The Department of Insurance requires a North Carolina collection agency bond from every provider of regulated collection services in the state. A “collection agency” defined by N.C.G.S. §58-70-15, as any person that procures a listing of delinquent debtors from any creditor and that sells the listing or otherwise receives any fee or benefit from collections made on the listing, any person that attempts to or does transfer or sell to any person not holding a collection agency license any system or series of letters or forms for use in the collection of delinquent accounts, an in‑house collection agency, whereby a person, firm, corporation, or association sets up a collection service for his or its own business and the agency has a name other than that of the business, and/or a “debt buyer”, meaning a person or entity that purchases delinquent or charged‑off consumer loans or consumer credit accounts, or other delinquent consumer debt for collection purposes, whether it collects the debt itself or hires a third party for collection or an attorney‑at‑law for litigation in order to collect such debt. As a condition of license approval, every applicant must file with the Commissioner a North Carolina collection agency bond in favor of the State of North Carolina that is executed by a surety company licensed to transact surety business in this State. The bond must remain in force during the licensing period, be continuous in form, and remain in effect until all moneys collected by the agency have been accounted for. The wording of the obligation must expressly provide that the North Carolina collection agency bond is for the benefit of any person, firm or corporation for whom the collection agency engages in the collection of accounts. The surety must be written in the amount of ten thousand dollars ($10,000) for an license permit. The amount of the bond for license renewals must be no less than ten thousand dollars ($10,000), nor more than seventy‑five thousand dollars ($75,000), following the surety bond calculation formula in N.C.G.S. §58-70-20(c). Upon renewal, to determine the North Carolina collection agency bond penal sum, you calculate the total collections paid directly to the collection agency less commissions earned by the collection agency on those collections for the calendar year ending immediately prior to the date of application, multiplied by one‑sixth. Foreign (non-North Carolina) applicants must follow a separate set of procedures and provide a different obligation than in-state agencies. Non-residents must provide a North Carolina collection agency bond in the amount of ten thousand dollars ($10,000) on the “foreign applicant surety bond form”, which in addition to statutory compliance also states that the surety bond is for the purpose of reimbursing the Department for expenses incurred in visiting and examining a nonresident collection agency in connection with a federal bankruptcy or state receivership proceeding in which the collection agency is the subject. On February 25th, Deputy Commissioner Teresa Knowles emitted a regulatory advisory notifying all collections professionals that the Department would be implementing new bond forms AND requiring dual bonds for license holders. One of the new North Carolina collection agency bond forms is onerous as it includes no cancellation provision and includes a provision guaranteeing payment by surety of substantiated demands within thirty days. Lastly, at the beginning of May, 2013 the Department will activate the new automated license renewal system for “NIBE”, or non-insurance business entities, through which all licensees will be required to process renewals and the North Carolina collection agency bond and its riders or endorsements.
North Carolina surety bond leader, Surety One, Inc. is a surety bond specialist in the insurance services sector. We offer collection agency bonds to all applicants regardless of credit and financial condition. We also offer fidelity bond coverages to insure employee dishonesty risks. Visit us at SuretyOne.com, call or (800) 373-2804, or email Underwriting@SuretyOne.com for a North Carolina collection agency bond application or bonding support in any state.
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