State Licensing Requirements for Collection Agencies

Debt collection licensing can be a confusing subject. While a few states don’t have licensing requirements for debt collectors, most do.However, requirements across the states are not uniform. Prior to obtaining a license, debt collectors need to determine which states require a license to collect debt as well as any potential licensing exemptions for out-of-state debt collectors and other conditions of licensure, such as trust accounts, bonds and licensing fees.You’ll need to review state license requirements carefully as certain debt collectors may be exempt. Often, in order to qualify for the out-of-state licensing exemption, debt collectors must not maintain a physical presence in the state and may only collect debts by use of interstate communications, which usually includes telephone, mail or fax.

 

There are three types of collection agencies:

 

1.) First-Party Agencies. These are oftentimes subsidiaries of the original creditor.

 

2.) Third-Party Agencies. These are companies which are contracted by the original creditor to collect debts on their behalf for a fee.

 

3.) Debt Buyers. These companies purchase debts at a percentage of the value and then attempt to collect it from the debtor.

 

Below is a chart broken down by state to show which states require a license to operate. It is always a good idea to check your state’s government site just to make sure but this a quick reference.

 

State License Required Bond Required Certificate of Authority State Filing Fee
AK
Yes Yes Yes $300 – 600
AL
No No Yes N/A
AZ
Yes Yes Yes $1,500
AR
Yes Yes Yes $140
CA
No No Yes N/A
CO
Yes Yes Yes $300
CT
Yes Yes Yes $500 – 900
DC
No No No N/A
DE
No No No N/A
FL
Yes Yes Yes $200 – 500
GA
No No No N/A
HI
Yes Yes Yes $120 – 215
IA
Yes Yes Yes $10
ID
Yes Yes Yes $150
IL
Yes Yes Yes $750
IN
Yes Yes Yes $100
IA
Yes Yes Yes $10
KS
No No No N/A
KY
No No No N/A
LA
Yes No Yes $25
MA
Yes Yes Yes $1,300
MD
Yes Yes Yes $700
ME
Yes Yes Yes $200 – 400
MI
Yes Yes Yes $225
MN
Yes Yes Yes $1,050
MO
No No No N/A
MS
No No No N/A
MT
No No No N/A
NC
Yes Yes Yes $1,000
ND
Yes Yes Yes $700
NE
Yes Yes Yes $400
NH
No No No N/A
NJ
Yes Yes Yes $25
NM
Yes Yes Yes $500
NY
No No No N/A
OH
No No No N/A
OK
No No No N/A
OR
Yes Yes Yes $350
PA
No No No N/A
RI
Yes No Yes $210
SC
No No No N/A
SD
No No No N/A
TN
Yes Yes Yes $150
TX
No No No N/A
UT
Yes Yes Yes $32
VA
No No No N/A
VT
No No No N/A
WA
Yes Yes Yes $340
WI
Yes Yes Yes $1,200
WV
Yes Yes Yes $500