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Debt Collector Licensing

THE COMPLEX JOURNEY TO OBTAINING LICENSING FOR A COLLECTION AGENCY

 

Licensing rules and state regulations are constantly changing for obtaining licensing for a collection agency .  Each jurisdiction requires a different set of requirements including supporting documentation and fees. Timeline for approval varies from state to state.

 

Rather than burden yourself and expend the resources that are essential to the success of your business, Orion State Licensing reduces the time, money and effort that you would undertake while navigating the intricacies of state licensing.  We understand and know the process of licensing from start to finish and we get the job done competently and efficiently.

 

Debt collection and debt buying is a highly regulated industry, and operating agencies  must adhere to state and federal rules and regulations.  In 34 states, debt collectors are required to obtain a license before they can operate legally. These licenses are issued by state agencies, and they typically require debt collectors to pass a background check and demonstrate their knowledge of debt collection laws.

 

YOU WANT TO FOCUS ON GROWING YOUR BUSINESS, NOT THE BURDEN OF LICENSING

The debt collection licensing and registration process demands a team capable of successfully handling large complex projects with multiple delivery deadlines. Orion State Licensing, Inc. (“Orion”) is a full service interactive consulting agency specializing in the licensing field and is thoroughly knowledgeable in assisting companies to obtain & meet its new licensing and registration requirements in a timely process.

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A look at which states require collection agencies to obtain a license in order to collect debt.

 

Hover or tap to see requirements. Click each state for more detailed information.

 

THIRD PARTY COLLECTION AGENCIES

Third-party collection agencies operate independently, specializing in recovering consumer or commercial debts on behalf of their clients. These agencies may be subject to more complex regulations and licensing requirements. The licensing requirements for third-party debt collectors can vary depending on the jurisdiction. There are some states which do not have licensing requirements. However the states that are regulated have specific requirements for obtaining licensure. They may include but are not limited to obtaining surety bonds, licensing a qualified manager, procuring brick and mortar locations, obtaining state registrations, as well as meeting certain criteria related to professional conduct, training, and compliance with debt collection rules and regulations. Licensing a 3rd party collection agency allows the company to be compliant for conducting collection activities.

FIRST PARTY COLLECTION AGENCIES

First party collection agencies are a company’s in-house efforts to collect on unpaid invoices before they are written off as bad debt. First party debt collectors may not be subject to the same stringent licensing requirements as third-party. A great benefit of first party collections is that they can lead to higher rates of debt recovery. Because companies have a pre-existing relationship with their clients, they may be in a better position to understand their financial situation and work with them to find a solution. This can lead to more successful collections efforts, which can help to improve a company’s bottom line and reduce the amount of bad debt on their books. An additional benefit of using this type of collection agency is that the company retains full control of the collections process, allowing them to maintain a positive relationship with the borrower. One key advantage of first party collections is that they can help preserve a company’s reputation. Since they are dealing with their own clients, they can take a more personalized approach to collections, working with clients to find payment arrangements that work for both parties. This approach can help to avoid negative reviews or word-of-mouth reputation damage that can come from using third party collections agencies.

COLLECTION ATTORNEY & COLLECTION LAW FIRMS

When a debtor fails to pay, collection attorneys and collection law firms can provide legal assistance to ensure that the debt is collected. Debt collection law firms and lawyers must adhere to federal and state laws when attempting to collect debts. The Fair Debt Collection Practices Act (FDCPA) regulates the collection industry and sets guidelines for what is considered acceptable behavior. Violations of the FDCPA can result in penalties and liability for collection attorneys and collection law firms. In addition to their legal licensing requirements, collection attorneys and law firms may also need to comply with other debt collection regulations. Collection attorneys and law firms can be beneficial to both creditors and debtors. Creditors can benefit from the legal expertise of collection attorneys and collection law firms to ensure that their debts are collected in a timely and effective manner. Debtors can benefit from working with collection attorneys and collection law firms to negotiate a payment or settlement that works for their financial situation. Overall, collection attorneys and collection law firms play an important role in the debt collection process and can help both parties achieve a successful resolution.