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Army Veteran Owned | Expert Surety Bonds Since 2004
Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
Pennsylvania does not set one bond amount for debt management companies. The bond has to be larger than the total Pennsylvania consumer funds you will hold, directly or in trust, at any time, so the right number starts with your own trust account projections. Size it correctly and it clears one of the conditions the Department of Banking and Securities requires before it will issue the license.
Section 7 of Pennsylvania's Debt Management Services Act bars the Department of Banking and Securities from issuing a debt management services license until the applicant obtains and maintains a bond in an amount greater than the total Pennsylvania consumer funds the licensee will hold directly or in trust at any time. The bond runs to the Commonwealth, is also available to consumers injured by a violation of the Act, and cannot be canceled without 30 days notice to the Department.
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There is no fixed figure. Section 7 of the Debt Management Services Act, Act 117 of 2008, requires a bond in an amount greater than the total amount of Pennsylvania consumer funds the licensee will hold directly or in trust at any time. The figure has to cover your peak balance, not your average, and it has to be in place before the license issues. If your volume grows past the bond, the bond needs to grow with it.
The Act covers companies that receive funds periodically from a consumer and distribute them to the consumer's creditors. Section 4 exempts banking institutions and credit unions, judicial officers and people acting under court order, government agencies and instrumentalities, employees of licensees or exempt persons, and attorneys providing legal services within an attorney client relationship.
Three groups do not need a license but still have to follow the Act when they provide these services: licensed certified public accountants working within an accountant client relationship, licensed title insurance companies, and mortgage lenders, mortgage brokers and mortgage loan correspondents licensed under 7 Pa.C.S. Chapter 61.
The bond must come from a surety company authorized to do business in Pennsylvania, in a form acceptable to the Department. It is a penal bond conditioned on compliance with the Act, subject to forfeiture by the Department, and runs to the Commonwealth for its use. It is also available for the benefit of any consumer injured by a violation of the Act or its regulations. It cannot be canceled for any cause unless notice of intent to cancel is given to the Department at least 30 days before cancellation takes effect.
The license is filed through NMLS. The checklist calls for uploading the bond and mailing the original, a $2,000 license fee, credit report and FBI background check fees for each control person, a qualifying individual, financial statements and a business plan. Credit counselors must be certified by a Department approved certification provider. Nonprofit corporations with less than $3,000,000 a year in debt management fees use a separate checklist.
The checklist also asks for a liability or fidelity insurance policy covering dishonesty, fraud and theft by employees, officers, directors or principals, and recommends at least $250,000. That policy is separate from the bond and does not replace it.
Debt settlement providers are licensed under Pennsylvania's separate Debt Settlement Services Act. This page covers the debt management services license.
More than the total Pennsylvania consumer funds you will hold directly or in trust at any time. Section 7 of the Debt Management Services Act sets it that way, so the amount depends on your own volume and trust balances.
Nonprofit status is not one of the Section 4 licensing exemptions. Nonprofit corporations with less than $3,000,000 a year in debt management fees apply on a separate NMLS checklist, and Section 7 conditions every license on the bond.
The bond runs to the Commonwealth and is subject to forfeiture by the Department. It is also available for the benefit of any consumer injured by a violation of the Act or its regulations.
Only with notice of intent to cancel given to the Department at least 30 days before cancellation takes effect. A bond without that provision does not satisfy the Act.
No. The NMLS checklist asks for a separate liability or fidelity policy, with at least $250,000 recommended. You need both.
No. Debt settlement providers are licensed under Pennsylvania's separate Debt Settlement Services Act.
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