Bail Bondsmen Hit Hard By Recession
Gerri L Elder
As the economy’s conditions continue to get worse, businesses are learning to adapt the way they think about and do things to make
it through the recession. According to a report by The Associated Press, bail bondsmen are feeling the effects of the tough times and have found
they need to adapt.
But law enforcement officials and insurers fear that the latest
tactics bail bondsmen are using to build business may put public safety at
risk. A growing number of bondsmen are offering financing options to sweeten
the deals and attract defendants.
Bail bond agents generally charge a 10 percent premium and
often require collateral to ensure defendants make required court
appearances. However, some are now
bending the rules by offering minimal down payments and no collateral. The defendants get out of jail for a fraction
of the traditional cost and agree to make payments on the remainder of the
bondsman's premium.
In most states, it’s legal for bail bondsmen to finance
premiums for defendants. In fact,
financing of bail bonds developed a few years ago, but in the recent state of
the economy, financing deals are becoming more popular – and may even make up
half of the bonds written when criminal defense attorneys cannot arrange for a defendant to be released on recognizance. Law enforcement officials are concerned that the
growing number of agents offering financing may result in a larger number of
defendant's skipping court.
Insurance companies that back the bonds also have concerns
about higher bail forfeiture rates. The premium paid to a bail bondsman is
non-refundable. While a bondsman only
pays a portion of the premium to the insurer, the insurer backs the bond and
has to pay the total amount of bail if the defendant skips out on the court
date.
However, The Associated Press reported that it is not
possible to see if there is a correlation between the recent increase in
bail-on-credit and bail jumping. Courts have many different ways of recording
defaults and there is a period of time before the case is considered a default
since many states give bounty hunters months to catch the defendants.
Financing premiums may even help prevent jail overcrowding
and discrimination against the poor. Many bail bondsmen say that there is
pressure to offer financing to with the effects of the recession. The housing crisis and deflated home values
have made it impossible for many homeowners to use homes as collateral. Since many people have depleted all of their
cash and resources, finding a bail bond agent who offers credit is their only
hope at making bail.
Although bondsmen say that offering financing is a must to
stay in business, they realize that the business cannot survive on a depleted
cash flow. Bail bond financing carries
the risk that defendants who fall behind on payments could be arrested again
and sent back to jail.
In
these hard times, it is difficult to come up with a winning solution for
defendants and bail bondsmen. Until the
economy improves, defendants, bondsmen and bond insurers are in a precarious
position.