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Collection agency licensing for law firms and buyers

A collection license may be owed in a state where nobody has set foot, because several statutes reach a collector by where the debtor lives rather than where the collector sits. What follows is what each statute says, state by state. It does not tell any reader whether they personally need a license, and nothing here is legal advice. That question turns on facts a page cannot see, and the statute of the state blank on the map below is a statute the research has not found, not proof there is none.

States that make a license the price of collecting for others

Seventeen states condition collecting debts for others on first holding a license, each in its own words.

Arizona, California, Colorado, Idaho, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Mexico, North Dakota, Tennessee, Washington and Wisconsin all require a license before a person conducts the business. Cal. Fin. Code 100001(a)1 is one form: no person shall engage in the business without first obtaining a license. Arkansas makes it unlawful, unless licensed, to engage in the collection of delinquent accounts, bills or other indebtedness. Ark. Code 17-24-3012. Connecticut licenses the narrower category of consumer collection agencies. Conn. Gen. Stat. 36a-801(a)3 says so.

Other states use a different instrument, and the word matters when a reader asks what to file. Florida requires registration of consumer collection agencies and, under separate sections, of commercial ones. Fla. Stat. 559.553(1)4 and Fla. Stat. 559.544(1)5. Hawaii, Louisiana and Oregon require registration. North Carolina issues a permit. Iowa requires an annual notification from debt collectors whose total debt collected in the preceding year exceeds the threshold amount or, if it did not, whose total debt collected during the current year exceeds $25,000. Iowa Code 537.62016 and 537.6202(1). West Virginia treats a business franchise registration certificate as the license itself. W. Va. Code 47-16-4(a)7.

Two states ask for money on deposit rather than a license at all. Texas requires a surety bond, a copy filed with the secretary of state, before a third-party debt collector may collect. Tex. Fin. Code 392.101(a)8. New Jersey requires a bond on file with the secretary of state before a person may conduct a collection agency. N.J.S.A. 45:18-19.

A United States map. States requiring a license: Arizona, Arkansas, California, Colorado, Connecticut, Idaho, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Mexico, North Dakota, Tennessee, Washington, Wisconsin and Wyoming. States requiring registration: Florida, Hawaii, Louisiana, Oregon and West Virginia, whose business franchise registration certificate is deemed the license. North Carolina requires a permit. Iowa requires an annual notification. Texas and New Jersey require a bond on file. All other states, including Alaska and Utah, are not shown because the controlling section was not found.

Where the map shows a license, read the state section for whether it reaches an out-of-state collector and whether lawyers are exempt. Two bond states, Texas and New Jersey, name no license at all.

When a statute reaches a collector in another state

The surprise in these statutes is distance. Some of them follow the debtor, not the collector.

California treats a collector located outside the state as acting there when the debtor resides in California. Cal. Fin. Code 100001(a). Nevada reaches a collector in another state seeking to collect from a debtor who lives in Nevada. NRS 649.075(2)10. North Dakota is blunter still: a person engages in debt collection in the state if the debtor resides in the state. N.D.C.C. 13-05-0211. Connecticut reaches an out-of-state agency collecting from Connecticut residents for Connecticut creditors or for its own account. Conn. Gen. Stat. 36a-801(a). Hawaii reaches collection from anyone who resides or does business there. HRS 443B-3.5(g)12.

Other statutes leave a door open for the collector working only across the wire. Illinois exempts an agency whose Illinois activity is limited to interstate telephone, mail or electronic contact, if it is licensed at home and that state returns the favor. 205 ILCS 740/413. Michigan exempts a person whose collection activities in the state are limited to interstate communications. MCL 339.904(2)14. Wisconsin exempts a nonresident collecting from residents solely by interstate telecommunications or mail. Wis. Stat. 218.04(2)(b)15. New Mexico exempts the collection of debts not incurred there by interstate communication. NMSA 61-18A-5(C)16. Nebraska does not prohibit a collector regulated and residing in another state from communicating with a Nebraska debtor. Neb. Rev. Stat. 45-60117.

