgment against the provider.