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Selling Your Judgment

If you won a judicial judgment sometime ago, but are finding it difficult to retrieve the money from the debtor, one option open to you is – sell the judgment. It is an option worth considering. Regrettable, about 80% of court judgments are never collected. Reasons for the low collection rate include the skillfulness of sneaky debtors who are professionals at not paying, and the competing and productive tasks facing citizens and business people.

Few of us would file suit to collect a debt unless we are sincere about believing we are owed the money. Not collecting the court judgment can add insult to injury as the professional deadbeat works the system. Fortunately, most of us infrequently encounter debtors who are skilled at and intent not to pay what they owe. Extracting money from these nefarious characters can require specialized skills.

Why sell your judgment?

When you sell a judgment, the benefits include getting paid some of the money judgment, and a measure of satisfaction. Getting paid a portion of the total judgment now, may be better than hoping to get the entire judgment later. If the debtor has not paid yet, what will force him to pay? And if you have not yet made time to collect the judgment, is it realistic that you will in the near future?

Many clients have found meaningful satisfaction in knowing the debtor will have to face the music and pay the piper. Selling your judgment means you get cash today, which is always better. Further, clients know that the company that buys judgments for cash will not pay money today unless they believe that they can make the debtor pay up.

Some firms pitch you on selling judgments on a “future pay basis”. These firms serve a purpose and have helped many judgment holders. However, their initial offer can be misleading. The first impression is that they are offering to purchase your judgment and pay you cash today.

In reality, they are asking you to assign your judgment to them in consideration of their promise to attempt to collect from the debtor. In return, they will pay you a portion of whatever amount they recover. There is no promise you will ever be paid anything. This is a valid business proposal, although its initial presentation can be misleading.

The benefit of assigning your judgment to a firm to collect is that you could possibly get a higher recovery, if they are successful. Disadvantages include the uncertainty of when or if there will be any recovery, the ultimate amount that is recovered, and whether the firm will truly expend commercially appropriate efforts to collect your judgment. Also, their discomfort with paying cash for your judgment is an indication of their uncertainty about their ability to perform. In many cases a selling a judgment under this method will result in the company giving you back the judgment to process yourself because of the inability to collect.

The debtor should be held accountable. If you do not have the time, expertise or interest in collecting your judgment, consider selling or assigning your judgment to someone who will hold the debtor accountable.