New York Senate Bill 7508 imposes surety bond requirements on the financial sector. More specifically, the bill mandates a $25,000 surety bond requirement for debt collectors. The bill defines a debt collector as any person who engages in a business of debt collecting consumer debts owed or due to another person. Essentially, a debt collector is a third party individual or entity who collects debts on behalf of a creditor. Creditors hire debt collectors to find individuals who are overdue on payments.
Why does a debt collector need a surety bond?
Debt collectors in the state of New York must be licensed. To attain and maintain a debt collector license, individuals have to purchase a surety bond. Surety bonds ensure protection for the consumer and the obligee (the entity requiring the bond). In this case, surety bonds procured by debt collectors support the creditor. According to the bill, “the bond shall be for the benefit of creditors who obtain a judgement… based on the failure of the consumer debt collector to remit money collected on account and owed to the creditor.” Additionally, should a debt collector violate the Fair Debt Collection Practices Act, the bond protects the creditor’s interests.
For example, should a debt collector get the money for a creditor and refuse to give that money to the creditor, a judicial process must take place. If a competent court deems a violation has occurred, a surety bond will make sure the creditor gets the opportunity to recoup financial losses.
How to become a debt collector in New York
An individual looking to become a licensed debt collector in the state of New York must complete the following steps. Applications can be submitted either online or in-person. Please note, before filing an application, an individual must obtain and maintain applicable business certificates. The certificates vary based on the individual’s business legal structure. Although the certificates are not required when submitting the application, the Debt Collection Agency of New York retains the right to solicit and inspect the documents at any time under Section 20-104 of the New York City Administrative Code.
- Download and print the basic license application form (includes sections for business information, contact mailing information, sole proprietors or individual general partners, background questions, and affirmation statements)
- Complete licensing and renewal supplement form
- Pay licensing fee (payment accepted via credit card or check or money order made payable to NYC Department of Consumer Affairs)
Should the potential debt collector plan on collecting debt for child support payments, the individual must furnish the debt collection child support form. Additionally, applicants with businesses located outside of New York and/or having someone other than themselves complete the application must submit the DCA non-resident form and/or the form granting authority to act, respectively.
File all in-person applications at one of two possible locations: DCA Licensing Center at 42 Broadway in Manhattan or NYC Small Business Support Center at 90-27 Sutphin Boulevard in Jamaica, Queens.
- Register an online account with the City of New York
- Once an individual has registered with the City, applicants should log into the account to complete the application
- After submitting the application, follow the instructions on the confirmation page
- Pay licensing fee with a major credit card
Looking to purchase a surety bond?
To purchase a New York Debt Collector surety bond, visit our bond page. Have questions or concerns? Give us a call at (800) 308-4358 to speak to one of our readily available surety experts. As always, we’re happy to help.