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State Licensing for Collection Agencies

State licensing can be quite the ordeal for collection agencies. Each state and U.S. territory has different licensing requirements for collection agencies, attorneys, and debt buyers, creating a complicated landscape for firms looking to expand or just starting up.

Below, we have laid out the licensing and bonding requirements for each state. Simply click on a state for expanded information on its requirements. And for comprehensive solutions to state licensing issues, visit Cornerstone Support, the premier licensing service provider to the collection industry.

 
 
 
 

Choose a map highlight (licensing, bonds, or fees):

Alabama

License General business license required.
Bond None
Fees License tax, $38.50-$151. Whenever a license is levied, there shall be collected both a state and county license for each place of business, the sum of which is 50 percent of the state license amount.

Exemptions

The Alabama Department of Revenue Sales, Use and Business Tax Division interpreted Alabama’s collection agency licensing statute to mean: An out-of-state collection agency, soliciting accounts by letter and/or phone only, with no agents in Alabama, does not need a license to collect. No license required when agent enters state solely for purpose of soliciting clients.

If an out-of-state agency employs any agents in the state, they would need a license. An agent can include, but is not limited to, an employee of the agency, an attorney license in Alabama on retainer or retained on a special case-by-case basis, another agency located in Alabama acting on the out-of-state agency’s behalf or anyone located in Alabama acting on behalf of the out-of-state agency.

Contacts

Alabama Dept. of Revenue, Sales Use & Business Tax Division

Secretary of State, Corporation Division

Alaska

License General business license, professional/occupational license, operator’s license required.
Bond $5,000 effective 7/1/13
Fees Fees required.

Exemptions

Attorney General opinion: “An Alaska collection agency license is required for only those agencies that collect claims, or solicit claims collections, on behalf of Alaska-based creditors. If the agency’s customers are out of state, no Alaska license is required.”

Contacts

Nathan Vallier: Licensing Examiner, State of Alaska Department of Commerce, Community and Economic Development

Department of Commerce and Economic Development, Division of Banking Securities and Corporations

 

Arizona

License Required
Bond $10,000-$35,000
Fees Fees required

Exemptions

Attorneys, banks, employees of licensed collection agencies and many others are exempt from the licensing requirements when engaged in the regular course of their respective businesses.

Developments

A bill passed on April 17, 2014 states that renewals must occur by Jan. 1 of each year.

Contacts

Robert Charlton: Division Manager, Financial Enterprises Division

Arizona Corporate Commission

 

Arkansas

License Required
Bond $10,000-$25,000
Fees Required

Exemptions

An out-of-state agency is required to obtain a license to collect or solicit accounts. No exemptions for out-of state agencies exist.

Penalties

There is no trust account requirement, but collection agencies “required to be licensed” must remit funds to their client within the calendar month following the month of collection. Collection agencies must give annual written notice in April of their remittance requirements to each of their clients.

Contacts

Janet Wilson: State Board of Collection Agencies

Secretary of State: Corporate Commission

 

California

License Not required
Bond Not required
Fees none

Exemptions

N/A

Contacts

Business Programs Division: Document Filing Support Unit

 

Colorado

License Required
Bond Starts at $12,000 and increases based on revenue to a max of $20,000
Fees Required

Exemptions

Out of state collection agencies must be licensed in Colorado. However, Colorado has a limited “open borders” law that eliminates licensing for out of state collection agencies who (1) collect debts incurred outside of Colorado, (2) use only interstate communications (telephone calls, letters, faxes) to collect these debts, (3) are located in a state which regulates and licenses collection agencies and does not require licensing for similarly situated Colorado collection agencies (reciprocity).

Every licensee must maintain an office in the State of Colorado which is open to the public during normal business hours where payments may be made and which has access to consumer payment records and client account records. This need not be a “working office” with debt collectors, solicitors, or the collections manager. The office may be shared with other businesses if all signs and directories are clearly marked and you are able to receive mail at that location. Record access may be provided by toll free telephone line, fax, or computer connection.

