- Who qualifies as a debt collector under Maine law?
- I am an out-of-state attorney and my law firm plans to collect debts in Maine. Do I need a debt collector's license? How did the 2006 amendment to Maine's FDCPA affect my status as a debt collector?
- When do I need to get a license?
- Are there minimum net worth qualifications for my company to become licensed as a debt collector? If so, what are they?
- What do I need to include in my debt collection application packet?
- What are the bond requirements for debt collection companies?
- What is the license fee schedule, and how does it affect the amount I am required to pay?
- My collection company has two branches, a main office and a second smaller office. Both branches actively collect debts from Maine consumers. I received a debt collection license for my main office. Am I in compliance with Maine's Fair Debt Collection Practices Act (FDCPA)?
- What are the Bureau of Consumer Credit Protection guidelines for debt collection letters to Maine consumers?
- What trust account requirements exist for companies collecting debt in Maine?
- Do I need to notify the Bureau of Consumer Credit Protection if I begin undertaking new forms of debt collection activity (e.g. my company currently writes letters, but would like to begin direct collection activity)?
- Are there location requirements for my company's files on Maine consumers?
- What is the Gramm-Leach-Bliley Act (GLB)? Does it apply to me as a debt collector?
- If the consumer's debt is incurred in another state, do I need to be licensed in Maine to collect the debt?
- Can the State of Maine suspend or revoke my debt collection license?
- What do I need to do if I plan to shut down my debt collection business?
Maine Law tracks federal law; therefore, if your company qualifies as a debt collector under federal law it also qualifies as such under Maine law.
These types of companies are required to obtain a Maine debt collection license:
- Third-party collectors of consumer debt
- Companies that buy delinquent debt and collect on it
- Check-guarantee companies that collect on bounced checks
- Collectors of student loan debt
- Collectors of child support debt (See 32 M.R.S.A §11002)
- Attorneys who collect consumer debt (See question 2 for licensing information on attorney debt collectors)
As of August 23, 2006 Maine law requires that you obtain a debt collector license from the Bureau of Consumer Credit Protection (Bureau of Consumer Credit Protection). The Second Regular Session of the Maine Legislature passed LD 1804 in the spring of 2006. Under this amendment, the State FDCPA distinguishes between in- and out-of-state attorneys. Out of state attorneys must obtain a license if they plan to conduct debt collection activity in Maine.
Four sets of circumstances exist that would require your company to obtain a debt collection license:
- If your company maintains an office in Maine.
- If you collect on debts incurred between Maine consumers and a creditor with a business presence in Maine.
- If you solicit your services to Maine creditors.
- If you collect debt in other states that were originally incurred in Maine.
Your company must have a positive net worth of at least $10,000 to be eligible for a Maine debt collector license.
Your application packet must include the following completed items:
- Application form
- Fingerprint card for the owner, partners, or top three officers (depending on ownership organization)
- Verification of the company's trade name
- An "Authorization for Credit Bureau Report" form, signed by the owner or partners
- Surety bond form, completed by a bonding company
- Financial report - reviewed or audited by a C.P.A.
- Samples (or computer screen printouts) of the following:
- Client contract forms
- Listing sheets
- Debtor's work card
- Debtor's receipt for cash payment
- Remittance sheet
- Creditor's attorney authorization form
- All letters the company plans to use in correspondence with Maine consumers (See question 9)
- See APPENDIX A for a detailed explanation of these items.
- Name of financial institution holding trust account (See question 10 for more on trust account requirements)
- Statement explaining exact nature of company's debt collection activity
- License fee (Amount and schedule explained in question 7)
The amount of the surety bond depends on the type of debt collection activities your company plans to undertake. Direct collection companies require a bond of $20,000, whereas letter-writing companies (companies that do not accept funds, but direct that the funds be sent to the creditor) require a bond of $5,000.
When debt collectors renew their license with the Bureau of Consumer Credit Protection, the amount of the bond depends on the company's gross monthly Maine collections for the previous year. The Bureau of Consumer Credit Protection separates the bond amount into brackets based on average monthly collections on behalf of Maine consumers:
|Monthly Collections||Bond Amount|
|$30,000 – $40,000||$45,000|
|$20,000 – $30,000||$35,000|
|$10,000 – $20,000||$25,000|
Letter-writing companies must procure a $5,000 bond upon license renewal.
To maintain a standard renewal schedule, the Bureau of Consumer Credit Protection requires companies whose registered trade name begins with the letters A-M to renew their license on even years (e.g. 2006, 2008, 2010), while companies beginning with N-Z to renew on odd years (2007, 2009, 2011). The Bureau of Consumer Credit Protection charges a $600 license fee if over 12 months remain, and $300 if less than 12 months remain, before the next renewal cycle.
My collection company has two branches, a main office and a second smaller office. Both branches actively collect debts from Maine consumers. I received a debt collection license for my main office. Am I in compliance with Maine's Fair Debt Collection Practices Act (FDCPA)?
No, your company does not currently meet Maine FDCPA standards. Any office that conducts direct debt collection in Maine must have an individual license. In this case, your branch office must apply for a "branch license" in order for your company to fully comply with State law.
