Debt collection license
Authorizes a company to collect past-due accounts on behalf of the original creditor or another owner of the debt.
Debt buyer license
Authorizes a company to purchase portfolios of past-due accounts and then collect on debt it now owns.
| Feature | Debt collection license | Debt buyer license |
|---|---|---|
| Who owns the debt | The original creditor or a third party | Your company, after purchase |
| Typical business model | Contingency fees on amounts recovered | Returns on purchased portfolios |
| Where it is required | Most states license third-party collectors | A growing number of states license debt buyers separately |
| Surety bond | Commonly required, amount varies by state | Commonly required, amount varies by state |
| Consumer protection rules | FDCPA and state collection laws apply | FDCPA and state collection laws apply |
Best for
Pick Debt collection license
Choose the collection license if you recover accounts for original creditors or other owners and earn a fee on what you collect.
Best for
Pick Debt buyer license
Choose the debt buyer license if you purchase portfolios of accounts and collect on balances your company now owns. Several states require it in addition to a collection license.
How the two licenses differ
Both license types govern the collection of past-due consumer accounts, and both put your company under the Fair Debt Collection Practices Act and state collection statutes. The dividing line is ownership. A third-party collector works the accounts for the party that owns them and earns a fee on what it recovers. A debt buyer purchases the accounts outright and then collects on balances it now holds.
Several states treat debt buying as its own regulated activity with a separate license category, application, and sometimes a separate bond. Other states fold debt buyers into the general collection-agency license. Because the map changes as states update their statutes, confirm the current requirement in every state where you plan to operate before you file.
Getting it right across states
Most growing collection operations end up holding licenses in many states at once, each with its own renewal date, bond, and reporting cycle. Tracking that calendar in one place is what keeps a multi-state program in good standing. See our state licensing summaries for a starting point, or talk with our team about your footprint.
Frequently asked
- Do I need both licenses?
- Possibly. If your company both buys portfolios and collects for outside creditors, some states will expect you to hold both authorizations. Check each state individually.
- Does the FDCPA apply to debt buyers?
- Yes. Debt buyers that collect on the accounts they purchase are subject to the FDCPA and to state collection laws, the same as third-party collectors.