Contacts

Colorado Attorney General’s Department of Consumer Protection, Collection Agency Regulation Division

 

Connecticut

License Required
Bond $25,000
Fees Required

Exemptions

Those not needing license include:

  • An individual employed on the staff of a licensed consumer collection agency, or by a creditor who is exempt from licensing, when attempting to collect on behalf of such consumer collection agency.
  • Persons not primarily engaged in the collection of debts from consumer debtors who receive funds in escrow for subsequent distribution to others, including, but not limited to real estate brokers and lenders holding funds of borrowers for payment of taxes or insurance.
  • Any public officer or a person acting under the order of any court.
  • Any member of the bar of Connecticut.
  • A person who services loans or accounts for the owners thereof when the arrangement includes, in addition to requesting payment from delinquent consumer debtors, the providing of other services such as receipt of payment, accounting, record-keeping, data processing services and remitting, for loans or accounts which are current as well as those which are delinquent.
  • A bank or out-of-state bank
  • A subsidiary or affiliate of a bank or out-of-state bank, to the extent such affiliate or subsidiary is not primarily engaged in the business of purchasing and collecting upon delinquent debts not secured by real property.

Contacts

Connecticut Department of Banking – Consumer Collection Agency Licensing

Frequently Asked Questions

 

Delaware

License Required
Bond
Fees Required

Contacts

Delaware Division of Revenue

 

District of Columbia

License General business license required
Bond None
Fees $75

Additional Fees

  • $200 biennial renewal fee

Contacts

DC Department of Consumer and Regulatory Affairs – Business Licensing

 

Florida

License Required
Bond $50,000 (commercial collection agencies only)
Fees Required

Exemptions

Florida’s consumer collection licensing requirement does not apply to:

  • A credit grantor.
  • A collection agency which is not primarily engaged in collection of commercial claims.
  • Any member of The Florida Bar (unless such person is primarily engaged in collection of commercial claims).
  • Any financial institution authorized to do business in this state and any wholly owned subsidiary and affiliate thereof.
  • Any licensed real estate broker.
  • Any insurance company authorized to do business in this state.
  • Any consumer finance company and any wholly owned subsidiary and affiliate thereof.
  • Any person licensed pursuant to chapter 520 (retail installment loan providers).
  • Any out-of-state consumer debt collector who does not solicit consumer debt accounts for collection from credit grantors who have a business presence in this state.
  • Any FDIC-insured institution or subsidiary or affiliate thereof.

Contacts

Florida Office of Financial Regulation – Consumer Collection Agencies

 

Georgia

License Certificate of Authority required for all out-of-state companies
Bond None
Fees Required

Contacts

Georgia Secretary of State – Corporations FAQs

 

Hawaii

License Required
Bond $25,000 (and $15,000 for each additional office)
Fees Required

Additional Requirements

An agency shall: maintain a regular business office in this state as prescribed in section 16-112-11; designate a principal collector to assume responsibility for the direct management and control of the daily operation of the collection agency’s office

Exemptions

A collection agency may apply for designation as an exempt out-of-state collection agency provided that the collection agency:

1. Is licensed or registered as a collection agency under the laws of a state that:

a) Regulates collection agencies; and

b) Does not require a Hawaii collection agency to obtain a license or register to collect debts in that state if the activities of the Hawaii collection agency are limited to those described in paragraphs 2, 3 and 4;

2. Is collecting debts on behalf of an out-of-state creditor;

3. Does not solicit or engage in collection activities for clients in this State; and

4. Only collects debts in this State using interstate communication methods, including telephone, facsimile, or mail (exempt agencies cannot file lawsuits).

Contacts

Department of Commerce & Consumer Affairs Collection Agency Licensing Area

Idaho

License Required
Bond $15,000
Fees Required

Additional Requirements

  • Quarterly Notification of Agents and a fee per agent are required to be filed on any new agent in the licensee’s employ for 30 days

Contacts/Additional Information

Idaho Department of Finance Collection Agency Section

Searchable database of licensed Idaho collection agencies

Illinois

License Required
Bond $25,000
Fees Required

Additional Requirements

The City of Chicago recently passed a law requiring the licensing of ARM firms seeking to collect from residents of the city. The ordinance went into effect July 1, 2013. City of Chicago licensing requires a fee with renewals required every two years. More information. An additional business license may be required if the collection agency has an office inside Chicago city limits.

Recent court rulings have also revealed that courts are interpreting Illinois law as requiring out-of-state debt buyers to be licensed as debt collectors, although the Illinois Collection Agency Act does not expressly state such.