Florida and Hawaii build the out-of-state exemption into their own terms. An out-of-state consumer debt collector that does not solicit accounts from credit grantors with a Florida business presence is exempt from the consumer registration section. Fla. Stat. 559.553(3). Hawaii lets a qualifying agency be designated an exempt out-of-state collection agency, on conditions that include holding an unrestricted license in a reciprocal state. HRS 443B-3.5(b).

Consumer debt, commercial debt, and the line between them

Some of these statutes never touch a commercial account, and reading the wrong one wastes a filing.

Connecticut licenses consumer collection agencies, not commercial ones. Conn. Gen. Stat. 36a-801(a). Colorado's definition of debt excludes a debt for business, investment, commercial or agricultural purposes, and a debt incurred by a business. C.R.S. 5-16-103(8)(b)18. California's division does not apply to covered commercial debt or credit. Cal. Fin. Code 100001(c). Florida splits the question across two acts, registering commercial collection agencies apart from the consumer ones, with a commercial claim defined as an obligation arising from credit extended primarily for commercial purposes. Fla. Stat. 559.543(1)19.

What happens to the collector without the paper

The consequence of collecting unlicensed is not uniform, and it runs from a misdemeanor to a felony to losing a lawsuit.

Operating unregistered as a commercial collection agency in Florida is a felony of the third degree. Fla. Stat. 559.548(1)(a)20. Collecting consumer debts unregistered there is a misdemeanor of the first degree. Fla. Stat. 559.78521. An out-of-state consumer collector who skips registration faces an administrative fine of up to $10,000. Fla. Stat. 559.565(1)22. North Carolina makes operating without a permit a felony. N.C. Gen. Stat. 58-70-123. In Minnesota, carrying on business as a collection agency without a license is a misdemeanor. Minn. Stat. 332.3324, subd. 2.

Two states soften the edge. In Washington no collection agency may bring or maintain a suit without alleging and proving its license, except where the judgment is entered by default. RCW 19.16.260(1)(a)25. In Tennessee a debt already collected by voluntary payment or by final judgment cannot be set aside for lack of a license, and an unlicensed collector may cure at any time by applying. Tenn. Code 62-20-105(e)26 and (f).

Two states leave the controlling text out of reach. Alaska sets operator qualifications, including that an applicant be 19 or older. AS 08.24.110(a)27 and AS 08.24.380(5)28. Utah has a collection-fee condition that mentions a third party collection agency being registered under its title. Utah Code 12-1-11(2)(a)29. Whether a license or registration is required in either is a question this page will not guess. Indiana does state its requirement, at IC 25-11-1-7(a)30, with the application made to the secretary of state and a fee of $100 plus $30 per branch office. IC 25-11-1-331. Wyoming states its requirement at Wyo. Stat. 33-11-10232.

Lawyers are usually out, but rarely for free

Federal law has had no lawyer exemption from the Fair Debt Collection Practices Act since 1986, so a state exemption carries real weight. Most states grant one, and most attach a string.

The Supreme Court noted in Heintz v. Jenkins that Congress repealed the Act's attorney exemption in its entirety in 1986, and held the Act reaches attorneys who regularly collect consumer debts even when the activity is litigation. So the exemptions below are state law. Connecticut excludes any member of its bar. Conn. Gen. Stat. 36a-800(3)33. Florida's consumer section excludes a member of The Florida Bar. Fla. Stat. 559.553(3)(b). Hawaii excludes licensed attorneys acting within their profession, Louisiana licensed Louisiana attorneys, New Jersey attorneys authorized to practice there, and Oregon attorneys performing an attorney's duties. HRS 443B-134, La. R.S. 9:3534.1(A)35, N.J.S.A. 45:18-636 and ORS 697.005(1)(b)(D)37.

Many states tie the exemption to whose name the lawyer collects in. Massachusetts protects an attorney collecting on behalf of a client. Mass. Gen. Laws ch. 93, 2438. Michigan requires the collection to be in the attorney's own name. MCL 339.901(1)(b)(xi)39. New Mexico wants it on behalf of and in the name of a client. NMSA 61-18A-2(C)(6)40. North Carolina, Nebraska and West Virginia all protect attorneys handling claims in their own name and not under a layman's management. N.C. Gen. Stat. 58-70-15(c)(8)41, Neb. Rev. Stat. 45-602(3)(i)42 and W. Va. Code 47-16-243. Wyoming wants the collection in the client's true name. Wyo. Stat. 33-11-101(b)(viii)44.

