Arizona Collection Agency Bond

To operate as a collection agency in Arizona, you need to get licensed through the Nationwide Multi-State Licensing System and Registry (NMLS). To get an AZ Collection Agency License, you must designate a manager to handle day-to-day operations, submit your application and license fee, and get an Arizona Collection Agency Bond.  

An Arizona Collection Agency Bond is a surety bond that acts as a financial guarantee that a collection agency will operate lawfully. If they fail to do so, the bond ensures the injured party is compensated for losses. This bond is also referred to as a Debt Collector Bond.

This surety bond is a legal requirement for all Arizona Collection Agency License holders. Each one involves three parties:

1. Principal – The collection agency that needs to get bonded.
2. Obligee – the organization requiring the bond (The Arizona Department of Insurance and Financial Institutions [DIFI])
3. Surety – the company that issues and financially backs the bond (ex. Lance Surety Bonds)

Say an AZ collection agency causes financial harm because it failed to comply with licensing regulations. In this case, the injured party can make a claim against the bond. The surety will initially pay for this claim. However, the collection agency must then pay them back in full.

Important: This bond is in place to protect the public—it is not insurance for collection agencies or debt collectors.

Any collection agencies operating in Arizona are required to get this bond in order to be licensed, per Arizona Revised Statutes Title 32, Chapter 9. A collection agency is considered any individual or business that:

• directly or indirectly solicits claims for collection.
• collects claims owed, due or asserted to be owed or due to a third party.
•  If in the process of collecting debts occurring in the operation of their own business, uses any name other than their own. This would indicate that a third person is collecting or attempting to collect such debts.

Certain individuals are exempt from this definition, including attorneys, banks and other lending institutions, title insurers, and real estate brokers.

An Arizona Collection Agency Bond costs as little as $100. While the full bond amount needed varies from $10,000 to $35,000, applicants with good credit only pay 1% - 3% of that amount.

This bond’s cost is determined by your gross income and credit score.

·       Gross Income: The full bond amount you need, known as the penal sum, is determined by your gross income. In this case, gross income is what you generated from all business transacted in Arizona during the previous calendar year. ARS § 32-1021(B)(2)

·       Credit Score: The percentage of the bond’s penal sum you must pay is mainly determined by your credit score. For example, with a $10,000 bond, the cost is typically anywhere from $100 - $1,000. However, business experience, past bonding history, and business financials may also be considered. See the chart below

Get a Free Collection Agency Bond Quote.

The Arizona Department of Insurance and Financial Institutions (DIFI) regulates all Arizona Collection Agency Licenses. However, license applications and renewals are processed through NMLS.

To apply for an AZ Collection Agency License, you will need:

1. A designated manager to handle the day-to-day operations of the business. This individual must:
   • Be a citizen of the United States and be of good moral character.
   • Not have been convicted of a crime involving moral turpitude.
   • Not have defaulted on payment of money collected or received for another.
   • Not have been a former licensee under this chapter whose license was suspended or revoked and not subsequently reinstated.
2. A financial statement that shows assets and liabilities. It must reflect your net worth in cash or its equivalent.
3. A list of all business transacted in the state.
4. A business plan that includes marketing strategies, products, target markets, and the operating structure that the applicant intends to employ.
5. Licensing Fee. $1,500, plus a registration fee based on the time of application. The registration fee ranges from $150 to $750.
6. A Collection Agency Bond. Bond Amount varies from $10,000 to $35,000, based on gross income. See the next section.

1. Apply for a Free Bond Quote

Fill out an online application. It is the quickest way to get a quote and available 24/7.

Information you need on hand includes:

• Bond Name (Collection Agency Bond)
• Bond Amount (Varies; $10,000 - $35,000)
• Your Contact Information

Have questions or prefer to apply over the phone? Get in touch with one of our bond experts at 877-514-5146.

2. Check Your Email

A bond quote will be sent directly to the email address you provide. For many Collection Agency Bonds, this quote only takes a few minutes to arrive. However, underwriting for larger bond amounts may take longer.

3. Purchase & Send Your Bond

Follow the email instructions to sign the bond agreement and pay your invoice online. We will send you an electronic copy of the bond right away. You can submit this online to NMLS to fulfill the licensing bond requirement.

An Arizona Collection agency bond is valid for one year. We will contact you one to two months before your bonds’ expiry with instructions on how to renew. Bond renewal is quick and straightforward, taking only a few minutes for most bondholders.

How Long is an Arizona Collection Agency Bond Valid?

An Arizona Collection Agency Bond is valid for one year and needs to be renewed annually. The date of expiry will be printed on your bond.

Can I operate multiple agencies under one bond?

No, you cannot operate multiple Arizona Collection agencies under one bond. The Arizona DIFI requires you to hold a license for each separate trade name/company listed on the Company Form (MU1). As a surety bond is a requirement for each license, you will also need an additional bond to register another agency.

What if I have bad credit?

If you have bad credit, you can often still get an Arizona Collection Agency Bond. While your initial bond rate may be higher due to your poor credit, if your financials improve over time, your bond rate will decrease.

At Lance Surety Bonds, we specifically have a bad credit bonding program. It helps those with poor credit to get the bond they need (and at the best possible price!)

Get a Free Bond Quote Today.

Chapter 9. COLLECTION AGENCIES, Title 32. Professions and Occupations, Arizona Revised Statutes. (n.d.). In FREE ACCESS TO ARIZONA LEGAL INFORMATION. Retrieved March 24, 2025, from
https://az.elaws.us/ars/title32_chapter9

Collection Agencies - DIFI. (n.d.). In DIFI. Retrieved March 24, 2025, from
https://difi.az.gov/collection-agencies-dfi

Collection Agency Bonds. (n.d.). In Lance Surety Bonds. Retrieved March 24, 2025, from
https://www.lancesuretybonds.com/license-bonds/collection-agency-bonds

License Company New App Checklist. (n.d.). Retrieved March 24, 2025, from
https://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/AZ_Collection_Agency_License-Company-New-App-Checklist.pdf