• July 29, 2018

The Problems with Posting Collateral with the Court

The Problems with Posting Collateral with the Court

The Problems with Posting Collateral with the Court 1024 768 Patrick J. Thomas Agency

When dealing with a dispute in court that involves a party’s assets or some type of judgment, a surety bond is typically required to safeguard the assets until the dispute is resolved, including any appeals that are made. Surety bonds are the most common type of safeguard because they offer the best protection for the assets, but there are certain cases where the courts will accept some type of collateral instead.

 Do People Post Cash?

Some parties choose to post cash with the court because they are looking to save on the costs of acquiring a surety bond. While this may seem like a good idea, it’s not always the best idea for multiple reasons:

  1. Some courts aren’t equipped to take cash or any other type of collateral, they may instead require you to obtain a surety bond.
  2. You will end up tying up valuable assets during the process.
  3. Sometimes the courts can take a while to return cash after the case is settled.
  4. If the court decides against you, there is little recourse for getting your money back.

What About Promissory Notes?

Some people also bring up the option of using a promissory note or letter of credit in lieu of a surety bond. These are also not guaranteed to be accepted by the court. There are also other concerns with using them over a surety bond. Courts aren’t usually equipped to hold these letters of credit nor do they know when to draw on them, if needed.

Also, there’s a chance that the court will accept the document, but the bank that issued it could cancel the note at any time, leaving you vulnerable to damages. With a surety bond, you do not run this risk.

Surety Bonds are the ONLY Guarantee

While posting cash or some type of physical collateral can work out in your favor during a court case, the only “sure” guarantee is a properly obtained surety bond from a reputable surety agency. This is because there is no clear supervision for collateral in many court systems, but the courts are clear in their acceptance of surety bonds, whether they are for injunctions, replevin or any other case.

To obtain a surety bond for your case, get in touch with one of our agents. We can help you find the right bond for your case quickly.


Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.