Texas Consumer Debt Management Services Bond

Comprehensive Guide to Texas Consumer Debt Management Services Bond.

The Texas Consumer Debt Management Services Bond is a  type of surety bond  required for businesses and individuals providing debt management services in the state. The bond amount varies (see below) and the cost of the surety bond is usually between 1% and 3% of the bond amount.

How to Get a Texas Consumer Debt Management Services Bond

At Surety1.com we make it easy to obtain this surety bond. Our simple, three step process is:

1. Complete the easy to navigate and secure online application. ¹
2. Review the free, no obligation quote from one of Surety1’s professional surety bond agents, usually within one business day.
3. Sign some paperwork and pay the bond premium

Once these steps have been completed, the Texas Consumer Debt Management Services Bond will be shipped to the bond applicant.
^{1 -The name of the applicant on the surety bond application must match exactly the full legal business name of applicant for the license.} 

Surety1.com is a service of AssuredPartners one of the largest and fastest growing insurance agencies in the nation. Representing over a dozen surety bond companies, Surety1.com is the premier online provider of surety bonds nationwide since 2003.

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What Bond Amount do I Need?

If you handle consumer funds (hold money in trust for clients):

• First-time applicants: Most are required to provide the minimum $25,000 bond (set by the state).
• Existing businesses: Bond amount = average daily balance of your Texas consumer trust account over the past 6 months.

If you don’t handle consumer funds (only provide advice/negotiation without holding money):

• Fixed bond amount of $50,000.

What Does the Bond do?

This surety bond serves as a financial guarantee that debt management service providers will comply with Texas Finance Code Chapter 394 and protect consumers from potential violations. Regulated by the Texas Office of Consumer Credit Commissioner (OCCC), this bond ensures that debt management companies operate ethically and compensate consumers for damages resulting from any violations of state regulations 78. The bond acts as a safeguard for both the state and consumers, providing financial recourse if the debt management service provider fails to meet its obligations.

Who Needs This Bond?

The Texas Consumer Debt Management Services Bond is required for:

• Businesses or individuals providing debt management services in Texas
• Companies that obtain concessions from creditors on behalf of indebted consumers
• Providers offering consumer credit counseling services
• Debt negotiators working with Texas consumers
  • This includes two main types of activities:
    • Consumer credit counseling services
    • Debt negotiation services

Additional Registration Requirements

Beyond the Texas Consumer Debt Management Services Bond, debt management service providers must submit:

• Completed Application Form ADM 76
• Answered Application Questionnaire ADM 77
• Disclosure of Owners and Principal Parties Form ADM 78
• List of Additional Offices Form ADM 88 (if applicable)
• Statutory Agent Disclosure Form ADM 13

Required fees:

• $250 flat investigation fee
• $430 annual fee 6

What Happens if I have a Claim on my Bond?

If a debt management service provider violates Texas Finance Code Chapter 394:

• Claim filing: Damaged parties file claims with the surety company
• Investigation: Surety investigates the validity of claims
• Payout: If valid, surety pays claims up to the bond amount
• Reimbursement: Provider must repay the surety for all claims paid

Common violations that may lead to claims include:

• Misuse of consumer funds
• Failure to provide promised services
• Violations of maximum fee regulations

Renewal and Maintenance of Your Surety Bond

The Texas Consumer Debt Management Services Bond:

• Runs concurrently with your state-issued license
• Automatically renews with license renewal (renewal premium will be required)
• Bond Amount May require amount adjustments at renewal

Providers should monitor their trust account balances as bond amounts may need to be adjusted based on six-month averages .

Why Surety1.com?

• Extensive Experience with Texas debt management bonds since 2003
• Easy to Navigate and secure online application.
• Credit score flexibility
• Customer service reputation
• Competitive rates
• Representing top providers

Consequences of Operating Without a Texas Consumer Debt Management Services Bond

Operating a debt management service in Texas without the required bond may result in:

• License denial or revocation
• Fines and penalties
• Legal action by the state
• Inability to legally conduct business

Frequently Asked Questions

Q: How quickly can I get bonded?
A: Most bonds are approved and issued within 1-2 business days.

Q: What if I have bad credit?
A: Surety1 can usually find place the bond, although the cost may be more.

Q: Can the bond amount change?
A: Yes, it may be adjusted at renewal based on your trust account balances.

Q: Where do I file my bond?
A: With your license application to the Texas Office of Consumer Credit Commissioner.

Conclusion

The Texas Consumer Debt Management Services Bond is an essential requirement for operating legally in the state’s debt management industry. By understanding the bond requirements, application process, and ongoing obligations, providers can ensure compliance with Texas regulations while offering valuable services to consumers struggling with debt. Regular monitoring of trust accounts and maintaining good financial standing will help keep bond costs manageable throughout your business operations.