Kentucky Debt Adjuster Bond: A Comprehensive Guide
This guide provides information for insurance agents to help debt adjusters obtain Kentucky Debt Adjuster Bonds
At a Glance:
- Lowest Cost: $375 per year or $38 per month based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All debt adjusters operating in Kentucky
- Purpose: To ensure the public will receive compensation for any damages should the debt adjuster fail to comply with registration law
- Who Regulates Debt Adjusters in Kentucky: The Kentucky Office of the Attorney General
Background
Kentucky statute 380.040 requires all debt adjusters operating in the state to register with the Office of the Attorney General. The Kentucky legislature enacted the registration laws and regulations to ensure that debt adjusters engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, debt adjusters must purchase and maintain a $25,000 surety bond to be eligible for registration.
What is the Purpose of the Kentucky Debt Adjuster Bond?
Kentucky requires debt adjusters 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 adjuster fails to comply with the registration regulations set forth in the registration statutes. Specifically, the bond protects consumers in the event the debt adjuster engages in any acts of fraud or fails to honor agreements made with consumers. In short, the bond is a type of insurance that protects the public if the debt adjuster breaks licensing laws.
How Can an Insurance Agent Obtain a Kentucky Debt Adjuster Surety Bond?
BondExchange makes obtaining a Kentucky Debt Adjuster 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 Kentucky Debt Adjuster Bond?
Surety companies will run a credit check on the owners of the debt services company to determine eligibility and pricing for the Kentucky Debt Adjuster 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 Kentucky Debt Adjuster Bond Cost?
The Kentucky Debt Adjuster surety bond can cost anywhere between $375 to $1,250 per year or $38 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 Debt Adjuster Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $375 | $38 |
| 650 – 799 | $500 | $50 |
| 600 – 649 | $1,000 | $100 |
| 450 – 599 | $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 Kentucky Define “Debt Adjuster?”
To paraphrase Kentucky statute 380.010, a debt adjuster is any individual or business entity who acts as an intermediary between a debtor and creditor on behalf of the debtor or who assists debtors in obtaining more favorable debt terms.
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 Adjusters Apply for Registration in Kentucky?
Debt adjusters in Kentucky must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the registration packet for details on the process.
Registration Period – The Kentucky Debt Adjuster Registration expires annually and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Debt adjusters must purchase and maintain a $25,000 surety bond
Step 2 – Purchase Insurance
Kentucky requires all debt adjusters to purchase errors and omissions insurance with a limit of at least 10% of the monthly average of the aggregate amount of all deposits by all debtors in the preceding six months. The insurance limit may not be less than $100,000 and does not need to exceed $250,000. However, the insurance limit must be increased by $250,000 if the adjuster engages in debt adjusting in relation to any debt that is primarily for personal, family, or household use that is secured by a mortgage, deed of trust, other equivalent consensual security interest on residential real property, or collateral that has a mortgage lien interest in residential real property.
Step 3 – Complete the Application
All Kentucky regulatory debt adjuster registration applications should be mailed to the following address:
Office of the Attorney General
Attn: Debt Adjusting
1024 Capital Center Drive, Suite 200
Frankfort, Kentucky 40601
Debt adjusters must complete the application in its entirety, and pay a $250 registration fee.
How Do Kentucky Debt Adjusters Renew Their Registration?
Debt adjusters in Kentucky should mail their completed renewal application, including the $250 filing fee, to the following address:
Office of the Attorney General
Attn: Debt Adjusting
1024 Capital Center Drive, Suite 200
Frankfort, Kentucky 40601
The Kentucky Debt Adjuster Registration expires annually and must be renewed before the expiration date.
What Are the Insurance Requirements for the Kentucky Debt Adjuster Registration?
Debt adjusters must purchase and maintain a $25,000 surety bond. Additionally, Kentucky requires all debt adjusters to purchase errors and omissions insurance with a limit of at least 10% of the monthly average of the aggregate amount of all deposits by all debtors in the preceding six months. The insurance limit may not be less than $100,000 and does not need to exceed $250,000. However, the insurance limit must be increased by $250,000 if the adjuster engages in debt adjusting in relation to any debt that is primarily for personal, family, or household use that is secured by a mortgage, deed of trust, other equivalent consensual security interest on residential real property, or collateral that has a mortgage lien interest in residential real property.
How Do Kentucky Debt Adjusters File Their Bond?
Debt adjusters should mail the completed bond form, including the power of attorney, to the following address:
Office of the Attorney General
Attn: Debt Adjusting
1024 Capital Center Drive, Suite 200
Frankfort, Kentucky 40601
The debt adjuster surety bond requires signatures from both the surety company that issues the bond and a representative from the debt services company. The surety company should include the following information on the bond form:
- Legal name, address and phone number of entity/individual(s) buying the bond
- Surety company’s name, address and phone number
- Date the bond goes into effect
- Date the bond is signed
What Can Kentucky Debt Adjusters Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt adjusters in Kentucky must follow all registration 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
- Honor all agreements made with consumers
- Pay all required taxes and fees
What Other Insurance Products Can Agents Offer Debt Adjusters in Kentucky?
Kentucky requires debt adjusters to purchase errors and omissions insurance as a prerequisite to obtaining a registration. Bonds are our only business at BondExchange, so we do not issue errors and omissions 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 Kentucky Debt Adjuster Customers?
Kentucky conveniently provides a public database to search for active debt adjusters 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.