What is a Texas Debt Management Services Bond?
If you’re a debt management services provider in Texas, then this is the bond for you!
The Office of Consumer Credit Commissioner in Texas requires that a debt management services provider secure a bond upon filing an initial or renewal registration with the Commissioner.
The surety bond is needed as a guarantee that the debt management services provider will abide by the provisions of the Texas Finance Code 394.
Should a violation of the code arise, the bond will serve as a financial assurance that those who have been damaged by the said violation will be compensated.
What are the bond conditions?
The Texas Finance Code requires the following:
- The bond’s validity should be simultaneous with that of the period of registration unless revoked. In the case of revocation, a 30-day (or more than) notice is required by the Commissioner. The renewal of registration will automatically renew the surety bond. It may, however, include an adjustment to the bond’s amount. The registration is renewed annually.
- The responsible parties should pay the consumers the damages and penalties due to the violation of the code.
- That the bond should be in favor of the state of Texas for its use and the person who filed for a bond payment claim due to a violation.
How much will the bond amount be?
The bond amount should be equal to the daily balance of the debt management credit services provider’s trust account for Texas consumers over the six-month period before issuing the bond.
The commissioner will decide the bond amount if the provider is registering for the first time. However, if the provider receives and holds money paid by or on behalf of a consumer for disbursement to the consumer’s creditors, the bond amount will not be less than $25,000 or more than $100,000.
If the provider does not receive and hold money paid by or on behalf of a consumer for disbursement to the consumer’s creditors, the bond amount will be $50,000.
The surety bond cost will depend on which category of the bond amount you will fall under, your credit score, financial history, and other necessary factors. It can go as little as 1% for those who possess an outstanding credit score!
Other requirements for the DBMS registration filed at the Office of Consumer Credit Commissioner in Texas
- Application form ADM 76 that’s been completed and signed.
- Application questionnaire ADM 77 that’s been answered.
- Filled out Disclosure of Owners and Principal Parties of Debt Services Provider form ADM 78.
- List of Additional Offices Form ADM 88.
- Statutory Agent Disclosure form ADM 13.
- Pay the necessary fees that will include a flat fee for investigation ($250) and the annual fee ($430).
Give us a call if you’re ready to get a DBMS bond or if you need further information!