Third Party Debt Collector Bond
Texas requires anyone who intends to serve as a third-party debt collector (someone besides an attorney who collects a debt on behalf of another party), to obtain a specific type of surety bond first: a third party debt collector bond.
What is a Third Party Debt Collector Bond?
Surety bonds like this one protect one party from illegal or unethical behavior committed by another party. In this case, if someone acting as a third party debt collector fails to follow applicable laws and codes of conduct relevant to debt collection, the bond provides a way for anyone hurt by the debt collector's misbehavior to seek out justice and financial restitution. Texas requires these bonds as a way to hold debt collectors accountable and preserve the integrity of the debt collection industry as a whole.
How does a Third Party Debt Collector Bond work?
When a third party debt collector fails to carry out their duties as required - by trying to illegally collect a debt, for example - and those actions lead to financial losses, someone may file a claim against the bond seeking a settlement equal to those losses. As long as their claim is true and accurate, the company that issues the bond guarantees it will pay the claim. When they do pay, however, the bonded party (the debt collector) must pay the company back the full amount. Third party debt collector bonds are a way to guarantee that people get payment and guarantee the party responsible is held accountable.
Who should get a Third Party Debt Collector Surety Bond?
Anyone in Texas who expects to collect a debt on behalf of a third party. If you're unsure whether this bond requirement applies to you, contact Viking Bond Service. Our bond experts have the information, answers, and assistance you're looking for.
Who are the parties involved in a Third Party Debt Collector Bond?
Like all surety bond agreements, a third party debt collector bond involves three equal parties:
- The Principal - The third party debt collector. The principal must pay to get bonded and also pay to settle claims against the surety bond.
- The Obligee - The party in a position to be negatively affected by the debt collector. The obligee has the right to file claims against the bond seeking damages, and they're guaranteed payment as long as the claim holds up under investigation.
- The Surety - The company that issues the bond to the principal and pays claims to the obligee. The surety is only an intermediary - anything they pay to settle claims the principal must pay back with interest and fees included.
How much does a Third Party Debt Collector Bond cost?
Texas law requires a bond worth $10,000, meaning the surety will pay up to that amount to settle claims. The actual cost is only a small percentage of the bond amount. The exact cost depends largely on the applicant's credit history. Make sure you get a fair and competitive rate no matter what your credit is like by working with the team at Viking Bond Service.
How are claims handled for a Third Party Debt Collector Surety Bond?
The surety guarantees payment for valid claims, but they never assume a claim has merit. They always investigate first. Investigations may involve lawyers or accountants when there's complicated financial malfeasance involved. After confirming everything, the surety settles the claim in full (up to the $10,000 limit). The final step is for the principal (the debt collector) to pay the surety back.
How to apply for a Third Party Debt Collector Bond?
At Viking Bond Service, you can get a quote back within 24 hours in most cases. Simply complete a standard bond application, which only takes a few minutes and asks for basic information about your background and business history. In some instances, underwriters will ask for additional documentation. You will then receive a quote for the surety bond cost (known as the premium), which you pay to activate the bond.
Viking Bond Service - Get Bonded Today!
Bonds are important, but they shouldn't be an obstacle. That's our philosophy at Viking Bond Service - a nationwide surety agency that can issue the exact bond you need to satisfy Texas state law. Fill out our online application at any time. Or contact our team first - complete the contact form on this page, or call us at 1-888-278-7389.
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