Everyone that first attempts to sell their judgment for cash upfront, thinks about things such as the face value of their judgment, the interest rate, how long the judgment lasts, etc. At first, most people do not think about the most important part; the available assets of their debtor, and the economy. Most owners of new judgments vastly over-estimate the cash upfront value of their judgment.
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.
Professional judgment buyers do not care about the story of how the judgment was won, or what a SOB the debtor is. Judgment buyers care only about the quality of the judgment, and the judgment debtor’s situation.
Very few judgments sell for more than 10% cash upfront, and the national average is probably close to 3% cash upfront. When a judgment is recovered on a future-payment contingency basis, the nationwide average is about 50%. Most creditors insist on getting a cash upfront offer, and get frustrated when they cannot sell their judgment for more than a few pennies on the dollar. Some of the factors that go into cash upfront judgment pricing, which always includes plenty of due diligence, are:
1) The State the judgment debtor lives in, because certain states have laws that are extra friendly to judgment debtors.
2) Whether the judgment was won by default, and the proof of service of the lawsuit. Default judgments, especially when the proof of service is not ideal, can be vacated, which erases the judgment.
3) The available assets of the debtor. Even if the judgment debtor owns property, many properties are upside down these days. The more available assets the debtor has, the more the judgment can be sold for. If your debtor stands to inherit some property, in certain cases, that can help raise cash upfront prices.
4) The bankruptcy history of the debtor. If the debtor has a record of filing for bankruptcy protection as often as the law allows, that scares off judgment buyers, because bankruptcies destroy most judgments.
5) The stability and social habits of the debtor. Reduced prices result when the judgment debtor uses multiple social security numbers, has a crime history, uses AKAs, has other judgments against them (especially Federal or State judgments), moves too often, hides behind a PO box, etc. Even a judgment debtor running a small home-based business can be a challenge to recover from.
6) The age of the debtor because social security, disability, and most retirement plans are off limits to creditors. General SS benefits are subject to garnishment. However, SSI, which is a needs based program, is not.
Benefits which are paid in to the SSA, but not yet paid out, are never executable/attachable. Once either standard retirement benefits or social security disability, is sent out, it may be garnished. Once the recipient dies, the benefits stop, and so do the garnishments. (Be careful here, because if/when the recipient debtor dies, and the creditor keeps garnishing payments sent to the deceased, if the SSA learns of the death, then they will come after creditor for return of the money, to which they are entitled. Compared to the other benefits which are paid to a recipient based upon what they have paid in to the system, SSI is not such a program. SSI is for old, or sick or disabled people (with certain income eligibility requirements.) No need to pay in to the system for SSI benefits, it is purely a welfare type program, which is why it cannot be garnished.
If your lien is attached to the real estate, why wait for them to refinance or sell their property? Could you not simply initiate foreclosure (If you can afford to?)
Judgment recovery is expensive and financially risky. One never knows when a debtor will die, move, go bankrupt, get sick, lose their job or home, get divorced, courts will downsize, or some do-gooder legislator will again raise exemptions and protections for debtors. No wonder cash upfront judgment sale prices are usually very low.