Contacts/Additional Information

Illinois Department of Financial & Professional Regulation

 

Indiana

License Required
Bond $5,000
Fees Required

Contacts/Additional Information

Secretary of State: Collection Agency Licensing section

Indiana Collection Agency licensee search

Iowa

License Required (Notification with Attorney General)
Bond Not Required
Fees Required

Overview

Iowa does not license debt collectors. However, debt collectors who collect over $25,000 a year (all
accounts, not just Iowa accounts) are required to file notification with the Iowa Attorney General and pay
an annual fee.

Contacts/Additional Information

Iowa Attorney General Collection Agency Notification Overview

 

Kansas

License Not Required for Collection Agencies; a Supervised Loan License is Required for Debt Buyers
Bond Not Required
Fees none

Contacts/Additional Information

Information on starting a business in Kansas

Kentucky

License Not Required
Bond Not Required
Fees none

Contacts/Additional Information

Kentucky Cabinet for Economic Development

Louisiana

License Required (Registration with Secretary of State)
Bond Not Required
Fees Required

All debt collectors must register with the Louisiana Secretary of State

Contacts/Additional Information

Louisiana Secretary of State Business Documents Filing page

Maine

License Required
Bond Initial $5,000 – $20,000
Fees Required

Additional Fees

  • Bonds must also be renewed biennially, but the bond’s amount will depend on average monthly collections from Maine consumers, capped at a maximum of $50,000

Contacts/Additional Information

Maine Department of Consumer Protection, Collection Agency Licensing Information

Montana

License Not Required
Bond Not Required
Fees N/A

Contact/Additional Information

NOTE: Debt management and settlement companies are required to be licensed or registered in Montana. As long as a collection agency does not advertise itself as a debt management firm, it will not need license or registration.

Department of Justice – Debt Management and Debt Settlement

Nebraska

License Required
Bond $5,000 – $15,000
Fees Required

Contact/Additional Information

Secretary of State – Collection Agency Licensing Board

Nevada

License Required
Bond $35,000-$60,000 (depending on trust account balance)
Fees Required

Additional Requirements

  • In-state collection agencies must also have a certified collection manager.  Collection managers must pass a state examination to receive their Collection Manager Certification.

Contact/Additional Information

Department of Business and Industry – Collection Agency Licensing

New Hampshire

License Not Required
Bond Not Required
Fees N/A

NOTE: While New Hampshire does not explicitly require debt collection agencies to be licensed, there is a provision in the law that does read as requiring out-of-state businesses to obtain a Certificate of Authority. While many view the law as arcane and largely unenforceable, it is still a matter to discuss with legal counsel.

Contact/Additional Information

The New Hampshire Division of Economic Development

New Jersey

License Not Required
Bond $5,000
Fees Processing fee for bond application

Additional Fees

Although New Jersey does not require a collection agency license, all foreign (out of state) companies must be on file with the state before conducting business there. And the Certificate of Business Formation must be filed before a collection agency bond application can be processed. There is a charge for processing the certificate.

Contact/Additional Information

Department of the Treasury – File Collection Agency Bonds

New Mexico

License Required
Bond $5,000
Fees Required

Additional Fees

  • If the business is to be located in New Mexico, a licensed Collection Manager must be named in the original application. There is a fee for a Collection Manager license, an examination, and renewals.

Contact/Additional Information

Regulation & Licensing Department – Collection Agencies, Managers and Repossessors

New York

License Not Required (statewide); Required in New York City and Buffalo
Bond Not Required (statewide); $5,000 in both New York City and Buffalo
Fees Not Required (statewide); Required in New York City and Buffalo

Special Note on New York

The state of New York does not require debt collectors to be licensed or bonded to operate in the state. However, the two largest cities in the state – New York City and Buffalo – do require both licensing and bonding. The City of Yonkers has licensing requirements only. The statutes of these cities require any business that collects from city residents, regardless of company location, to be licensed.

Furthermore, passive debt buyers must be licensed as collection agencies in New York City. Attorneys are also required to be licensed in New York City.

Contact/Additional Information

Buffalo

Code Requirements for Collection Agencies

Collection Agency License Application

New York City

Department of Consumer Affairs – Debt Collection Agency Licensing

City of Yonkers

Code Requirements for City of Yonkers

Collection Agency License Application

North Carolina

License Required
Bond $10,000 in-state businesses; $20,000 out-of-state businesses
Fees Required

Passive debt buyers are required to be licensed as collection agencies in North Carolina.

