Can I Discharge Criminal Bail Bonds In Bankruptcy?

14 Sep Can I Discharge Criminal Bail Bonds In Bankruptcy?

You know the drill; your brother, cousin, orgood friend, is arrested on a criminal charge and wants to get out of jail pending a trial on his orher case. So you agree to sign a personal bond to gain a release from jail. And then your brother/cousin/good friend/dirtbag skips town leaving you owing the bail bondsman andfacing bankruptcy. What to do?

The first question is what does the bond cover? There are several varieties that do not involve cash. If you posted bail that creates a lien on some property that you own, then the question is can you avoid the “lien” for lack of valuein a bankruptcy case? A criminalbail bond lien would be treated like any other lien or mortgage on your home. If there is not enough value to cover the lien, then it can and will be avoided in a bankruptcy proceeding leaving you with the property.

So if the bond is simply a personal guarantee that you will pay the bond amount if the relative or friend skips town, then it is an unsecured debt much like any other. If you later file for bankruptcy, the debt must come under some provision of Bankruptcy Code Section 523 to survive. Courts have held that the bond is not a debt owed to a governmental authority under Section 523(a)(7), but is merely a private contract where a third party pays the government on a guarantee of debt. So the bond debt IS dischargeable.

However, you must also watch out for other provisions of Section 523. If the bond was obtained by submitting a false financial application or by actual fraud, then subsection (a)(2) might prohibit the discharge. This is time to consult a skilled bankruptcy attorney to determine the extent of your exposure and whether or not a bankruptcy can help you under from that bag your relative or friend left you holding.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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