What is Collateral?
Collateral is either money, property in the form of assignment of a mortgage, or some other valuable asset used to financially back up the rest of the bond in case the entire bond has to be paid by a bail bond agency because a defendant did not show up for court. For example: If a bond is $10,000.00, 10% of that $10,000 is called the premium charged to the indemnitor (person getting the defendant out of jail), and it is not refundable.. The $10,000 bond however, has to be backed up by charging a credit card, an assigned mortgage of a person's house or some other valuable asset assigned to the bail bond agency. Collateral is returned after the defendant shows up for his/her court date and completes the requirements of the Court. Collateral is "converted" to cash to pay the bond if the defendant does not show up for court and approximately 120 days have passed without the defendant and his/her attorney re-setting a new court date. Converting collateral, therefore, takes a long time and has to be done legally. If a mortgage or vehicle title is used, no record of this arrangement is ever shown on any data bases. Furthermore, if a defendant "skips" a court date, the indemnitor is given time to find the cash to cover the bond charged by the court.
Do I Get all of my Collateral Back after I go to Court?
Yes, under state law regarding bail agents agents, if the defendant has successfully shown up for all court dates and done everything required by the court, then both the Indemnitor and the Defendant are "off the bond," and should receive all collateral used to secure the bond past the premium. The premium is 10% of the bond and that is not returned to the bail bond agency because it is a fee charged to secure the release of the defendant. Before signing a "bond" as the indemnitor (person who acts in behalf of the defendant because they are in jail and cannot release themselves) discuss all aspects of using and returning collateral.
What Happens If the Defendant Does not Show up in Court?
The bail bond agency must then try to determine why the defendant did not show up in court, and assist them in getting a new court date if defendant was not notified by the court.
Types of Collateral
The primary form of collateral at Mississippi Bonding Company is an individual's agreement to pay represented by their signature with approved credit. In addition, collateral can be provided through:
- Bank Accounts
- Life insurance policies
- Real Estate
- Stocks & Bonds