Debt buyers in Minnesota are required to obtain a license prior to conducting business. This is outlined in Minn. Stat §332.33, subd 1 and requires a Collection Agency License rather than the specific "Debt Buyer" License typically referred to by industry professionals.
Businesses that purchase charged-off accounts, bills and other forms of debt for collection purposes must comply with Minnesota Statutes Section 332.31 Subdivision 8 in order to be classified as a debt buyer. This includes businesses that engage in or hire third parties or attorneys for the purpose of collecting on said debts.
On August 1, 2021 the new law will be officially instituted. All debt buyer applications must be submitted no later than January of 2022 to ensure they are in compliance with regulations. To learn more about when you need to become licensed by, please see the next question for further guidance.
For those interested in becoming a debt buyer, the deadline to submit an application is January 1st 2022. Anyone who has already applied prior to this date will be given the opportunity continue their pursuit of licensure until approved or denied by The Commerce Department.
To apply for a debt buyer's license, applicants should use the PULSE system as their gateway. Following the outlined process on this platform will help ensure your application is successful!
How do start applying to becoming a debt buyer in Minnesota ?
As a debt buyer, it's important to be aware of the law - specifically when defining which employees qualify as collectors. Per Minnesota Statute 332.31 Subdivision 6, anyone working on behalf of and with authority from your business who are responsible for collecting outstanding accounts or debts is deemed a ‘collector’ according to legal definitions – barring any applicable exceptions stated in Minn. Stat §332.32 if they exist!
To ensure compliance when conducting business in multiple locations, debt buyers must obtain separate licenses for each distinct office. An exception to this requirement is if the branch office meets the definition of an “affiliated company” - further details can be found regarding that topic in following questions.
An "affiliated company," according to Minnesota statutes 332.31, subd. 9 is a business that meets four criteria: it must directly or indirectly control, be controlled by and/or have the same executive management team as another entity; possess unified corporate practices; not actively seek out debt collection on its own behalf - all of which warrant special licensing considerations in the state of Minnesota. When such entities comply with these requirements, they may do so under one license – provided each affiliated name appears thereon per Minn Stat §332-33 Subdivision 9 regulations
A debt buyer already licensed as a collection agency need not obtain an additional license—their existing authorization covers their activities in buying and collecting on past due accounts.
When it comes to licensed collection agency activities that involve debt buying, a separate license is not required.
Licensed collection agencies do not need to formally notify the Commerce Department of their debt buyer activities. This means that businesses can rest assured knowing that no additional paperwork is necessary when engaging in such practices.
Debt buyers must register their collectors with the Minnesota Department of Commerce before operating in the state. The registration process for debt collector can be completed through PULSE, a secure online system provided by the department. If you believe an exception under Minn. Stat § 332.32 applies to your business' collector, they may not require this extra step and should determine applicable eligibility requirements accordingly.
The collector registration process is quickly and easily facilitated through PULSE, setting out a straightforward procedure designed to help debt collectors get up-and-running.
Debt buyers are required to take proactive measures when selecting their collectors. This includes performing an adequate background screening, ensuring compliance with all applicable state regulations as per Minn. Stat. § 332.33, subdivision 8 prior to submission for registration and renewal of the individual collector's license .
Debt buyers must adhere to the surety bond requirements of Minn. Stat., sec. 332.34 and should use a bond form specific for their structure, which can be accessed through our website here!
All debt buyers must comply with certain regulations, including those related to trust accounts. If the debt buyer is engaging in third-party collection activities on behalf of others, they are obliged by Minnesota Statute 332.345 to have a segregated trust account established for these purposes. Alternately, if not collecting debts from other parties outside their own company then no such requirement exists and it is unnecessary for them to create one accordingly.