Surety Bond News

The State of Indiana implemented a new law relating to debt-management service providers. The new law, which is referred to as SB 428, modifies the surety bond requirement for debt-management service providers. The previous law required a $25,000 surety bond conditioned on the truthful execution of the Department’s policy and regulations and compliance with the State’s legislation. SB 428 states that the Director will establish the quantity of the surety bond being required and the standards pertinent to the bond.

Debt-management services are impacted by a new law in Tennessee State which is labeled SB 812. The new law enacts the Uniform Debt Management Services Act of the National Conference of Commissioners of Uniform State Law. SB 812 requires debt-management service providers to acquire a $50,000 surety bond. The Attorney General may amplify or reduce the required amount of the surety bond calculated by specific conditions of the licensee. The new law requires surety companies to receive an “A” rating from a nationally acknowledged rating service and must be licensed within the State. The surety bond runs to the State for the advantage of the state and those who enter into agreements with the provider. The surety bond must be active for a further two years after the registrant stops executing debt-management services in Tennessee. SB 812 authorizes a certificate of insurance or a letter of credit in the place of a surety bond. The new law becomes active on July 1st, 2010.

HB 2294, enacted 10/09/2008, adds a new requirement for debt management services to abide by. The new law calls for debt management service companies to be licensed, to acquire a $50,000 bond, and to have proof of liability/fidelity insurance. The bond acquired must be from a surety approved by the Department of Banking and must be licensed in the Commonwealth. The bond will run to the Commonwealth for the aid of consumers who suffered damages from the debt management providers/their agent’s defiance of the new law or the regulations implementing it. The function of the fidelity policy is to cover against any theft, fraud or dishonesty of the provider’s employees, directors or principals.