Indiana Debt Management Company Bond: A Comprehensive Guide
This guide provides information for insurance agents to help debt management companies obtain Indiana Debt Management Company Bonds
At a Glance:
- Lowest Cost: $500 per year or $50 per month based on the applicant’s credit
- Bond Amount: $50,000
- Who Needs it: All debt management companies seeking to obtain a license in Indiana
- Purpose: To ensure the public will receive compensation for any damages should the debt management company fail to comply with licensing law
- Who Regulates Debt Management Companies in Indiana: The Indiana Department of Financial Institutions
Background
Indiana statute 28-1-29-3 requires all debt management companies operating in the state to obtain a license with the Department of Financial Institutions. The Indiana legislature enacted the licensing laws and regulations to ensure that debt management companies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, debt management companies must purchase and maintain a $50,000 surety bond to be eligible for licensure.
What is the Purpose of the Indiana Debt Management Company Bond?
Indiana requires debt management companies 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 management company fails to comply with the licensing regulations set forth in Indiana statute 28-1-29-3. Specifically, the bond protects consumers in the event the debt management company engages in any acts of fraud or does not properly account for all funds received. In short, the bond is a type of insurance that protects the public if the debt management company breaks licensing laws.
How Can an Insurance Agent Obtain an Indiana Debt Management Company Surety Bond?
BondExchange makes obtaining an Indiana Debt Management Company 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? 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 Indiana Debt Management Company Bond?
Surety companies will run a credit check on the owners of the debt management company to determine eligibility and pricing for the Indiana Debt Management Company 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 Indiana Debt Management Company Bond Cost?
The Indiana Debt Management Company surety bond can cost anywhere between $500 to $2,500 per year or $50 to $250 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 $50,000 bond requirement.
$50,000 Debt Management Company Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $500 | $50 |
| 680 – 799 | $750 | $75 |
| 650 – 679 | $1,000 | $100 |
| 600 – 649 | $2,000 | $200 |
| 450 – 599 | $2,500 | $250 |
*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 Indiana Define “Debt Management Company?”
Indiana statute 28-1-29-1 defines a debt management company as any business entity who helps debtors manage their debts in exchange for compensation. Debt management companies are commonly referred to as budget counselors, credit counselors, debt managers, or debt pooling servicers.
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 Debt Management Companies Apply for a License in Indiana?
Debt management companies in Indiana must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Indiana Debt Management License expires on August 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Debt management companies must purchase and maintain a $50,000 surety bond
Step 2 – Request NMLS Account
The Indiana Debt Management 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 3 – Complete the Application
All Indiana Debt Management License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Audited business financial statements prepared by a CPA
- Certificate of Good Standing obtained from the Indiana INbiz platform
- Bank account information for the trust account used for the specific benefits of the company’s Indiana contract debtors
- Company business plan containing the following information:
- Marketing strategy
- Products
- Target markets
- Operating structure
- List of all fees the company plans on charging (must be mailed to the DFI)
- Copies of all documents supplied to the contract debtor
- Company formation documents
- Management chart showing the company hierarchy
- Organization chart showing the company’s ownership structure
- Authorization allowing the examination of all company trust accounts used for holding funds belonging to others
Debt management companies must pay a $1,000 licensing fee when submitting their application
How Do Indiana Debt Management Companies Renew Their License?
Debt management companies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Indiana Debt Management License expires on August 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Indiana Debt Management License?
The State of Indiana does not require debt management companies to obtain any form of liability insurance as a prerequisite to obtaining a business license. Debt management companies must purchase and maintain a $50,000 surety bond.
How Do Indiana Debt Management Companies File Their Bond?
Debt management companies should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the debt management company. The surety company should include the following information on the bond form:
- Legal name, city and county of entity/individual(s) buying the bond
- Surety company’s name
- Date the bond goes into effect
- Date the bond is signed
What Can Indiana Debt Management Companies Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, debt management companies in Indiana must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Properly account for all funds received from consumers
What Other Insurance Products Can Agents Offer Debt Management Companies in Indiana?
Indiana does not require debt management companies to purchase any form of liability insurance as a prerequisite to obtaining a license. 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 Indiana Debt Management Company Customers?
The NMLS conveniently provides a public database to search for active debt management companies in Indiana. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.