BUF Funds

kebcpa
Senior Poster



Joined: 24 May 2005
Posts: 347
Location: Colorado

Usergroups:
Agents, Western Region
Posted: Wed Sep 27, 2006 7:12 pm Post subject:

--------------------------------------------------------------------------------

One percent of every bond I write goes into a build up fund (BUF). This is to cover forfeitures, however it is clearly known that the forfeiture will only be paid out of those funds if the bond agent does not pay them and the insurance company has to do so. If this is done, the agent usually loses the authority to write for that company. I make out a separate check to the bank and send it in with my bi-weekly report. The account is set up in my name with the insurance company as trustee. This is standard for all agents that I know. Once an agent stops writing for the insurance company and has sent discharges on all of his/her bonds (liability) to the insurance company, the BUF is returned to the agent.

If the account is controlled by another agent, however, I can see issues with it. I am already foreseeing having to get a court order to get the BUF that I had to pay to another agent (along with the 1% I paid into his BUF) once my liability is cleared with him.

I also know an agent that had to take his insurance company to court to get his BUF returned. They wanted to hold it for 3 years after all of his liability had been cleared. Another insurance company tried to sue an agent for the return of a forfeiture they paid out of his BUF even though he was no longer writing for them.
_________________
Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Walsenburg, CO

Back to top


tsuggs
Moderate Poster



Joined: 09 Mar 2006
Posts: 111
Location: Richmond, California

Usergroups:
None
Posted: Wed Sep 27, 2006 8:47 pm Post subject:

--------------------------------------------------------------------------------

I have heard of a agent having a BUF account setup through a GA and not the surety company. In that case the GA controlled the account and would not release the funds to the agent after he quit writing bonds.

The only other bad case was when a surety went out of business. They tried to keep the BUF accounts of all their agents but, I believe the State made them release the funds.

I would not think that State would allow an association be in charge of BUF accounts. Then again, who has the power, rules.
_________________
Tony Suggs
Castle Bail Bonds
Richmond, CA 94804
510-232-3399

Back to top


HoundDog
Moderator


Joined: 14 Aug 2004
Posts: 840
Location: Heber Springs, AR

Usergroups:
Agents, Moderators
Posted: Fri Sep 29, 2006 12:27 pm Post subject:

--------------------------------------------------------------------------------

In Arkansas the bonding companies are self sureties after eliminating the insurance surety in 1989. My problem with the proposed legislation here is that the companies control your money without your OK and if you leave their employ you usually do not get your money even though you paid taxes on it.
_________________
Robert I. Donnellan Jr.
Compass Rose, LLC
501-206-1365

Back to top


tsuggs
Moderate Poster



Joined: 09 Mar 2006
Posts: 111
Location: Richmond, California

Usergroups:
None
Posted: Fri Sep 29, 2006 12:42 pm Post subject:

--------------------------------------------------------------------------------

Is there a agent / company contract signed when beginning work for the company? Does it have the terms and conditions in writing for return of the BUF?

I would think that the agents would file suit to recover their money if the bond company was keeping it.

Sounds very corrupt to me.
_________________
Tony Suggs
Castle Bail Bonds
Richmond, CA 94804
510-232-3399

Back to top

_________________
River City Associates
Decatur, Al. 35601

Unfortunately corruptness is a part of any business, and it seems very prominent in bonding. That is why more and more states are tightening down and passing stricter laws to regulate the industry.

Bob, There are various ways to deal with the tax issue depending on how your pay is reported. If the company sends you a W-2 or a 1099 which includes the BUF as income, you can still deduct it as an expense. For a W-2 employee, it would be done as an employee expense and written off on a Form 2106 along with any other unreimbursed business expenses. For a 1099 it would be written off on your Schedule C as a business expense. If at some later date you do get the funds back, claim it as income and pay the taxes on it then.

_________________
Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

Hi Kathy, I was wondering, Do all Bailbonds agencies Have to write for a surety insurance company? I read somewhere the difference between an Independant Bailbondsman, takes FULL liability with his own company and a surety bondsman writes for an insurance company. In that your BUF is under your business name. Or am I way out in left field, since we are new to the Biz?

_________________
Steve Galente
NEW ENGLAND BAIL BONDS
South Burlington, VT 05403
(802)863-6442
NSIN#SG0906

In vermont all there are no private bondsmen you must have a surety backing you up

It depends on the state, Steve, and Hadley responded that you can only do it under an insurance co in VT.

