Third Party Debt Collector ($10,000) Bond - Statewide in Texas

Brief Summary

Texas does not license third-party debt collectors. It bonds them. The $10,000 bond filed with the Secretary of State is the one thing standing between your agency and lawful collection calls into Texas, there is no state filing fee, and the filing goes in electronically through the SOS Portal.

Texas Finance Code 392.101 bars a third-party debt collector or credit bureau from engaging in debt collection until it obtains a $10,000 surety bond from a surety authorized in Texas and files a copy with the Texas Secretary of State. The bond runs in favor of any person damaged by a violation of Finance Code Chapter 392 and the State of Texas for their benefit. It is filed with SOS Form 2901, and the Secretary of State charges no filing fee.

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How to Apply for a Third Party Debt Collector ($10,000) Bond:

• Confirm you fall under Chapter 392: a third-party debt collector collecting consumer debt, or a credit bureau.
• Have the legal business name and address exactly as you want them to appear in the SOS Debt Collector Search.
• Complete the bond application with owner information for the credit review.
• Pay the premium and receive the executed $10,000 bond.
• Complete Form 2901 and submit it with a copy of the bond electronically through the SOS Portal.
• Keep the bond in force for as long as you collect in Texas.

Detailed Information About the Texas Third Party Debt Collector ($10,000) Bond:

A bond, not a license

Many collectors expect a Texas collection agency license. There is none. The Secretary of State's own FAQ says third-party debt collectors and credit bureaus are not required to register, but they are required to file a $10,000 surety bond with the Secretary of State before engaging in debt collection. The requirement is Texas Finance Code 392.101, and the amount is a flat $10,000 with no tiers.

Who has to file

Finance Code 392.001 defines a third-party debt collector by reference to the federal Fair Debt Collection Practices Act definition at 15 U.S.C. 1692a(6). Chapter 392 applies to consumer debt, meaning obligations primarily for personal, family or household purposes. Credit bureaus must also file the bond.

Attorneys collecting debts on behalf of a client are excluded from the definition, but the exclusion ends if the attorney has nonattorney employees who regularly solicit debts for collection or regularly contact debtors to collect. A law firm with a collection staff making the calls needs the bond.

What the bond covers

Under 392.101(b), the bond is in favor of any person damaged by a violation of Chapter 392 and of the State of Texas for the benefit of those persons. Under 392.102, a person with a claim may sue both the collector and the surety. If the surety pays, the collector owes the surety back under its indemnity agreement.

How to file

The surety must be authorized to do business as a surety company in Texas. A copy of the bond and an executed Form 2901 are submitted electronically through the SOS Portal. There is no filing fee. The public can check whether a collector has filed through the Secretary of State's Debt Collector Search.

Cancellation and penalties

Form 2901 requires written notice of intent to cancel to reach the Secretary of State, Statutory Documents Section, no later than the 60th day before the cancellation date. Collecting without a bond on file is a misdemeanor under 392.402, and 392.403 lets a consumer seek injunctive relief, actual damages and statutory damages of not less than $100 for each violation of the bond requirement.

Eligibility and Requirements for a Texas Third Party Debt Collector ($10,000) Bond:

• Bond amount of $10,000 under Texas Finance Code 392.101(c).
• Surety company authorized to do business as a surety in Texas.
• Bond in favor of any person damaged by a Chapter 392 violation and the State of Texas for their benefit.
• Executed SOS Form 2901 filed with a copy of the bond.
• No Secretary of State filing fee.
• Surety cancellation requires written notice to the Secretary of State at least 60 days before the cancellation date.

Texas Third Party Debt Collector ($10,000) Bond FAQs:

Official and Additional Resources for the Texas Third Party Debt Collector ($10,000) Bond: