Utah Debt Management Bond: A Comprehensive Guide

August 27, 2021

Utah Debt Management Bond

This guide provides information for insurance agents to help their customers obtain Utah Debt Management Bonds

At a Glance:

  • Average Cost: Between 1.5% to 5% of the bond amount per year based on the applicant’s credit
  • Bond Amount: At least $100,000 (more on this later)
  • Who Needs it: All debt management companies operating in Utah
  • Purpose: To ensure the public will receive compensation for any damages should the debt management company violate registration law
  • Who Regulates Debt Management Companies In Utah: The Utah Department of Commerce

Background

Utah statute 13-42-104 requires all debt management companies operating in the state to register with the Department of Commerce. The Utah legislature enacted the registration 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 registration law, debt management companies must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Utah Debt Management Bond?

Utah requires debt management companies 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 manager fails to comply with the regulations set forth in the Utah Uniform Debt Management Services Act. Specifically, the bond protects the public in the event the debt manager 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 manager breaks registration laws.

Utah Debt Management Bond Form

Utah Debt Management Bond Form

How Can an Insurance Agent Obtain a Utah Debt Management Surety Bond?

BondExchange makes obtaining a Utah 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? Enroll 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.

How is the Bond Amount Determined?

Utah statute 14-32-113 requires that the limit on the Debt Management Bond be at least $100,000. However, Utah statute 13-42-132 grants the Department of Commerce the authority to increase the required bond amount each year to adjust for inflation.

Is a Credit Check Required for the Utah 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 Utah 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 Utah Debt Management Bond Cost?

The Utah Debt Management Bond can cost anywhere between 1.5% to 5% of the bond amount 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 a $100,000 bond requirement.

$100,000 Debt Management Bond Cost

Credit Score Bond Cost (1 year)
800+ $1,500
650 – 799 $2,000
600 – 649 $4,000
450 – 599 $5,000

How Does Utah Define Debt Management Company?”

To paraphrase Utah statute 13-42-102, a debt management company is any business entity who acts as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining debt concessions.

How do Debt Management Companies Apply For a Registration in Utah?

Debt management companies in Utah 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 Utah Debt Management Registration is valid for one year from the date of issuance and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Debt management companies must purchase and maintain a surety bond with a minimum limit of $100,000

Step 2 – Purchase Insurance

Debt management companies must purchase insurance protecting themselves against fraud and theft in an amount that is at least $250,000 with a maximum deductible of $5,000

Step 3 – Complete the Application

All Utah Debt Management Registration applications should be mailed to the following address:

Department of Commerce
Division of Consumer Protection
160 East 300 South
Box 146704
Salt Lake City, Utah 84114-6704

Debt managers must complete the application in its entirety, and submit the following items:

    • Company formation documents
    • Names and addresses all all company owners/officers
    • Blank copy of all debt management contracts used with consumers
    • Company email and phone number
    • Website URL
    • Primary contact information
    • Information regarding all company owners with a 10% stake or more
    • Jurisdiction Explanations
    • Description of educational programs used with consumers
    • Description of company’s most recent financial analysis

Debt managers must pay a $250 fee when submitting their registration application.

How Do Utah Debt Managers Renew Their License?

Debt managers should mail their completed renewal application, including a $250 renewal fee fees, to the following address:

Department of Commerce
Division of Consumer Protection
160 East 300 South
Box 146704
Salt Lake City, Utah 84114-6704

The Utah Debt Management Registration is valid for one year from the date of issuance and must be renewed before the expiration date

What Are the Insurance Requirements for the Utah Debt Management Registration?

Utah requires debt management companies to purchase insurance protecting themselves against fraud and theft in an amount that is at least $250,000 with a maximum deductible of $5,000. Debt management companies must purchase and maintain a surety bond with a minimum limit of $100,000

How Do Utah Debt Management Companies File Their Bond?

Debt management companies should mail the completed bond form, including the power of attorney, to the following address:

Department of Commerce
Division of Consumer Protection
160 East 300 South
Box 146704
Salt Lake City, Utah 84114-6704

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 and address
  • Bond amount
  • Bond term
  • Date the bond is signed

What Can Utah Debt Management Companies Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, debt management companies in Utah must follow all registration 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 Utah?

Utah requires debt management companies to purchase insurance protecting themselves against fraud and theft as a prerequisite to obtaining a business license. Bonds are our only business at BondExchange, so we do not issue other forms 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 Utah Debt Management Customers?

Utah 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.

2021-12-29T09:41:09-05:00