Be Prepared For These Two Problems You May Encounter With A Property Bond
One of the benefits of using a bail bondsman to get yourself or someone else out of jail is that you don't actually need cash. You can pledge property as collateral to hold the bond, which is a good option if bail is set at an amount you just can't afford. However, it's important you fully understand the consequences of going this route so you're not surprised later on when you try to exercise some of your privileges as a homeowner. Here are two issues that may crop up when you use your home as bond collateral.
You'll Temporarily Lose Your Homestead Exemption
Even though you're under contract with the bail bond company, you can still file for bankruptcy to reorganize your finances if you start suffering serious money troubles. However, the property bond you have with the company will cause you to lose an important tool: the homestead exemption.
The homestead exemption lets you keep some of the equity in your home that the bankruptcy trustee would otherwise use to pay off your creditors. For instance, if you have $100,000 in equity in your home, the trustee would be required to return $23,675 (the federal homestead exemption) of that amount to you if he or she confiscated and sold the property to pay some of your debts.
Unfortunately, the contract for the property bond nullifies your right to that exemption because it is actually a lien and, since it's a voluntary lien, the courts won't let you escape paying on the obligation by claiming the homestead exemption.
You may be able to use other exemptions to protect some of the equity in your home, though. It's best to speak to a bankruptcy attorney about your options for handling this issue.
It Will Be Difficult to Sell the Home
As noted previously, a property bond lets the bail bondsman put a lien on your home. So, if the defendant in the case fails to follow through on the terms of the release and causes the bail to be forfeited, the bond company can take possession of your home to repay the money it lost.
The trouble is the lien stays attached to the home. So, even if you sell it to someone else, the bail bond company would still retain the right to take possession of it if bail is forfeited. Since most homebuyers will not take a chance that they may lose the entirety of their investment because of the defendant in a criminal case, it may be impossible for you to sell the home if you needed to. You would either need to switch to a different bail bond type (e.g. pay the fee in cash) or wait until the defendant's case ends and the lien is released before trying to sell the home.
For more information about property bonds or to get someone out of jail, contact a local bail bond company.
