Surety Bond Encyclopedia

Collection Agency Bond - Statewide in Arizona

Brief Summary

Most Arizona collection agencies guess at the bond amount, and the guess is often wrong. The statute sets it by last year's gross income from Arizona business, anywhere from $10,000 to $35,000. Bring that income figure and we will write the bond at the matching tier, in the continuous form the law calls for, so the license file is not held up by a bond that has to be reissued.

Arizona collection agencies must file a surety bond with the Department of Insurance and Financial Institutions under A.R.S. 32-1021 and 32-1022. The amount follows gross annual income from Arizona business in the preceding year: $10,000 up to $250,000, $15,000 from $250,001 to $500,000, $25,000 from $500,001 to $750,000, and $35,000 at $750,001 and over. The bond runs to the people of the state and stays in force for as long as the license is held.

We can help with all Arizona bonds!

How to Apply for a Collection Agency Bond:

Pull gross annual income from Arizona business for the preceding year to find your tier.
Have the agency's legal name exactly as it appears on the license application.
Provide owner details for the surety's underwriting review.
Sign the bond as principal with an Arizona licensed surety.
File the bond and financial statement with the Department of Insurance and Financial Institutions.
Pay the $1,500 application fee, then the $600 renewal fee by December 31 each year.

Detailed Information About the Arizona Collection Agency Bond:

The tier comes from last year's Arizona income

A.R.S. 32-1021 computes the bond on the gross annual income the licensee generated from all business transacted in Arizona during the preceding year. It is not tied to the size of the accounts you hold or to income earned in other states.

Not over $250,000: $10,000
$250,001 to $500,000: $15,000
$500,001 to $750,000: $25,000
$750,001 and over: $35,000

The same schedule applies to original and renewal applications, so an agency that grows past a threshold should expect a larger bond at renewal. Business counts as transacted in Arizona when the debtor is here, the collecting office is here, or the creditor is here, even if the other parties are not.

What the bond promises

A.R.S. 32-1022 requires the agency to account for and pay clients the proceeds collected within thirty days after the last day of the month in which a collection is made. The bond runs to the people of the state, must be written by a corporation licensed in Arizona to transact fidelity and surety business, and is continuous in form. A surety that wants to withdraw must give the deputy director sixty days' notice by registered mail. Suit on the bond must be filed within three years after the act it is based on.

An applicant may deposit cash, certificates of deposit, investment certificates or share accounts in the same amount instead of a bond. Those funds are held for three years after the license expires, is surrendered or is revoked.

Who is exempt

A.R.S. 32-1004 lists sixteen exemptions. Among them are attorneys at law, banks and financing and lending institutions, common carriers, licensed real estate brokers, employees of licensed agencies and certain insurance premium collectors licensed under Title 20.

Fees and renewal

A.R.S. 6-126 sets the application fee at $1,500 and the annual renewal fee at $600. Under A.R.S. 32-1025 the license must be renewed by December 31. A license not renewed by then is suspended by operation of law, can still be renewed before January 31, and expires after that.

Eligibility and Requirements for a Arizona Collection Agency Bond:

Bond of $10,000, $15,000, $25,000 or $35,000 based on prior year Arizona gross income.
Bond running to the people of the State of Arizona, continuous in form.
Surety licensed in Arizona to transact fidelity and surety insurance.
Client proceeds paid within thirty days after the end of the month of collection.
Financial statement in the form described in A.R.S. 32-1022.

Arizona Collection Agency Bond FAQs:

How do I know which bond amount applies to my agency?

Look at gross annual income generated from Arizona business in the preceding year. Up to $250,000 needs $10,000. $250,001 to $500,000 needs $15,000. $500,001 to $750,000 needs $25,000. $750,001 and over needs $35,000. If you have no prior Arizona year, ask the department which tier it will accept before the bond is issued.

Does income from collections in other states count toward the tier?

The statute counts income from business transacted in Arizona. That includes collecting from a debtor in Arizona, working from an Arizona office, or collecting for an Arizona creditor, even when the other parties are elsewhere.

Can we post cash instead of buying a bond?

Yes. A.R.S. 32-1022 allows cash, certificates of deposit, investment certificates or share accounts in the amount the tier requires. The deposit stays tied up for three years after the license expires, is surrendered or is revoked.

Our law firm collects for clients. Do we need this license?

Attorneys at law are on the exemption list in A.R.S. 32-1004. Banks, licensed real estate brokers and employees of licensed agencies are also exempt, along with several other categories.

What happens if we miss the December 31 renewal?

The license is suspended by operation of law. You can still renew with the application and fees before January 31. After that the license expires.