Many people do not still understand what inactive bond status means. Well, bonds can become inactive, and that could be due to several factors. Several people confuse it with inactive bonds. An inactive bond is a security that trades in small volumes daily.
They are also referred to as illiquid bonds. It is an infrequently traded stock and could be bought at say five shares only at a given time. These bonds are illiquid and can be quite challenging to sell them. Bond prices for these assets are volatile as a slight change in demand can grossly affect their rates. Inactive securities may sometimes be referred to as cabinet securities since they are stored in cabinets until that time they are required.
Now an inactive bond status means that the bond does not stand anymore. It means that the defendant cannot use the existing bond anymore to be released. Several scenarios can lead to such instances. Let’s look at some scenes here to understand better.
At any time you will be arrested and taken to jail, the judge may impose a bond on your head. Depending on prior history and the crime allegedly committed, the bond may be standard or maybe lower than the standard. If you are offered a standard bond, then you will consider a bail bond agent who will cover your bond for a 10% charge known as premium.
That technically means that if the asking fee for the bond is around $10,000, then the bondsman will receive $100 as his nonrefundable fee. In return, the bondsman will cover the full bond amount for you. The price paid to the bondsman guarantees him that you will appear before the court during your hearing.
Now that the bondsman will have to assume the risk, it will be based on the fee during that time the bond is executed. In case you are arrested for a massive crime and ask for a bond after 24 hours of arrest, the bail bond agent will assume the risk basing his argument on a maximum of 5 years of exposure. For first-time offenders, the risk to be assumed by the bail agent is low.
Now during the arraignment, the prosecutor decides to add on more charges on you as the defendant, and you were only charged with one offense. However, after investigation, the prosecutor believes that you had been involved in some other gross misconduct. They will, therefore, file for arraignment on the additional charges. Now in such a case, the bondsman is not still liable for the bond.
That is because there has been diversity in the circumstances that led to the bond. Initially, you were to be charged with five years in prison, but now you are being charged with ten years in prison. The risk of the flight has now increased, and since the conditions of the bond have changed, the bondsman is not obligated to honor it anymore. That is when the bond status is inactive.
The bondsman initially agreed to take the risk of paying for your bond when the danger was lower at five years. Now the threat has increased, and facing a ten-year sentence; you are more likely to flee compared to someone facing five years sentence.