Connecticut Debt Negotiator Bond: A Comprehensive Guide

April 5, 2021

Connecticut Debt Negotiator Bond

This guide provides information for insurance agents to help debt negotiators obtain Connecticut Debt Negotiator Bonds

At a Glance:

  • Average Cost: Between $1,000 to $2,500 per year based on the debt negotiator’s credit
  • Bond Amount: $50,000
  • Who Needs It: All debt negotiators seeking to obtain a license in the State of Connecticut
  • Purpose: To ensure the public will receive compensation for any damages should the debt negotiator fail to comply with licensing law
  • Who Regulated Debt Negotiators in Connecticut: The Connecticut Department of Banking

Background

Connecticut statute 36a-671 requires all debt negotiators operating in the state to obtain a license with the Department of Banking. The Connecticut legislature enacted the licensing laws and regulations to ensure that debt negotiators engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, debt negotiators must purchase and maintain a $50,000 surety bond to be eligible for licensure.

What is the Purpose of the Connecticut Debt Negotiator Bond?

Connecticut requires debt negotiators to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the debt negotiator fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the debt negotiator breaks licensing laws.

Connecticut Debt Negotiator Bond Form

Connecticut Debt Negotiator Bond Form

How Can an Insurance Agent Obtain a Connecticut Debt Negotiator Surety Bond?

BondExchange makes obtaining a Connecticut Debt Negotiator 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 Connecticut Debt Negotiator Bond?

Surety companies will run a credit check on the owners of the debt negotiation company to determine eligibility and pricing for the Connecticut Debt Negotiator 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 Connecticut Debt Negotiator Bond Cost?

The Connecticut Debt Negotiator surety bond can cost anywhere between $1,000 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 Negotiator Bond Cost

Credit Score Bond Cost (1 year)
650+ $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 Connecticut Define “Debt Negotiator?”

To paraphrase Connecticut Statute 36a-671, a debt negotiator is any individual or business entity who assists a debtor in negotiating the terms of a debt.

How do Debt Negotiators Apply for a License in Connecticut?

Debt negotiators in Connecticut must navigate several steps to secure their license. Below are the general guidelines, but license applicants should refer to the NMLS’s application guidelines for details on the process.

License Period – The Connecticut Debt Negotiator License expires on December 31 of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Debt negotiators must purchase and maintain a $50,000 surety bond

Step 2 – Designate a Qualifying Individual

Debt negotiators must designate a qualifying individual who is responsible for managing the day to day operations of the debt negotiation business. Qualifying individuals  are subject to both background and credit checks.

Step 3 – Request a NMLS Account

The Connecticut Debt Negotiator License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 4 – Complete the Application

All Connecticut Debt Negotiator License applications can be completed online through the NMLS. Applicants must complete entire the application, and submit the following items:

    • Unaudited financial statements prepared by a CPA
    • The following company contacts:
      • Primary Company Contact
      • Accounting
      • Exam Billing
      • Licensing
      • Consumer Complaint (Public)
      • Exam Delivery
      • Litigation
      • Consumer Complaint (Regulator)
      • Legal
      • Pre-Exam Contact
    • A company business plan detailing the following information:
      • Marketing strategies
      • Products
      • Target markets
      • Fee schedule
      • Operating structure the applicant intends to employ
    • Certificate of Good Standing obtained from the Connecticut Secretary of State
    • A sample Debt Negotiation Service Contract
    • Company formation documents
    • A management chart detailing the company’s hierarchy

Applicants for the Connecticut Debt Negotiator license must pay the following fees when submitting their license application:

    • $800 licensing fee
    • $100 NMLS processing fee
    • $15 credit report fee (per person)
    • $36.25 background check fee (per person)

How Do Connecticut Debt Negotiators Renew Their License?

Debt negotiators can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Connecticut Debt Negotiator License expires on December 31 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Connecticut Debt Negotiator License?

The State of Connecticut does not require debt negotiators to obtain any form of liability insurance as a prerequisite to obtaining a business license. Debt negotiators must purchase and maintain a $50,000 surety bond.

How Do Connecticut Debt Negotiators File Their Bond?

Debt negotiators should submit the completed bond form, including the power of attorney, electronically through the NMLS. Additionally, debt negotiators must mail their completed bond form to the following address:

Department of Banking
260 Constitution Plaza
Hartford CT 06103-1800

The debt negotiator surety bond requires signatures from both the surety company that issues the bond and the debt negotiator. The surety company should include the following information on the bond form:

  • Legal name and state/county of entity/individual(s) buying the bond
  • Surety company’s name and state/county
  • Date the bond is signed
  • Witness signatures for both the principal and surety company

What Can Connecticut Debt Negotiators Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, debt negotiators in Connecticut must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:

  • Honor all written agreements made with customers
  • Faithfully account for all funds received from customers

What Other Insurance Products Can Agents Offer Debt Negotiators in Connecticut?

Connecticut does not require debt negotiators to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable debt negotiators 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 Connecticut Debt Negotiator Customers?

The NMLS conveniently provides a public database to search for active debt negotiators in Connecticut. 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.

2021-04-05T20:13:06+00:00

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