How Do Bail Bondsmen Make Money?
The bail bonds office
contractually agrees with the court to post a bond on behalf of
a defendant
Established bail bondsmen enter into a contractual agreement
with a variety of courts around the city and county. In their
agreement, they stipulate to posting a bond and agree to be
irrevocably bound by the agreement. In return, the court allows
them to bail a defendant out of jail by signature--without
actually having to front the cash for the transaction. The
court understands that either the defendants will return on
their scheduled court date, or the bail bondsmen will pay the
entire bail amount to the clerk of the applicable court. Since
the bond the bail bonds office agreed to is irrevocable, the
court knows that it will receive payment, no matter what the
circumstances of the defendant's failure to appear may be.
Although at face value this looks like a situation that is only
beneficial for one side, the fact that the bail bonds office is
now in hot demand by defendants wishing to avail themselves of
this prearranged agreement places the bail bondsmen in a good
position to make a lot of money.
Bail bondsmen require
a payment of at least 10 percent of the entire bail amount as
an upfront fee
As friends and family members of a defendant are seeking out
the help of a bail bondsman to secure their loved one's
temporary freedom, the bail bonds office makes 10 percent of
the entire bail bond amount at the onset of the transaction.
This is a nonrefundable fee, even if the defendant shows up for
trial as scheduled and is found not guilty. A bail bonds office
that judiciously bails out low flight risks--that nonetheless
carry high bail amounts--will most likely make a lot of money
simply by taking in the 10 percent fee up front. For example,
if a defendant is required to post $50,000 bail, the bail
bondsman will seek a signature release of the individual and
take $5,000 as up front payment to do so. If the bail bonds
office bails out 10 such defendants in one week, they will have
taken in $50,000.
Bail bondsmen require
tangible securities to diminish their fiscal
risk
Bail bondsmen will truly only see a sizable profit if the
defendants they bailed out of jail actually show up to their
scheduled court hearings. If the defendants fail to do so, the
bond is called in by the court. Working with the example from
above, if the 10 defendants that were bailed out---and which
netted the bail bonds office $50,000---fail to appear for their
court dates, the bail bondsmen are suddenly liable for
$500,000. This now leaves the bail bonds office facing a
$450,000 loss. To ensure that this does not happen, bail
bondsmen protect their businesses by requiring a tangible
security to be placed with them, such as the pink slip to a
valuable car or by placing a lien on a defendant's home. If the
bond is forfeit, the bail bonds office seizes the property and
sells it to recoup the money paid out via the bond to the
court.
Article Source: Sylvia Cochran, eHow Editor
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