Several requirements exist for correspondence between licensed debt collectors and Maine consumers:
- The initial contact letter must contain the federal 30-day verification notice, and the following statement, "This is an attempt to collect a debt. Any information obtained will be used for that purpose." Initial letters should not include phrases like "pay now" or "pay at once", because those statements overshadow the consumer's 30-day debt verification period.
- All additional letters to consumers must contain the phrase, "This communication is from a debt collector."
- Correspondence must include the company's hours of operation.
- The letter must include the company's address so the consumer can confirm that the company holds an active Maine debt collection license. If the company receives its mail at a P.O. Box, they must also include the street address.
Maine law requires licensed debt collectors to maintain a trust account used strictly for, and containing all monies collected from, payments received by the collectors in payment of debts owed to Maine creditors.
State law also requires that the gross amount of debts collected on behalf of Maine creditors be deposited into the trust account no more than one day after receipt of payment from the consumer. All licensed debt collectors must withdraw their commissions from the account on a single day of each month. Each individual company may determine their commission withdrawal date, and then report that date to the Bureau of Consumer Credit Protection.
If collections on behalf of Maine creditors will amount to less than 25% of the company's total collections, the company may submit a written request to have the separate trust account requirement waived. The request must include the anticipated percentage of total collections that will be made on behalf of Maine creditors, and an indication of the company's willingness to reimburse the Bureau of Consumer Credit Protection for all examination costs associated with tracking Maine payments through the company's general trust account.
Do I need to notify the Bureau of Consumer Credit Protection if I begin undertaking new forms of debt collection activity (e.g. my company currently writes letters, but would like to begin direct collection activity)?
Your company must provide a written notification to the Director of the Bureau of Consumer Credit Protection if you plan to alter your collection activities. The director will decide whether your company needs to update its surety bond and/or provide additional financial forms to our agency.
Yes, your company must maintain all documents regarding Maine consumers in the State of Maine. However, you may seek permission to keep these records outside of the State by submitting a written request to the Director of the Bureau of Consumer Credit Protection. The request must contain the exact address and phone number of the files' out-of-state location. It must also express your company's willingness to pay any additional costs incurred by the Bureau of Consumer Credit Protection for examinations and investigations outside the state of Maine.
The files must be available for review at the Bureau of Consumer Credit Protection within 72 hours of a request from our agency. The Director must respond no more than 30 days after receiving the correspondence. Your company must report any change in the location of its records to the Bureau of Consumer Credit Protection within ten days of the relocation.
The GLB act sets privacy standards for the collection and distribution of consumer information by any company that collects personal information from consumers. The GLB Act requires companies to give consumers a privacy notice, and to inform them of the collection methods used to obtain their personal information. The notice must also indicate whether the company plans to share the consumer's information with other businesses. Companies must also give consumers the ability to "opt-out", which means that no other business will receive the consumer's information.
Talk with your legal advisor on the question of whether G.L.B. affects you, because the way in which you use personal information on debtors during the collection process may result in application of the law.
No, debt collection efforts against a Maine resident who incurred the debt in another state do not require a Maine debt collection license. For example, if a Maine consumer travels to Texas, breaks his or her arm and then goes to the hospital to have it placed in a cast, a Texas debt collector may contact the consumer in Maine to collect the hospital bill without a Maine debt collector's license, because the debt was originally incurred in Texas.
Yes, the director of the Bureau of Consumer Credit Protection may hold an administrative revocation hearing, and may file a complaint with the Maine District Court to facilitate the suspension or revocation of your company's license. The director may take such action if it becomes clear that your company violated any section of Maine's FDCPA.
Civil penalties of up to $5,000 per violation may be leveled against debt collectors by the Director of the Bureau of Consumer Credit Protection, through the Maine Attorney General's office. In addition, collection without a license may result in criminal penalties; see 32 M.R.S.A § 11040.
Your debt collection company must take several steps before shutting down:
- Notify the director of the Bureau of Consumer Credit Protection and all creditor clients of your intentions at least thirty days prior to the planned shutdown.
- Provide final financial figures for all debt collection accounts to your clientele.
- Return all funds and relevant paper work to the creditors from which it originated.
If your company wishes to sell any accounts to another debt collection company, you must receive written permission from the original creditor before doing so.
Listing Sheets (or equivalent computer screen print out) — The listing sheet will record the referrals made by a creditor to the collection agency. It must include the following items:
- Name of the debtors.
- Amount of the debt.
- Rate of commission that collection agency will receive from the client.
Debtors Work Card (or equivalent computer screen print out) — The Debtors Work Card must include the following:
- Name and Address of debtor.
- Date Account was referred.
- Amount of claim submitted by client.
- Name and address of creditor or some means of discerning this information either by code or account number.
- Record of payments made by the debtor, which must include the date payment was received, the amount received, and the updated balance on the debtor's account.
Debtors Receipt for Cash Payment — Must include fields for the following items:
- Name and address of licensee.
- Name of debtor.
- Date and Amount of payment received.
- Remaining balance on the collection account.
- Name of the creditor.
- Name or Initials of collection agent accepting payment.
Remittance Sheet (or equivalent computer screen print out) — To include the following:
- A field to record the date and amount of any remittance by the collection agency to the creditor.
Attorney Authorization Form — To clearly state the following:
- The creditor's right to choose its own attorney.
- Disclose that if the creditor does not choose an attorney, the collection agency may select their own attorney.