When someone takes out a bail bond, they may not understand the financial and legal complexities that come with it. If you co-signed on a friend’s bail bond and you’re struggling with the payments, you may wonder if bankruptcy is an option available to you. There is no one quick and easy answer—you have to look at the specifics of your situation and then make the best decision for your financial future.
Talking to the bankruptcy attorneys at Padgett & Robertson can help you make an informed decision that puts your future first. Talk to our Mobile team now by calling us at 251-336-3695.
An Overview of Bail Bonds
A bail bond offers a way to get a defendant out of jail while awaiting trial. Generally, the amount requested by the court is too high for an individual to pay directly. A bail bond allows them to get out of temporary custody by paying 10% of the bail amount. If the defendant does not appear in court when required, the full amount is due.
Defendants often need a co-signer in order to get a bail bond. The co-signer takes on full responsibility for the total amount if the defendant fails to appear in court, just like a co-signer for any other type of debt is responsible for the full amount if the primary borrower does not pay.
How Bail Bond Debt is Viewed in Bankruptcy
When you declare bankruptcy, debts are generally classified as dischargeable and non-dischargeable. Dischargeable debts, or those eliminated through bankruptcy, include credit cards, medical bills, and personal loans. Non-dischargeable debts include student loans, child support, and most tax debts. How these debts are handled also differs based on whether you choose Chapter 7 bankruptcy or Chapter 13 bankruptcy. How are bail bonds handled in bankruptcy?
One factor that comes into play here is whether or not you put down collateral for the debt. If you did not put down collateral, you have an unsecured bond. This is an unsecured debt and is generally dischargeable in bankruptcy. But if you did put down collateral, the process is much more complicated. The debt itself may be wiped out in bankruptcy—the lien associated with it will not be.
When a bail bond agency posts bail with collateral, it puts a lien on the property tied to the bond. That lien stays in place until you either pay it off or the creditor seizes the asset in exchange for unpaid payments. If you want to keep the property used as collateral, you will need to continue making payments. This is very important since bail bond agencies often use sizable assets as collateral, including a home or car.
The Timing Matters
The timing of your bail bond is important. When you file, your creditors are notified. If you co-signed for the bail bond in the 90 days prior to filing the bankruptcy, the company may claim that you knew you would file bankruptcy and that you co-signed for the bail bond with no intent of paying for it. This is fairly difficult to prove, though, since financial circumstances can change quickly. However, it’s still worth discussing with your Mobile bankruptcy lawyer if you co-signed shortly before filing.
Your Options If You’re Considering Bankruptcy
Bankruptcy is not a decision to make lightly. It will affect your credit for years to come, impact your ability to take on new credit and require a significant change in your approach to finances. It’s important to talk to a bankruptcy lawyer before making any final decisions, as they can look at your finances and help you understand which type of bankruptcy may be available to you. They can also explain how your bail bond is likely to be handled in your case.
Contact Padgett & Robertson to Learn More About Bankruptcy Options in Mobile
We know that the choice to file bankruptcy is a significant one, and we want to support you as you explore your next steps. Let’s sit down, take a look at your finances, and talk about the options available to you. Schedule your consultation right away by calling us at 251-336-3695 or filling out our online contact form.