Others tie it to the practice of law, which an attorney can step outside of. Idaho exempts activities incidental to practice but not a separate collection business. Idaho Code 26-2239(1)45. Nevada protects collection in the usual course of practice. NRS 649.020(2)(g)46. North Dakota protects the attorney only, not the people working for the attorney. N.D.C.C. 13-05-02.3(1)47. Three conditions can be lost: Wisconsin's exemption requires the attorney be resident in the state, Texas loses it where the attorney keeps nonattorney staff who regularly solicit or contact debtors, and Florida's commercial exemption ends once more than half the member's income comes from commercial collection. Wis. Stat. 218.04(1)(a), Tex. Fin. Code 392.001(7)48 and Fla. Stat. 559.544(5)(a). Colorado and Maine pull the collecting lawyer inside the definition: Colorado counts an attorney who regularly collects there as a collection agency, then exempts that attorney from the licensing provisions, and Maine subjects a Maine-licensed attorney whose principal activities include collecting to one subchapter only. C.R.S. 5-16-103(3)(e)(I) and 32 M.R.S. 11002(6)49. New York City excludes a lawyer only for work that only a licensed attorney may do, and not one who regularly does what collectors do, such as contacting debtors by mail or telephone. N.Y.C. Admin. Code 20-489(a)(5)50.

Buying a judgment can be the collection business itself

A buyer who thinks of itself as an investor may be a collection agency under the statute, and in one state buying a judgment to collect it is named in so many words.

Tennessee's collection service includes anyone who solicits claims or judgments, or the purchase of claims or judgments, for the purpose of collecting them. Tenn. Code 62-20-102(3)51. Wyoming's collection agency includes anyone who takes of debts to collect them or operates as a debt buyer. Wyo. Stat. 33-11-101. Minnesota's license requirement names a debt buyer alongside a collection agency. Minn. Stat. 332.33, subd. 1. Debt buyers sit inside the licensing statutes of Arkansas, California, Idaho, Maine, Nevada, North Carolina and Washington, each in its own words. Ark. Code 17-24-301(4), Cal. Fin. Code 100002(j)52, Idaho Code 26-2223(6)53, 32 M.R.S. 11002(5-A), NRS 649.020(3)(b), N.C. Gen. Stat. 58-70-15(b)(4) and RCW 19.16.100(4)(d)54. Connecticut defines debt buying as collecting for one's own account on indebtedness acquired from another that was delinquent or in default when acquired. Conn. Gen. Stat. 36a-800(7). Hawaii reaches a person who regularly takes assignments and sues on them in its own name. HRS 443B-1.

Some statutes carve particular purchases back out. Nebraska excludes a purchaser who collects in its own name. Neb. Rev. Stat. 45-602(3)(k). North Carolina excludes accounts not delinquent when bought. N.C. Gen. Stat. 58-70-15(c)(10). Oregon excludes an assignment that carries no obligation to pay the assignor any of the proceeds. ORS 697.005(1)(b)(R). Wisconsin closes the obvious workaround, applying its chapter to anyone using a pretended purchase or assignment to evade it. Wis. Stat. 218.04(11).

A buyer who sues faces its own rules on top of licensing. In Washington a debt buyer must attach the signed contract or other writing evidencing the original debt, and must supply the chain of ownership and account detail before a default judgment. RCW 19.16.260(2)(a) and (2)(b). In Florida an assignee of a consumer debt must give the debtor written notice of the assignment at least 30 days before any collection action, and is a real party in interest. Fla. Stat. 559.71555. New York adds a restriction that is not a license at all: Judiciary Law 48956 bars a business in collection, and corporations and associations, from buying claims with the intent and for the purpose of suing on them, with an exception, subject to subdivision 3, for a purchase of instruments or book debts of the same obligor with an aggregate purchase price of at least $500,000. Whether a buyer of judgments must hold a New York license is a question no section here answers.

