Judgment buyers prefer to buy judgments that look easy to recover. An ideal one is against a wealthy person or company with no other judgments or debts; owning lots of assets such as properties, expensive cars, boats, or planes, with no prior loans or liens on them. Unfortunately, few debtor situations are like that.
Before you buy a judgment, you should learn a lot about the debtor’s situation, and verify they have not filed for bankruptcy protection. This article is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.
There are many reasons to buy judgments with a single one-time cash upfront transaction. Cash upfront sales have several advantages, including no need to share any possible recoveries made, or having to listen to original judgment creditors. You also get the freedom to make a quick profit; and move on if you choose to, not having to answer to anyone.
Another big advantage of cash upfront judgment sales are that they are accepted in almost every court. In some states, courts, and with some judges; assignees of record enforcing judgments with future payment agreements to buy the judgments, are not allowed post-judgment recovery actions in courts.
One of the best reasons to buy a judgment, is to attempt to quickly settle the debt with the debtor. You can attempt to politely contact the debtor, and offer to settle the debt in a way that saves them a lot of money, yet leaves you a good profit opportunity. The goal is to make a reasonable profit soon, rather than beginning the usually long and expensive recovery process to attempt to enforce the judgment. Other reasons to buy a judgment are to later attempt to resell or recover it, without needing the debtor’s cooperation.
The best way to buy a judgment is to buy it cheap enough so that you have a good chance to make a profit, either by settling or enforcing it. The problem is that most judgment owners dramatically over-value the actual market worth of their judgments.
Experienced judgment buyers pay between 1% and 3% for average judgments, when the debtor does not seem to have any obvious way to repay even part of the judgment. When debtors have assets, sometimes buyers will pay more. Because a bankruptcy filing can instantly make most judgments worthless, is the biggest reason nobody pays a lot of cash upfront for judgments.
When you buy a judgment, you need to have the seller notarize their assignment of judgment to you; and sign your purchase agreement, to buy their judgment. Do not pay much, until the judgment has been assigned to you, and that assignment is recorded in the proper court.
If your debtor will not settle, then you can begin the often difficult and expensive path to attempt to recover your judgment. When you collect a judgment that you purchased, keep in mind that recovering every dime is not as important as locking in a quick profit, and moving onto the next purchase.
If you get paid, you must satisfy the judgment with a notarized satisfaction of judgment stamped by the court, and mail the judgment satisfaction to the former debtor. Keep a copy of the court-stamped satisfaction for your records.