Additional Fees

  • Annual license renewal fee
  • Bond amounts for renewal vary based on collection activity in the state the previous year, from a minimum of $10,000 to a maximum of $75,000.
  • North Carolina law does not allow collection agency branch offices, even those within the same company, to share licenses. So any additional office in the state will require a separate license.

Contact/Additional Information

Department of Insurance – Collection Agencies License

North Dakota

License Required
Bond $20,000
Fees Required

NOTE: All collection agencies must also register with the ND Secretary of State

Contact/Additional Information

Department of Financial Institutions

Ohio

License Required (registration with Secretary of State)
Bond Not Required
Fees Required

Ohio does not have a specific requirement for collection agencies or debt buyers to be licensed in the state. However, any business, regardless of location, that “transacts business” in Ohio is required to register with the Secretary of State.

Contact/Additional Information

Secretary of State Business Services – Forms & Fees

Oklahoma

License Not Required
Bond Not Required
Fees N/A

Contact/Additional Information

Department of Commerce – Starting a Business in Oklahoma

 

Oregon

License Required
Bond $10,000
Fees Required

Additional registration note:  All company names must be authorized for use in Oregon by the Secretary of State, Business Registry Section.

Exemptions

An out-of-state collection agency is exempt from the registration fee if the out-of-state collection agency is registered in another state and that state does not require payment of an initial fee by a person who collects debts in that state only by means of interstate communications from the person’s location in another state.

Contact/Additional Information

Licenses, Permits, and Registrations – Collection Agencies

Collection Agency License Holder Search

Massachusetts

License Required
Bond $25,000
Fees Required

Exemptions

A license is not required for passive debt buyers operating in the state.

Contacts/Additional Information

Consumer Affairs and Business Regulation – Debt Collectors and Loan Servicers

Minnesota

License Required
Bond $50,000 – $100,000
Fees Required

Exemptions

A collection agency shall be exempt Minnesota’s licensing and registration requirements if all of the following conditions are met:

  1. the agency is located in another state that regulates and licenses collection agencies, but does not require a Minnesota collection agency to obtain a license to collect debts in their state if the agency’s collection activities are limited in the same manner;
  2. the agency’s collection activities are limited to collecting debts not incurred in this state from consumers located in this state; and
  3. the agency’s collection activities in Minnesota are conducted by means of
    interstate communications, including telephone, mail, electronic mail, or facsimile transmission.

Contact/Additional Information

Department of Commerce – Collections Licensing

Mississippi

License Not Required
Bond Not Required
Fees N/A

Contact/Additional Information

Starting a business in Mississippi

Missouri

License Not Required
Bond Not Required
Fees N/A

Contact/Additional Information

Missouri Division of Finance – Debt Collection

Pennsylvania

License Not Required
Bond Not Required
Fees N/A

Contact/Additional Information

Starting a Business in Pennsylvania

Rhode Island

License Required
Bond Not Required
Fees Required

Exemptions

Any company or person who:

  • is the servicor of a debt secured by a mortgage to the extent that the mortgage debt was not in default when first serviced or;
  • is a debt collector located out of this state; provided that the debt collector: 1) is collecting debts on behalf of an out-of-state creditor for a debt that was incurred out-of-state; and 2) only collects debts in this state using interstate communication methods, including telephone, facsimile, or mail;
  • is a regulated institution as defined under R. I. Gen. Laws 19-1-1, national banking association, federal savings bank, federal savings and loan association, federal credit union, or any bank, trust company, savings banks, savings and loan association or credit union organized under the laws of this state, or any other state of the United States, or any subsidiary of the above; but except as provided herein, this section shall apply to a subsidiary or affiliate, as defined by the director, of an exempted entity and of a bank holding company established in accordance with state or federal law

Contact Information

Rhode Island Department of Business Regulation

South Carolina

License Not Required
Bond Not Required
Fees N/A

NOTE: There are no licensing or bonding requirements for debt collectors doing business in South Carolina unless they have an office in the state and are not a South Carolina Corporation. Then they are required to register as a foreign corporation doing business in South Carolina.

Contact Information

Secretary of State – Forms and Fees

South Dakota

License Not Required
Bond Not Required
Fees N/A

NOTE: South Dakota requires nearly all businesses in the state to pay sales tax on revenues and fees, even certain business services companies like collection agencies and attorneys. All companies must obtain a sales tax license, but there is no upfront charge to do so.

