My wife and I made the decision to open a residential cleaning business. We needed enough money to get the equipment, do a bit of advertising and get the licensing and insurance to protect ourselves and our customers. For about two years, things went very well, but then, things took a terrible spin for the worst after we hired a few employees to help us with the workload. Since then, we have gone bankrupt and have gone back to working full time jobs. If you are struggling with your business and considering bankruptcy, this blog can give you some answers to the many questions that you have.
You may have found yourself in a tricky situation recently due to trying to help someone get out of jail before their court hearing. If you recently got a bail bond for a family member or friend, and they then decided to leave town and avoid showing up for court, chances are that you now have to pay a hefty price to the bail bondsman. You may be wondering if bankruptcy is a way to help you get out of this debt. Here is what you need to know about bail bonds and bankruptcy.
Cash Bail Bonds
Using the chapter 7 form of bankruptcy will help wipe out any bail bonds secured with personal guarantees. This is a situation where you found a bondman that was willing to give you the cash needed for a bail bond and not requiring collateral. It's technically called a surety bond, which will be considered an unsecured debt during bankruptcy filings.
During bankruptcy, be aware that unsecured debts are paid last, and if the debt is paid off, it is only paid after other priority or secured debts. It's possible that a bondsman will get some of their money back, but they may not receive anything. No matter what happens with the final payment of the debt, the end result is having the bail bond debt discharged and not having to pay it back.
There are some exceptions to this though, such as if the bail bond was requested shortly before a bankruptcy filing. The bail bondsman could argue that the bail bond was requested with the knowledge that they would be filing for bankruptcy in the near future.
Collateral-Based Bail Bonds
It's quite different when you secure a bail bond using collateral. If you're using real estate to secure a debt, you may not be able to get free from your debt using bankruptcy. A bondsman will issue a lien on your property, which follows the property no matter who takes ownership of it. If you were to sell the property to pay for the debts, that lien must be paid off first. The lien also prevents you from transferring the property to a different person.
The best way to get an answer to your questions is to work with a chapter 7 bankruptcy attorney. They'll look over your specific situation and give you advice on how to proceed with eliminating your bail-bond-related debt.
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