Nebraska Debt Management Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Nebraska Debt Management Bonds
At a Glance:
- Lowest Cost: $100 per year or $10 per month based on the applicant’s credit
- Bond Amount: $10,000
- Who Needs it: All debt management companies operating in Nebraska
- Purpose: To ensure the public will receive compensation for any damages should the debt management company violate licensing law
- Who Regulates Debt Management Companies in Nebraska: The Nebraska Secretary of State
Background
Nebraska statute 69-1203 requires all debt management companies operating in the state to obtain a license with the Secretary of State. The Nebraska 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 $10,000 surety bond to be eligible for licensure.
What is the Purpose of the Nebraska Debt Management Bond?
Nebraska 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 manager fails to comply with the regulations set forth in the Nebraska debt management statutes. Specifically, the bond protects the public in the event the debt manager engages in any acts of fraud or fails to account for all money collected from consumers. In short, the bond is a type of insurance that protects the public if the debt manager breaks licensing laws.
How Can an Insurance Agent Obtain a Nebraska Debt Management Bond?
BondExchange makes obtaining a Nebraska Debt Management 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 Nebraska Debt Management Bond?
Surety companies will run a credit check on the owners of the debt management company to determine eligibility and pricing for the Nebraska Debt Management 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 Nebraska Debt Management Bond Cost?
The Nebraska Debt Management Bond can cost anywhere between $100 to $500 per year or $10 to $50 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 $10,000 bond requirement.
$10,000 Debt Management Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $100 | $10 |
| 680 – 799 | $150 | $15 |
| 650 – 679 | $200 | $20 |
| 600 – 649 | $400 | $40 |
| 450 – 599 | $500 | $50 |
How Does Nebraska Define Debt Management Company?”
Nebraska statute 69-1201 defines a debt management company as any business entity who manages the financial affairs of a consumer and receives funds from the consumer and distributes said funds to the consumer’s creditors.
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 Nebraska?
Debt management companies in Nebraska must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.
License Period – The Nebraska Debt Management License expires on December 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 $10,000 surety bond
Step 2 – Complete the Application
All Nebraska Debt Management License applications should be mailed to the following address:
Secretary of State
State Capitol
1201 N Street, Suite 120
Lincoln, NE 68508
Debt managers must complete the application in its entirety, and submit the following items:
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- Company formation documents
- Names and addresses all all company owners/officers
- Blank copy of all debt management contracts used with consumers
Debt managers must pay the following fees when submitting their license application:
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- $200 licensing fee (plus an additional $100 per office location)
- $200 investigation fee
How Do Nebraska Debt Managers Renew Their License?
Debt managers should mail their completed renewal application, including all appropriate fees, to the following address:
Secretary of State
State Capitol
1201 N Street, Suite 120
Lincoln, NE 68508
The Nebraska Debt Management License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Nebraska Debt Management License?
Nebraska does not require debt management companies to purchase any form of liability insurance as a prerequisite to obtaining a business license. Debt managers must purchase and maintain a $10,000 surety bond.
How Do Nebraska Debt Management Companies File Their Bond?
Debt management companies should mail the completed bond form, including the power of attorney, to the following address:
Secretary of State
State Capitol
1201 N Street, Suite 120
Lincoln, NE 68508
The debt management 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 of entity/individual(s) buying the bond
- Surety company’s name
- Bond term
- Date the bond is signed
What Can Nebraska Debt Management Companies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt management companies in Nebraska must follow all license regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Account for all funds received from consumers
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Debt Management Companies in Nebraska?
Nebraska does not require debt management companies to purchase any form of liability insurance as a prerequisite to obtaining a business 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 Nebraska Debt Management Customers?
Nebraska conveniently provides a public database to search for active debt managers 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.