Sometimes, bail bond companies go bankrupt just like businesses in a myriad of other industries. When that occurs, though, it leaves people wondering what happens to the bail bonds the company secured. Will the defendants who worked with the company be required to return to jail? Will you get a refund of monies paid? Here's what you need to know about how this type of situation is handled.
The Insurance Company Takes Over
Bail bonds are a type of insurance product provided by a surety company and administered through a bail bondsman to the consumer. When the bondsman agrees to secure a defendant's release, they essentially take out an insurance policy that's designed to pay out if bail is forfeited by the court.
For instance, a defendant's bail is $20,000. When the bond company takes the case, they have the insurance company underwrite the bond for the amount and submit it to the court as proof the bail is covered. If the defendant jumps bail causing the judge to forfeit it, the insurance company pays the $20,000 to the court and then the bondsman goes after the defendant and any cosigners for reimbursement.
Ultimately, the holder of the bail bond is the insurance company. So, if a bondsman goes bankrupt, the insurance company will typically assume responsibility for any outstanding bonds. While defendants won't be required to return to jail — since their bonds are still valid — any fees paid to the bondsman will not be refunded because those fees are what consumers are required to pay for the service.
Collateral May Be Held Up in Bankruptcy Court
In most cases, bondsman's customers will experience little to no disruption in service save for receiving notices about the issue and who to contact with questions. However, those who signed over collateral to the bail bond company may end up being involved in the bankruptcy case. This is because the company must list all assets they own, and collateral for a bail bond has the potential to be an asset because it will be collected to repay the bond if the defendant fails to appear and bail is forfeited. In this situation, you will be required to give the collateral to the court trustee for inclusion in the company's bankruptcy estate.
Even if the defendant successfully completes his or her court case, you may still need to file a claim with the bankruptcy court to get ownership of your collateral back. This is where you will likely need the help of a bankruptcy attorney. The lawyer can help you file the necessary paperwork to get your property back and make sure the bankruptcy case has no further impact on your life.
For more information about this issue, contact a local attorney, such as C. Taylor Crockett, P.C.
