South Dakota Debt Adjuster Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain South Dakota Debt Adjuster Bonds
At a Glance:
- Lowest Cost: $750 per year based on the applicant’s credit
- Bond Amount: $50,000
- Who Needs it: All debt adjusters operating in South Dakota
- Purpose: To ensure the public will receive compensation for any damages should the debt adjuster breach consumer contracts
- Who Regulates Debt Adjusters In South Dakota: The South Dakota Office of the Attorney General
Background
South Dakota statute 37-34-3 requires all debt adjusters operating in the state to file a $50,000 surety bond with the Office of the Attorney General. The South Dakota legislature enacted the bonding requirement to ensure that debt adjusters engage in ethical business practices. There is no statewide licensing requirement for debt adjusters in South Dakota, however, debt adjusters may need to obtain a license or register with their local municipal authority prior to conducting business.
What is the Purpose of the South Dakota Debt Adjuster Bond?
South Dakota requires debt adjusters to purchase a surety bond prior to conducting business. The bond ensures that the public will receive compensation for financial harm if the debt adjuster fails to comply with the regulations set forth in South Dakota statute 37-34. Specifically, the bond protects the public in the event the debt adjuster engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the debt adjuster acts unethically.
How Can an Insurance Agent Obtain a South Dakota Debt Adjuster Surety Bond?
BondExchange makes obtaining a South Dakota 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 South Dakota Debt Adjuster Bond?
Surety companies will run a credit check on the owners of the debt adjusting company to determine eligibility and pricing for the South Dakota Debt Adjuster 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 South Dakota Debt Adjuster Bond Cost?
The South Dakota Debt Adjuster Bond can cost anywhere between $750 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 the $50,000 bond requirement.
$50,000 Debt Adjuster Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $750 |
| 650 – 799 | $1,000 |
| 600 – 649 | $2,000 |
| 450 – 599 | $2,500 |
How Does South Dakota Define “Debt Adjuster?”
To paraphrase South Dakota statute 37-34-1, a debt adjuster is any business entity debt who receives from a debtor for the purposes of distributing these funds to creditors, or otherwise helps consumers reduce their debt obligations.
Are There any Exemptions to the Bonding Requirement?
Yes, the following individuals and entities who perform debt adjusting services are exempt from the bonding requirement:
- Banks and fiduciaries who perform credit and financial adjusting services
- Title insurers and abstract companies doing escrow business
- Judicial officers acting under a court order
- Nonprofit organizations
- Trade or mercantile associations
- Employers assisting their employees
- Mediators
Do South Dakota Debt Adjusters Need to Obtain a License?
There is no statewide licensing requirement for debt adjusters in South Dakota. However, debt adjusters may need to obtain a local business license or tax certification, and should check with their local municipal authority prior to conducting business.
What Are the Insurance Requirements for South Dakota Debt Adjusters?
South Dakota does not require debt adjusters to purchase any form of liability insurance as a prerequisite to obtaining a business license. Debt adjusters must purchase and maintain a $5,000 surety bond.
How Do South Dakota 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
1302 E Hwy 14
Suite 1
Pierre SD 57501-8501
The debt adjuster surety bond requires signatures from both the surety company that issues the bond and a representative from the debt adjustment 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
- Date the bond is signed
What Can South Dakota Debt Adjusters Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, debt adjusters in South Dakota must ensure that they 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
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Debt Adjusters in South Dakota?
South Dakota does not require debt adjusters 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 other types of 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 South Dakota Debt Adjuster Customers?
South Dakota unfortunately does not provide a public database to search for active debt adjusters in the state. We recommend contacting the South Dakota Secretary of State or a list service company to obtain this information. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.