In Colorado you either write under an insurance company, or after 5 years doing so can post cash (minimum $50K) with the state and become a Professional Cash Surety Agent. A PCSA can write a single bond up to double the amount of the cash they put up but aren't limited other than that.

An insurance company will allow you to post amounts based on your history and their "trust" in you. I carry in denominations up to $30K and can use them at my discretion. Anything larger, I have to go through my GA and the insurance company.

I am careful with the bonds I write, because I am responsible for any forfeitures, regardless of what I have in my BUF. If I write a bad bond and cannot pay it, the insurance company will first come to me, then my GA for payment. If neither of us pays, they will have to pay it from our BUF's with any excess out of their pockets. If they do not pay, they put every agent that writes for them in the state out of business until the forfeiture is paid. They have the right to take whatever collateral that I or my GA put up to pay the forfeiture.

My BUF is in my name with the insurance company as trustee on the account. I receive monthly statements showing my activity and balance. This is how the insurance companies that I have had involvement with operate.

There are several surety insurance companies licensed in various states, so do your research, talk to other agents, check your DOI website for infractions, etc before you make your choice. Sometimes it is easier to deal with the smaller, more personal agencies. My insurance company took me on, because my GA vouched for my reputation, with much less collateral than the larger ones would accept.

I have seen agents get in and out of business in a matter of months, because they wrote bad bonds. The best way to think of it is that every bond you write is a promissory note to the court. Of course, the main part of any bond is having a good cosigner and good collateral. But, sometimes cosigners and collateral disappear along with the skip. You can take real property on a large bond, but if you don't file the lien (or even if you do) and the property is foreclosed by the mortgage holder, what do you have? Not a darn thing. Bottom line, if the person runs, can you pay the forfeiture in the time allowed by your state? Forget cosigners, collateral, your tracking skills, and everything else but that if you cannot find the person, can you pay the bond?

I know this strays from the topic, but it is still pertinent to BUF's. They are put in place to cover the insurance company's you know what if you can't pay. As to being held by a GA or bond agency, they should be held to the same state-mandated standards for their return as the insurance company is. If not, make sure you have a solid contract that will stand up in court to force the return. BUF's are padding in case of forfeitures, but they are also a savings that must be legally returned to the depositer upon completion of legal requirements. Usually this is simply clearing all of your bonds by providing the proper court bond discharges to the agency. Once every bond (liability) is cleared, the money is yours, period.

_________________
Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

Thanks Kathy and Hadley for the great info! Just been doing alot of research and sometimes you get overwhelmed by what you read. I figure the only "stupid question" is the one you don't ask! Thanks again for your posts.........Steve

_________________
Steve Galente
NEW ENGLAND BAIL BONDS
South Burlington, VT 05403
(802)863-6442
NSIN#SG0906

Steve, that is what I was always taught. The only stupid question is the one that wasn't asked. We are all here to help you, so ask away. You may not always like our answers, but they come from our personal experiences and knowledge, so are usually on point. Obviously, much advice and opinions applies in your AO (area of operation), from people who operate in the area, you have to take that into consideration. When you get advice or info from someone "in the know" take it and use it. If they say it's so, it is so. That is the best advice anyone can give you.

_________________
Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

Thanks for the reply Kathy, one thing in my 25yrs in the AirForce has taught me was to always ask questions and to listen to the people who know more than you, stay well informed and use your training and judgement to make the best possible decisions! Thanks again!

_________________
Steve Galente
NEW ENGLAND BAIL BONDS
South Burlington, VT 05403
(802)863-6442
NSIN#SG0906

Steve,

Most sureties will require collateral from you. Ours takes a $50k lien on our house. After you reach $100K in your buf account, some sureties will release the lien on your property.

As Kathy stated, the surety will allow you to post bonds up to a certain amount based on experience and or collateral pledged with the surety. After that you will have to get GA or surety approval to write larger bonds.

I can not stress enough what Kathy said about who is ultimately responsible for a forfeiture. Before you write a bond, think about it as if it will go bad. Then think if you can afford to pay it off. If you can't don't write it.

Arkansas is a self surety state. If you want to start a company able to write bail you would need a minimum of $ 100,000 put up as collateral. This is in the form of certificates of deposit, property and you also need and irrevocable letter of credit from a bank.