Colorado Debt Management Services Provider Bond: A Comprehensive Guide

March 24, 2021

Colorado Debt Management Services Provider Bond

This guide provides information for insurance agents to help debt management services providers obtain Colorado Debt Management Services Provider Bonds

At a Glance:

  • Average Cost: Between $750 to $2,500 per year based on the debt management services provider’s credit  
  • Bond Amount: $50,000
  • Who Needs It: All debt management services providers seeking to obtain a registration in the State of Colorado
  • Purpose: To ensure the public will receive compensation for any damages should the debt management services organization fail to comply with registration law
  • Who Regulates Debt Management Services Organizations in Colorado: The Colorado Department of Law

Background

Colorado Statute 5-19-204 requires all debt management services providers operating in the state to register with the Colorado Department of Law. The Colorado legislature enacted the registration laws and regulations to ensure that debt management services providers engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, debt management services providers must purchase and maintain a $50,000 surety bond to be eligible for registration.

What is the Purpose of the Colorado Debt Management Services Provider Bond?

Colorado requires debt management services providers to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the debt management services provider fails to comply with the registration regulations. In short, the bond is a type of insurance that protects the public if the debt management services provider breaks registration laws.

Debt Management Services Provider Bond Form

Debt Management Services Provider Bond Form

How Can an Insurance Agent Obtain a Colorado Debt Management Services Provider Surety Bond?

BondExchange makes obtaining a Colorado Debt Management Services Provider Bond easy. Simply login to your account and use our keyword search to find the “debt” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the Colorado Debt Management Services Provider Bond?

Surety companies will run a credit check on the owners of the debt management services company to determine eligibility and pricing for the Colorado Debt Management Services Provider bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Colorado Debt Management Services Provider Bond Cost?

The Colorado Debt Management Services Provider surety bond can cost anywhere between $750 to $2,500 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $50,000 bond requirement.

$50,000 Debt Management Services Provider Bond Cost

Credit Score Bond Cost (1 year)
800+ $750
650 – 799 $1,000
600 – 649 $2,000
450 – 599 $2,500

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Colorado Define “Debt Management Services Provider?”

Colorado Statute 5-19-202 defines a debt management services provider as any individual or business entity who acts “as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions.” Exemptions to this definition include:

  • Attorneys providing legal services
  • Accountants providing accounting services
  • Representative services provided by an approved governmental entity

How do Debt Management Services Providers Apply for a Registration in Colorado?

Debt management services providers in Colorado must navigate several steps to secure their business registration. Below are the general guidelines, but registration applicants should refer to the application form for details on the process.

Registration Period – The Colorado Debt Management Services Provider Registration expires on July 1 of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Debt Management Services Providers must purchase and maintain a $50,000 surety bond

Step 2 – Complete the Application

All debt management services provider registration applications should be mailed to the following address:

Colorado Department of Law
Consumer Protection Section, CAR
Ralph L. Carr Colorado Judicial Center
1300 Broadway, 6th Floor
Denver, CO  80203

Applicants must complete the application in its entirety, and submit the following items:

    • Personal affidavits for each company owner/officer
    • A completed Trust Authorization
    • Audited financial statements for the company’s previous two years
    • Detailed descriptions of any educational programs the applicant provides
    • Detailed description of the applicant’s financial analysis used to evaluate consumers
    • Copies of any forms or agreements to be used with consumers
    • A schedule of all fees to be charged to consumers
    • A list of all branch locations the company operates
    • Company formation documents and Certificate of Good Standing issued by the Colorado Secretary of State

Applicants must pay a $1,000 registration fee when submitting their application

How Do Colorado Debt Management Services Providers Renew Their Registration?

Debt Management Services Providers should mail their completed renewal application to the following address:

Colorado Department of Law
Consumer Protection Section, CAR
Ralph L. Carr Colorado Judicial Center
1300 Broadway, 6th Floor
Denver, CO  80203

The Colorado Debt Management Services Provider Registration expires on July 1 of each year and must be renewed before the expiration date. Contact the Colorado Department of Law to obtain your renewal application.

What Are the Insurance Requirements for the Colorado Debt Management Services Provider Registration?

The State of Colorado does not require debt management services providers to obtain any form of liability insurance as a prerequisite to obtaining a business registration. Debt management services providers must purchase and maintain a $50,000 surety bond.

How Do Colorado Debt Management Services Providers File Their Bond?

Debt management services providers should mail the completed bond form, including the power of attorney, to the following address:

Colorado Department of Law
Consumer Protection Section, CAR
Ralph L. Carr Colorado Judicial Center
1300 Broadway, 6th Floor
Denver, CO  80203

The surety bond requires signatures from both the surety company that issues the bond and a representative from the debt management services organization. The surety company should include the following information on the bond form:

  • Legal name and address of the entity/individual(s) buying the bond
  • Surety company’s name and address
  • Date the bond goes into effect

What Can Businesses Do to Avoid Claims Against the Colorado Debt Management Services Provider Bond?

To avoid claims on the Debt Management Services Provider Bond, businesses must follow all registration regulations in the state, including some of the most important issues below that tend to cause claims:

  • Pay all required taxes and fees
  • Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Debt Management Services Providers in Colorado?

Colorado does not require debt management services providers to obtain any form of liability insurance. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Colorado Debt Management Services Provider Customers?

Colorado conveniently provides a public database to search for active debt management services providers in the state. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.

2021-03-24T18:19:32+00:00

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