Michigan Collection Agency Bond

Any business that collects debts on behalf of others in Michigan must post a collection agency bond before receiving or renewing its state license. The bond protects consumers and clients from losses caused by a collection agency’s misconduct or noncompliance. This guide explains who needs the bond, how much it costs, how to file it with the state, and how to apply through Lance Surety’s online application.

Collection agencies in Michigan play a critical role in recovering delinquent debts for businesses and financial institutions. Because they handle sensitive financial transactions, the state requires them to be licensed and bonded through the Corporations, Securities & Commercial Licensing Bureau (CSCL) under the Michigan Department of Licensing and Regulatory Affairs (LARA).

A Michigan collection agency bond acts as a safeguard for the public and the clients these agencies serve. It ensures that agencies follow all relevant state laws, handle funds properly, and operate with integrity. Businesses seeking to operate legally in Michigan must secure this bond before they can begin collecting debts or renewing an existing license.

For context on how this bond fits within broader licensing requirements, Lance Surety Bonds offers additional information about compliance through its collection agency bond program.

A Michigan collection agency bond is a surety bond required under state law to obtain or maintain a license to collect debts on behalf of another party. It guarantees that the agency will adhere to Michigan’s Collection Practices Act and all applicable rules set by the Michigan Department of Licensing and Regulatory Affairs (LARA).

If a collection agency mishandles client funds, violates consumer rights, or acts dishonestly, the bond ensures financial restitution for affected parties—up to the bond amount. The surety then seeks reimbursement from the agency.

The state mandates this bond to reinforce ethical standards and protect consumers from fraudulent or aggressive debt collection practices. In essence, it serves as both a compliance requirement and a trust signal for clients and regulators.

Typically, the bond must be filed as part of the Collection Agency License Application (Form LCA-015). Applicants can download the official form pdf directly from Michigan’s LARA website when preparing their application package.

The bond amount required for Michigan collection agencies is $5,000, set by the state. However, the amount an agency pays—the premium—is only a small fraction of that total.

Most licensed agencies pay between $100 and $250 annually for their bond. The exact premium depends on several factors, including:

• Credit score and financial history of the agency owner
   
• Years in business and management experience
   
• Prior bond claims or license violations
   
• Business financials and stability
   

Applicants with strong credit typically pay around 1–3% of the total bond amount. For example, a $5,000 bond could cost as little as $100 per year. Those with less established credit may pay slightly more but can still qualify for coverage.

Premiums can be lowered over time by maintaining a good payment history and avoiding claims. To understand what influences pricing across different industries, refer to Lance Surety Bonds’ Surety Bond Cost page, which breaks down the variables that affect rates and renewal pricing.

Securing your bond and license in Michigan follows a clear, structured process:

1. Verify your licensing requirements.
    Determine whether your business meets Michigan’s licensing thresholds under the Collection Practices Act. Only agencies collecting debts for third parties must be licensed and bonded through LARA.
    
2. Apply for your bond through a licensed surety provider.
    Complete Lance Surety’s secure online application to receive a quote. Applications are processed quickly—most approvals are issued within 24 hours.
    
3. Review Michigan’s bonding instructions.
    The state’s how to get bonded document outlines official filing procedures and acceptable bond forms. It’s important to ensure your bond is written by a surety company authorized to operate in Michigan.
    
4. Submit your completed bond with your license application.
    File your signed and sealed bond directly with the Michigan Department of Licensing and Regulatory Affairs, alongside the completed application form.
    
5. Maintain your bond for license renewals.
    Collection agency licenses in Michigan must be renewed annually. Keeping your bond active is essential for renewal approval. Most surety providers send reminders 30–60 days before expiration to prevent any lapse in coverage.
    

Holding an active bond is part of maintaining continuous compliance with the Michigan Bureau of Professional Licensing. Failing to renew on time can result in license suspension or denial of renewal.

Yes. Even if your credit history isn’t perfect, you can still qualify for a Michigan collection agency bond. Surety companies understand that many small business owners have faced credit challenges, and Lance Surety Bonds works with multiple A-rated sureties to offer flexible underwriting.

Instead of relying solely on credit score, underwriters consider additional factors such as your business experience, financial stability, and history of regulatory compliance. Applicants with low credit may pay slightly higher premiums (closer to 5–8%), but most are still approved.

With time and consistent renewals, agencies can often qualify for lower rates on future bond terms.

Who needs a Michigan collection agency bond?

Any business or individual collecting debts for others must obtain a license and bond under Michigan’s Collection Practices Act. This applies to both in-state and out-of-state agencies operating on behalf of Michigan clients.

How long does it take to get bonded?

Most applicants receive approval within one business day after submitting their online application. The process is quick, and once payment is made, your executed bond can be delivered electronically for submission to LARA.

What happens if my bond lapses or is canceled?

If your bond expires or is canceled, your license immediately becomes invalid until a new bond is issued. LARA requires continuous coverage for all active licenses, so renewing your bond before expiration is essential to avoid suspension or penalties.

How can I verify that my bond meets Michigan’s requirements?

You can confirm compliance by checking your bond form against the official Collection Agency License Application (Form LCA-015) provided by LARA. The approved form pdf outlines required bond wording and filing instructions.

Lance Surety Bonds. (n.d.). Collection agency bonds.
https://www.lancesuretybonds.com/license-bonds/collection-agency-bonds

Lance Surety Bonds. (n.d.). Surety Bond Cost.
https://www.lancesuretybonds.com/learn/surety-bond-cost

Lance Surety Bonds. (n.d.). Online application.
https://www.lancesuretybonds.com/surety-bond-quote

Michigan Bureau of Professional Licensing. (n.d.). BPL homepage.
https://www.michigan.gov/lara/bureau-list/bpl

Michigan Department of Licensing and Regulatory Affairs (LARA). (n.d.). Collection agencies.
https://www.michigan.gov/lara/bureau-list/bpl/occ/prof/collection

Michigan Department of Licensing and Regulatory Affairs. (n.d.). Collection Agency License Application Form (LCA-015).
https://www.michigan.gov/-/media/Project/Websites/lara/bpl/Folder32/lara_Collections_LCA015.pdf?rev=a79cd62b36804866b1f0c3d16050d968

Michigan Department of Licensing and Regulatory Affairs. (n.d.). LPI-010 bonding instructions.
https://www.michigan.gov/-/media/Project/Websites/lara/cscl/Folder1/lpi010.pdf?rev=4d18b6c1bb9f493ab802ce48736cc354