How to choose a debt collection agency in Tennessee
By Kai Greenspan, Founding Editor
The bond, or certificate of deposit instead, an applicant for a Tennessee collection service license files under Section 62-20-106, set by its number of employees. It is conditioned on the agency accounting to its clients for what it collects, and the injured client may sue on it.
Source: advance.lexis.com · Last checked: October 28, 2026
The five steps, in order
| Step | What to do, and why it comes in this order |
|---|---|
| 1. Verify the license on the Board's own register | In Tennessee this check is the law's, not just good practice: Section 62-20-118 of the Tennessee Collection Service Act says "Any person who places an account with a collection service is responsible for determining that the service is licensed as required by this chapter." Search the agency in the Department of Commerce and Insurance's public license search, https://search.cloud.commerce.tn.gov/, choosing the Collection Service Board. The license in force is the one recorded as active with an expiration date still in the future; ended licenses stay on the record, and a new owner needs a new license, so one company can have several numbers. Note the original licensure date too. |
| 2. Confirm the bond that protects you | An applicant for the license files a surety bond, or a certificate of deposit instead, of $15,000 to $25,000 depending on its number of employees, conditioned on performing its agreements with its clients and accounting for the net proceeds of all collections. Section 62-20-110 says the bond must be in force during all periods the agency does business in Tennessee, and that if the agency violates its conditions the injured client may sue on it in the client’s own name. So for a creditor the bond is protection for you, and it is worth asking who the surety is. |
| 3. Match the agency to your debt type | Consumer debt, owed by individuals for personal, family or household purposes, is federally regulated under the FDCPA. Its conduct rules apply to a collection agency collecting for clients, and to a debt buyer when the buyer meets the FDCPA's definition of a debt collector, which collecting its own purchased accounts does not do by itself (Henson v. Santander Consumer USA, 2017). The Tennessee Collection Service Act's definition of a collection service covers collecting for others and collecting purchased debt, so a licensed Tennessee agency may be a third-party collector, a debt buyer, or both. Ask which kind of accounts the agency actually works, and whether it collects for clients or buys. |
| 4. Read the public complaint record in context, and check any certifications at source | Search the agency in the CFPB Consumer Complaint Database and read the count in context: the CFPB says its database “is not a statistical sample of consumers’ experiences in the marketplace”, and each complaint records how the company responded and whether it responded on time. Certifications are checked against the issuing body, never the agency’s own claim. Where the Collection Service Board has acted against a licensee, the Board’s own order is the document to read. |
| 5. Only then talk fees, and get everything in writing | Most collection work is contingency: the agency keeps an agreed share of what it recovers. No trustworthy public benchmark for the percentage exists, so ask each agency for its rate in writing, by debt age band, and pin down the cases that cause disputes: direct payments made to you after placement, part payments, recalled accounts and legal costs. Under the Act a licensee keeps a separate trust account for clients’ money, and the Board may act against one that fails to report and pay you the net proceeds of a month’s collections within 30 days, unless you agree otherwise, so settle the remittance terms in the agreement. |
Step-by-step register instructions: verify a Tennessee license. The grouped list, by years on the register: Tennessee agencies. The register itself: the Department of Commerce and Insurance’s license search.
Source: advance.lexis.com · Last checked: October 28, 2026
The questions worth asking before you sign
Once an agency has passed the public checks, the remaining risk lives in the agreement, and the disputes that sour agency relationships are rarely about the headline rate. Ask each shortlisted agency, in writing:
- What is your Tennessee license number, and what is its original licensure date? Both facts are on the Board’s register, checkable in under a minute.
- Who is your surety, and is your bond or certificate of deposit in force today? The Act says it must be in force during all periods the agency does business in the state, and it is the protection you have as a client.
- Do you collect for clients, buy debt, or both? The Act’s definition covers both, and the answer changes what the relationship is.
- When and how will you pay us what you collect? The Board may act against a licensee that does not report and pay a month’s net proceeds within 30 days, unless you agree otherwise, so write the terms down.
- What is your rate, by debt age band, in writing? Ask about direct payments made to you after placement, part payments, recalled accounts and legal costs, because that is where disputes start.
- Will you sue in your own name, and through which attorney? A Tennessee licensee may, on a written assignment for collection, but only by a Tennessee attorney.
Sources: Tennessee Code Sections 62-20-106, 62-20-110, 62-20-114, 62-20-115, 62-20-118 and 62-20-124 · quoted 28 October 2026
Common questions about choosing in Tennessee
Does a collection agency have to be licensed in Tennessee?
Yes, unless the business is one the Act does not apply to. The Tennessee Collection Service Act, Tennessee Code Section 62-20-105, says "No person shall commence, conduct or operate any collection service business in this state unless the person holds a valid collection service license issued by the board under this chapter or prior state law." And Section 62-20-118 puts the check on you: "Any person who places an account with a collection service is responsible for determining that the service is licensed as required by this chapter."
The agency we want to use is not on the Tennessee register. Is that a problem?
It is a question to resolve before you sign, because Tennessee makes checking the license your responsibility. The Act does not apply to some businesses, among them attorneys at law, and Section 62-20-117 lets an agency based in another state obtain a Tennessee license where its home state offers Tennessee licensees the same privilege. Ask the agency whether it holds a Tennessee license and, if not, why it says it does not need one, and get the answer in writing.
What does the bond cover?
Section 62-20-106 says the bond or certificate of deposit "shall be conditioned that the applicant shall faithfully and truly perform all agreements entered into with its clients accounting for the net proceeds of all collections in accordance with this chapter", and Section 62-20-110 says "the injured client may maintain an action in the client's own name on the bond or certificate of deposit of the collection service in any court of competent jurisdiction." It also says "In no event shall the aggregate liability of the surety exceed the amount of the bond".
What happens to our accounts if the agency loses its license?
Section 62-20-116 says that on the expiration or revocation of a license the licensee shall, within 90 days, return or assign all uncollected accounts to its clients or their order, without charging for doing so, take no fee on money received after the license ended, and within 90 days remit all money to the owners of the accounts on which it was paid.
Can a Tennessee agency sue our debtors in its own name?
Yes, on conditions. Section 62-20-124 lets a licensed collection service sue in its own name on a debt you have assigned to it for collection, if the assignment is voluntary, in writing, states its effective date and any consideration, and does not transfer ownership of the debt to the agency. It must appear by a Tennessee attorney: "No collection service licensee shall commence any litigation authorized by this section, unless the collection service licensee appears by an attorney admitted to practice law in this state."
Does Debt Collection Index rank Tennessee agencies by how much they recover?
No, and no state page on this site does. Recovery rates are self-reported, unaudited and not comparable between agencies, so we do not publish them or rank on them. Tennessee agencies are grouped by years continuously licensed on the state register, with every fact sourced (and dated where a check has run), and listed alphabetically within each band.