Bail Bondsmen Hit Hard By Recession
By: 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.