What Is a Minnesota Debt Management/Settlement License Bond?
Minnesota debt management and settlement license surety bonds protect consumers from unfair or unethical debt management practices. The bond terms prohibit providers from engaging in fraud or misrepresentation while dealing with clients.
These bonds are required to be licensed with the Minnesota Department of Commerce.
How Much Do Minnesota Debt Management and Settlement Bonds Cost?
Minnesota debt settlement and debt management bond requirements vary. The minimum bond amount is $5,000 and increases based on the value of annual transactions.
The cost of your Minnesota bond will depend on the bond type and coverage amount:
- Debt settlement services provider bonds start at $75 with a multi-year discount available.
- Debt management services provider company bonds cost 1–10% of the total coverage amount, depending on credit score.
Request your free quote now.
Learn more about how surety bond rates are calculated here.
How Does a Minnesota Debt Management/Settlement License Bond Work?
An Minnesota debt management or debt settlement license bond joins three parties in a legally-binding contract:
- Principal: The debt management/settlement services provider
- Obligee: The Minnesota Department of Commerce
- Surety: The surety bond provider
The obligee requires the bond from the principal (debt services provider) and the surety backs the principal’s obligation. If the bonded principal causes damages or breaks the bond terms, the bond acts as a line of credit to pay harmed parties. However, the principal must reimburse the surety for any claims.
How to Get a Debt Management/Settlement License Bond in Minnesota
SuretyBonds.com provides the fastest and easiest way to get a Minnesota debt management or settlement services license bond. Just follow these quick steps:
- Apply: Complete the online application form.
- Quote: Receive a free quote within one business day.
- Checkout: Purchase your bond and e-sign the indemnification agreement.
We’ll upload the bond directly to the NMLS on your behalf and email you a copy for your records.
Who Needs a Minnesota Debt Services License and Bond?
The Minnesota Department of Commerce issues three license types for debt services providers, each with a unique surety bond requirement.
#1 Debt Management Services Provider: An entity that helps consumers with financial planning and receives funds from the consumer to repay creditors under a specific plan. These providers must file a $5,000 surety bond to become licensed.
#2 Debt Settlement Services Provider: Any person providing debt settlement services to a debtor in Minnesota, for-profit or not-for-profit. These providers must file a $5,000 surety bond to receive a business license.
#3 Credit Service Organization: A for-profit business that offers the following services to consumers:
- Improving personal credit
- Obtaining credit
- Providing credit advice or assistance
Credit service organizations (CSOs) must file a $10,000 bond to operate in the state. Learn more about Minnesota CSO bonds here.
How to Get a Debt Management License in Minnesota
To get your Minnesota debt management license, you’ll need to apply through the NMLS and submit the materials listed below.
- Company Form (MU1)
- Individual Form (MU2)
- Financial statements (including a balance sheet, income statement and statement of cash flows)
- $1,000 licensing fee
- Proof of a separate trust bank account
- Minimum $5,000 surety bond
- Business plan documentation
- Certificate of Authority/Good Standing
- Company staffing and internal policies documentation
- Sample copy of the licensee’s standard debt management services agreement the licensee executes with debtors
- Sample notice of debtor’s right to cancel (Minn. Stat 332A.11, subd. 2).
- Legal company formation documents
- Management chart
- Organization chart
- Biographical Statements Forms for each control person verifying experience
See more details in the resources linked below.
How to Get a Debt Settlement Services License in Minnesota
To get your Minnesota debt settlement license, you’ll need to apply through the NMLS and submit the following materials:
- Company Form (MU1)
- Individual Form (MU2)
- Financial statements (including a balance sheet, income statement and statement of cash flows)
- $1,000 licensing fee
- Proof of a separate trust bank account
- Minimum $5,000 surety bond
- Business plan documentation
- Certificate of Authority/Good Standing
- Company staffing and internal policies documentation
- Sample copy of the licensee’s standard debt settlement services agreement
- that the licensee intends to execute with debtors.
- Sample copy of the Disclosure statement required by Minn. Stat. 332B.06,
- Legal company formation documents
- Management chart
- Organization chart
- Biographical Statements Forms for each control person verifying experience
You’ll also need to mail two documents directly to the Department of Commerce:
- Appointment of Commissioner of Commerce as Agent for Service of Process
- Annual Report completed pursuant to Minnesota Statutes § 332B.08, subd. 2 no later than March 15 of each year.
Find more licensing information in the resources linked below.
