May 30, 2018

What is a Collection Agency Bond?

In this article, we will explain what a collection agency bond is and how it affects customers.

Collection Agency Bond & Surety Bond

A collection agency bond is a type of surety bond, which is a legally-binding contract that ensures obligations are met between a principal, obligee, and surety ( The principal is whoever needs the bond, the obligee requires the bond, and the surety is the insurance company guaranteeing that the principal can fulfill the bond’s obligations.

The collection agency bond promises that the collection agency will follow the rules and regulations of its professional license. In many states, collection agencies is required to get a surety bond in order to apply for a business license. The bond also promises that the collection agency will indemnify the surety company if they pay out on a bond claim (

How to Get a Bond

Getting a collection agency bond is dependent on a variety of factors, including your credit score and which state you work in. Regarding credit scores, the surety company needs to know how likely you are to pay them back in case they have to pay out on a bond claim. The price of a bond can depend on which state the collection agency is licensed to work in. (

What is a Bond Claim?

If a collection agency hasn’t fulfilled the duties of their business license, someone can make a bond claim complaint against them. Claims can only be made against a collection agency’s bond during the time the bond is active ( Usually people make bond claims for any reason including:

  • Fraud
  • Theft
  • Discrimination
  • Manipulating customers (overcharging them, misusing customer’s money, or manipulating fees for benefit)

When a Claim is Filed

When a claim is filed against a collection agency’s bond, the surety company will investigate the claim and determine if it’s valid or invalid. If the claim is determined to be invalid no further action will be taken with the investigation, but the collection agency might be liable for any costs the surety company incurred during the investigation process. If the surety company finds the claim to be valid, they will ask the collection agency to settle the claim which involves compensating the claimant for any financial loss or damages that incurred. (

For more information on the collection agency bond requirements in Nebraska or other state, please check the list at the bottom of our page:



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