Illinois Collection Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help Collection Agencies obtain Illinois Collection Agency Bonds
At a Glance:
- Lowest Cost: $188 per year or $19 per month based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All collection agencies seeking to obtain a registration in Illinois
- Purpose: To ensure the public will receive compensation for any damages should the collection agency fail to comply with registration law
- Who Regulates Collection Agencies in Illinois: The Illinois Department of Financial and Professional Regulation
Background
The Illinois Collection Agency Act requires all collection agencies operating in the state to register with the Department of Financial and Professional Regulation. The Illinois legislature enacted the registration laws and regulations to ensure that collection agencies engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, collection agencies must purchase and maintain a $25,000 surety bond to be eligible for registration.
What is the Purpose of the Illinois Collection Agency Bond?
Illinois requires collection agencies 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 collection agency fails to comply with the registration regulations. In short, the bond is a type of insurance that protects the public if the collection agency breaks registration laws.
How Can an Insurance Agent Obtain an Illinois Collection Agency Surety Bond?
BondExchange makes obtaining an Illinois Collection Agency Bond easy. Simply login to your account and use our keyword search to find the “collection” bond in our database. Don’t have a login? Gain access 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.
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Is a Credit Check Required for the Illinois Collection Agency Bond?
Surety companies will run a credit check on the owners of the collection agency to determine eligibility and pricing for the Illinois Collection Agency Bond. Owner’s 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 Illinois Collection Agency Bond Cost?
The Illinois Collection Agency surety bond can cost anywhere between $188 to $1,250 per year or $19 to $125 per month. 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 the $25,000 bond requirement.
$25,000 Collection Agency Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 700+ | $188 | $19 |
| 650 – 699 | $250 | $25 |
| 625 – 649 | $313 | $32 |
| 600 – 624 | $470 | $47 |
| 550 – 599 | $1,000 | $100 |
| 450 – 549 | $1,250 | $125 |
*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 Illinois Define “Collection Agency?”
The Illinois Collection Agency Act defines a collection agency as any business entity who collects debt.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Collection Agencies Apply for a Registration in Illinois?
Collection agencies in Illinois must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – The Illinois Collection Agency Registration expires on May 15 every three years and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
All collection agency registration applicants are required to purchase and maintain a $25,000 surety bond
Step 2 – Establish a Trust Account
Collection agencies must establish a trust account prior to submitting their registration application. Collection agencies are required to maintain a trust account at all times, even if no collection activity is occurring
Step 3 – Complete the Application
All collection agency regulatory registration applications must be mailed to the following address:
Department of Financial and Professional Regulation
Attn: Division of Professional Regulation
320 West Washington Street, 3rd Floor
Springfield, Illinois 62786
Collection agencies must complete the application in its entirety, and submit the following items:
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- Company formation documents
- Financial statements indicating the company’s net worth
- The personal employment history for all managers and administrators
Collection agencies must pay a $750 fee when submitting their registration application
How Do Illinois Collection Agencies Renew Their Registration?
Collection agencies will receive a renewal application approximately 60 days before their registration’s expiration date. Collection agencies should mail the completed renewal application to the following address:
Department of Financial and Professional Regulation
Attn: Division of Professional Regulation
320 West Washington Street, 3rd Floor
Springfield, Illinois 62786
The Illinois Collection Agency Registration expires on May 15 every three years and must be renewed before the expiration date.
What Are the Insurance Requirements for the Illinois Collection Agency Registration?
The State of Illinois does not require Collection Agencies to obtain any form of liability insurance as a prerequisite to obtaining a registration. All collection agency registration applicants are required to purchase and maintain a $25,000 surety bond.
How Do Illinois Collection Agencies File Their Bond?
Collection agencies should mail the completed bond form, including the power of attorney, to the following address:
Department of Financial and Professional Regulation
Attn: Division of Professional Regulation
320 West Washington Street, 3rd Floor
Springfield, Illinois 62786
The collection agency surety bond requires signatures from both the surety company that issues the bond and a representative from the collection agency. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name, address and phone number
- Date the bond is signed
What Can Illinois Collection Agencies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, collection agencies in Illinois must ensure to always remit all funds owed to creditors.
What Other Insurance Products Can Agents Offer Collection Agencies in Illinois?
Illinois does not require collection agencies to obtain any form of liability insurance as a prerequisite to obtaining a business registration. However, many 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 Illinois Collection Agency Customers?
Illinois conveniently provides a public database to search for active collection agencies in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.