Sources

Every section named above, with how current the text we read was. Read any of them yourself.

  1. Cal. Fin. Code 100001, California Code, Financial Code - FIN § 100001. Read the section, opens in a new tab Back
  2. Ark. Code 17-24-301, Professions, Occupations, and Businesses § 17-24-301. License required. Read the section, opens in a new tab Back
  3. Conn. Gen. Stat. 36a-801, The Banking Law of Connecticut § 36a-801. License required. Application, issuance, renewal. Authority to conduct criminal history records check. Examination of records. Abandonment of application. Surrender of license. Required system filing or notice of commissioner. Automatic suspension of license. Name and place of business. Change in any control persons. Unique identifier of license. Advertising of license. Read the section, opens in a new tab Back
  4. Fla. Stat. 559.553, Registration of consumer collection agencies required; exemptions. 2026 Florida Statutes. Read the section, opens in a new tab Back
  5. Fla. Stat. 559.544, Registration required; exemptions. 2026 Florida Statutes. Read the section, opens in a new tab Back
  6. Iowa Code 537.6201, Commerce [Chs. 505-554D] § 537.6201. Applicability. Read the section, opens in a new tab Back
  7. W. Va. Code 47-16-4, Regulation of Trade § 47-16-4. Requirements for conduct of agency. Read the section, opens in a new tab Back
  8. Tex. Fin. Code 392.101, Bond Requirement. Read the section, opens in a new tab Back
  9. N.J.S.A. 45:18-1, Professions and Occupations 45 § 18-1. Read the section, opens in a new tab Back
  10. NRS 649.075, Professions, Occupations and Businesses § 649.075. License required to engage in business of collection agency; conduct constituting engaging in such business; location for which license required to be obtained; conditions under which debt buyer is authorized to share license with affiliated person. Read the section, opens in a new tab Back
  11. N.D.C.C. 13-05-02, Debtor and Creditor Relationship § 13-05-02. Collection agency license required. Read the section, opens in a new tab Back
  12. HRS 443B-3.5, Business § 443B-3.5. Read the section, opens in a new tab Back
  13. 205 ILCS 740/4, Financial Regulation § 740/4. Registration. Read the section, opens in a new tab Back
  14. MCL 339.904, Collection agency; license required for each place of business; exceptions to licensing requirement of subsection (1); q. Read the section, opens in a new tab Back
  15. Wis. Stat. 218.04, 214 to 225) § 218.04. Collection agencies. Read the section, opens in a new tab Back
  16. NMSA 61-18A-5, Professional and Occupational Licenses § 61-18A-5. Unlawful to conduct collection agency or engage in the business of a repossessor without license. Read the section, opens in a new tab Back
  17. Neb. Rev. Stat. 45-601, Interest, Loans, and Debt § 45-601. Act, how cited; collection agency; license required; violation; penalty; foreign agency; communication authorized. Read the section, opens in a new tab Back
  18. C.R.S. 5-16-103, Consumer Credit Code § 5-16-103. Definitions. Read the section, opens in a new tab Back
  19. Fla. Stat. 559.543, Definitions. 2026 Florida Statutes. Read the section, opens in a new tab Back
  20. Fla. Stat. 559.548, Penalties. 2026 Florida Statutes. Read the section, opens in a new tab Back
  21. Fla. Stat. 559.785, Criminal penalty. 2026 Florida Statutes. Read the section, opens in a new tab Back
  22. Fla. Stat. 559.565, Enforcement action against out. 2026 Florida Statutes. Read the section, opens in a new tab Back
  23. N.C. Gen. Stat. 58-70-1, Insurance § 58-70-1. Permit from Commissioner of Insurance;  penalty for violation;  exception. Read the section, opens in a new tab Back
  24. Minn. Stat. 332.33, 324-341) § 332.33. Licensing and registration. Read the section, opens in a new tab Back
  25. RCW 19.16.260, Business Regulations--Miscellaneous § 19.16.260. Licensing prerequisite to suit--Debt buyer--Prohibited acts. Read the section, opens in a new tab Back