Contact Information

Department of Revenue

Tennessee

License Required
Bond Up to $25,000
Fees Required

Exemptions

  • Passive debt buyers do not need to be licensed in Tennessee.
  • Any person handling claims, accounts, or collections under order of any court
  • Attorneys at law
  • Any person engaged in the collection of indebtedness incurred in the normal course of business or the business of a parent, subsidiary, or affiliated firm or corporation

Additional Requirements

Bond requirements in Tennessee vary based on number of employs at the agency:

  • 1-4 employees – $15,000
  • 5-9 employees – $20,000
  • 10 or more employees – $25,000

Contact

Collection Service Board

Texas

License Not Required (but all out-of-state businesses must register with Secretary of State)
Bond $10,000
Fees Required

Texas does not require collection agencies to be licensed. But if a creditor or collector does not have an office in Texas, the “foreign entity” must register with the Secretary of State to do business in Texas.

Texas also has no law that specifically governs debt buyers, but interestingly, all collection activity – whether first or third party – is governed by the Texas Debt Collection Act (TDCA).

Automatic Dial Announcing Device Permits are also required, with initial and renewal fees.

Contact/Additional Information

Secretary of State – Foreign or Out-of-State Entities

Utah

License Required
Bond $10,000
Fees Required

Contact/Additional Information

 Utah Department of Commerce – Division of Corporations and Commercial Code

Vermont

License Not Required
Bond Not Required
Fees N/A

NOTE: There are no licensing or bonding requirements for debt collectors or debt buyers doing business in Vermont. Other businesses are licensed through the Secretary of State’s Professional Regulation division.

Contact Information

Secretary of State

Virginia

License Not Required
Bond Not Required
Fees N/A

NOTE: There are no licensing or bonding requirements for debt collectors or debt buyers doing business in Virginia. Financial institutions are regulated by the state’s Bureau of Financial Institutions within the State Corporation Commission, but debt collection is not specifically regulated.

Contact Information

Bureau of Financial Institutions

Washington

License Required
Bond $5,000
Fees Required

Debt buyers must register as collection agencies in Washington. The 2013 Legislature adopted a new bill, ESHB 1822, that adds “debt buyers” to the definition of a collection agency.

Washington has very specific and enumerated standards for in-state and out-of-state collection agencies. Any collection agencies with clients in the state must register as an in-state collector. Collection agencies without offices or clients in Washington can register as out-of-state, even if they are collecting from state residents.

Contacts/Additional Information

State Department of Licensing – Collection Agencies

West Virginia

License Required (Registration with Secretary of State)
Bond $5,000 (per office)
Fees Required

Out-of-state collection agencies without an office in this state and the only contact with residents of this State for the collection
of debts is by letter and telephone calls, is required to designate to the Tax Commissioner a resident agent (name, address
and telephone number) upon whom notices, orders or other communications may be served and upon whom process may be
served. West Virginia Secretary of State may be designated as the resident agent for service of process.

Contacts/Additional Information

West Virginia State Tax Department

Wisconsin

License Required
Bond $25,000 or $35,000
Fees Required

A non-resident is not required to obtain a collection agency license if that person conducts collection business with state residents solely by means of interstate telecommunications or interstate mail. If a non-resident physically enters Wisconsin to solicit accounts from creditors or to collect accounts, that person is required to obtain a Wisconsin collection agency license and have a Wisconsin office.

The required bond amount varies: $25,000 if all business records are maintained within Wisconsin or $35,000 if any records are maintained outside of Wisconsin.

Contact/Additional Information

Department of Financial Institutions – Collection Agencies

Wyoming

License Required
Bond $10,000
Fees Required

Debt buyers must be licensed as a collection agency in Wyoming. Also, all licensed collection agencies must have an established office with a physical address in Wyoming with a bona fide resident of Wyoming as a resident manager of the office (more on the resident manager requirement below).

Additional Requirements

  • Annual renewal fee.
  • A resident manager is required for all licensed collection agencies operating in Wyoming.  All new resident managers must satisfactorily complete an examination which covers the material in the Wyoming Collection Agency Laws and Rules and the Federal FDCPA. The state does, however, allow for resident managers to serve for up to ten different collection agencies. The state even provides a list of resident managers available to new companies.

Contact/Additional Information

Division of Banks – Collection Agency License Application and Renewal Process

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