Using Collateral to Cover a Bail Bond


Few things are more shocking than receiving a phone call in the middle of the night to inform you that a family member has been arrested and needs your help to get out of jail. Nobody plans to help a person on bail and this is especially true in financial matters. Depending on the reason for the arrest, a bond may be expensive and require a significant amount of money in advance.

If you work with a guarantor, it will charge you a premium in exchange for your agreement to pay the full amount of the deposit. This amount is determined as a percentage of the total amount of the bonds. In most states, this percentage is set by regulation. For example, in California, the guarantor must fix the premium at 10% of the total amount of the bond.

Bondholders are not allowed to charge more than this and can not grant "rebates" to customers.

So what do you do if you need to guarantee a bond but you do not have the cash in hand to pay the premium? One answer is to use collateral.

It is essentially a matter of giving control of a physical asset to a guarantor as a guarantee that the person receiving the bond will respect all its hearing dates and fulfill all its legal obligations.

Some suppliers of professional bonding services will accept a guarantee instead of a monetary payment to cover the cost of a bonding bonus. In addition, a judge may also allow the court to accept collateral rather than money to cover bail if you work directly with the court system to arrange bail.

If you are working with a guarantor and want to use a guarantee instead of cash, it will be up to the guarantor to determine what is acceptable as collateral. As a general rule, the guarantor will prefer to receive something whose value is at least equal to 150% of the total value of the deposit. The reason is that if a person skips the bond, the guarantor must be able to sell the collateral item to cover his lost bond and also cover his time and efforts to sell the item as collateral. .

What types of items can be presented as collateral? Again, it depends on the bond agent, but almost anything of value can be used. The most commonly used items as collateral are:

  • Property (like a house)
  • Car
  • Recreational vehicles

In these cases, the guarantor will ask you to place the pink slip or act in their trust. This does not give them ownership but allows them to become the owner of the item if the bond agreement is broken. Smaller items such as jewelry, art objects or collectibles can also be used as collateral; in these cases, the guarantor may request to physically keep the item until the court case ends.

The use of collateral to cover the costs of a surety can be extremely beneficial if you need help and you can not afford to pay a premium. However, the consequences can be serious if the person you are helping breaks the bonding agreement.

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