  26. Tenn. Code 62-20-105, Professions, Businesses and Trades § 62-20-105. Read the section, opens in a new tab Back
  27. AS 08.24.110, Business and Professions § 08.24.110. Qualification for operator's license. Read the section, opens in a new tab Back
  28. AS 08.24.380, Business and Professions § 08.24.380. Definitions. Read the section, opens in a new tab Back
  29. Utah Code 12-1-11, Collection Agencies § 12-1-11. Collection fee--Convenience fees. Read the section, opens in a new tab Back
  30. IC 25-11-1-7, Professions and Occupations § 25-11-1-7. Read the section, opens in a new tab Back
  31. IC 25-11-1-3, Professions and Occupations § 25-11-1-3. Read the section, opens in a new tab Back
  32. Wyo. Stat. 33-11-102, Professions and Occupations § 33-11-102. Licenses required. Read the section, opens in a new tab Back
  33. Conn. Gen. Stat. 36a-800, The Banking Law of Connecticut § 36a-800. Consumer collection agency. Definitions. Read the section, opens in a new tab Back
  34. HRS 443B-1, Business § 443B-1. Read the section, opens in a new tab Back
  35. La. R.S. 9:3534.1, 9, § 3534.1. Collection agent; registration; assignment of debt to collector. Read the section, opens in a new tab Back
  36. N.J.S.A. 45:18-6, Professions and Occupations 45 § 18-6. Read the section, opens in a new tab Back
  37. ORS 697.005, Oregon Revised Statutes Occupations and Professions § 697.005. Read the section, opens in a new tab Back
  38. Mass. Gen. Laws ch. 93, 24, Administration of the Government (Ch. 1-182) Ch. 93, § 24. Read the section, opens in a new tab Back
  39. MCL 339.901, Occupational Code § 339.901. Read the section, opens in a new tab Back
  40. NMSA 61-18A-2, Professional and Occupational Licenses § 61-18A-2. Definitions. Read the section, opens in a new tab Back
  41. N.C. Gen. Stat. 58-70-15, Insurance § 58-70-15. Definition of collection agency and collection agency business. Read the section, opens in a new tab Back
  42. Neb. Rev. Stat. 45-602, Interest, Loans, and Debt § 45-602. Terms, defined. Read the section, opens in a new tab Back
  43. W. Va. Code 47-16-2, Regulation of Trade § 47-16-2. Definitions. Read the section, opens in a new tab Back
  44. Wyo. Stat. 33-11-101, Professions and Occupations § 33-11-101. Definitions. Read the section, opens in a new tab Back
  45. Idaho Code 26-2239, Banks and Banking § 26-2239. Exemptions. Read the section, opens in a new tab Back
  46. NRS 649.020, Professions, Occupations and Businesses § 649.020. “Collection agency” defined. Read the section, opens in a new tab Back
  47. N.D.C.C. 13-05-02.3, Debtor and Creditor Relationship § 13-05-02.3. Entities exempt from licensing requirements. Read the section, opens in a new tab Back
  48. Tex. Fin. Code 392.001, Definitions. Read the section, opens in a new tab Back
  49. 32 M.R.S. 11002, Professions and Occupations § 11002. Definitions. Read the section, opens in a new tab Back
  50. N.Y.C. Admin. Code 20-489, N.Y.C. Admin. Code 20-489. Read the section, opens in a new tab Back
  51. Tenn. Code 62-20-102, Professions, Businesses and Trades § 62-20-102. Read the section, opens in a new tab Back
  52. Cal. Fin. Code 100002, California Code, Financial Code - FIN § 100002. Read the section, opens in a new tab Back
  53. Idaho Code 26-2223, Banks and Banking § 26-2223. Collection agency, debt counselor, credit counselor, or credit repair organization--License required. Read the section, opens in a new tab Back
  54. RCW 19.16.100, Business Regulations--Miscellaneous § 19.16.100. Definitions. Read the section, opens in a new tab Back
  55. Fla. Stat. 559.715, Assignment of consumer debts. 2026 Florida Statutes. Read the section, opens in a new tab Back
  56. Judiciary Law 489, Purchase of claims by corporations or collection agencies. Current through January 01, 2026. Read the section, opens in a new tab Back