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The Truth About Judgments
Through my vast experience, with a few exceptions, I know the cash up-front value of most judgments is very small. Almost every day, I talked with at least twenty judgment owners, and still trade emails with at least thirty more each day.
Far too often, when I tell people the truth that their judgment is not worth a lot of cash up-front, they tell me that I am wrong.
It is as if they are listening to the truth about their judgment, for the first time in their life. Many judgment owners do not believe the reality about their judgment situations.
One big problem is that there are web sites that brag about buying judgments for "up to 50% on the dollar", that will not even pay even three cents on the dollar for average judgments.
The old statistics found all over the web, assert that about 80% of judgments are never recovered.
I had been enforcing judgments for about 5 years, and have been a judgment broker for longer than a decade. I have first-hand experience with thousands of judgments, and I know this:
There is no doubt, that some judgments are easy to enforce and are recovered quickly, and such judgments sell for more than a few pennies on the dollar. However, most judgments have weak or clever debtors and sell for pennies on the dollar. These days, I think it is close to about 95% of judgments are never recovered, at least not for more than 20% of what is owed on them.
When I assert that 95% of judgments are not recovered, I am not including judgments that were settled or dismissed. The reasons for my 95% estimate is:
1) The economy is awful, and most debtors have far less money and available assets now than before
A judgment is not cash, and only the judgment debtor can repay a judgment. When the debtor is poor, not much can be done, and the judgment remains almost worthless.
2) Laws and courts are changing, becoming more expensive, and getting slower. Judgment recovery is more expensive, slower, and occasionally impossible in some courts.
3) Debtors are much more likely to file for bankruptcy protection these days. Almost always, bankruptcy kills judgments.
4) Judgment enforcers and judgment buyers are going out of business faster than ever before.
5) Judgment enforcers, contingency lawyers, and judgment buyers, have become very picky about which judgments they will consider.
When a judgment debtor has lots of available assets, it is easy to sell a judgment, or to find a contingency enforcer. These days, very few debtors have even an average amount of available assets.
For the 99% of judgments where the debtors have few or no assets; it seems that either few people tell judgment owners the truth, or more likely, judgment owners are consistently refusing to believe the truth.
The reality is, it is now almost impossible to sell judgments for more than 1-7% of their face value, everything depending on the judgment debtor. Of course, I have seen 35% paid a few times, with situations involving very-rich debtors.
The average future-pay contingency recovery charge averages 50% when you do not pay or risk anything for a judgment recovery. On large or "juicy" judgments, you usually pay less than 50%. When the debtor has substantial assets, or if you pay all the expenses, you may find a lower future-pay recovery charge.
Most judgment buying and auction sites are now out of business. The one judgment buy/sell/trade site left, has very few successful transactions, because most judgment owners price their average judgments far above 5%, so nobody buys them.
Amazingly, many judgment owners cannot accept the reality about the low cash upfront value of most judgments. Some contact hundreds of judgment experts.
Over the years, I have observed a repeating pattern. For example, a judgment owner called me a year ago with their $100,000 judgment, they wanted to sell for $30,000 cash up-front.
I explained that nobody pays that much of a percentage, for a cash up-front judgment sale with their kind of debtor. Also, that they would be far better off with a future-payment recovery, where a recovery expert would pay them an average of 50% of what might get recovered.
When the judgment owner heard that, they said they would pay 15% to get their judgment enforced on a future-pay basis, and not a penny more. I told him nobody can help them, and good luck.
What happened during the following year, was that I received judgment leads from about 50 judgment experts, from that exact same creditor, who had persistently and aggressively shopped their judgment all over the nation.
About a year later, the creditor called me again. He explained that he had contacted 300 judgment experts during the previous year, trying to find a match for his requirements.
He still had not found even one buyer or enforcer, with his unrealistic terms. He then asked me if I had any new buyers now, who would pay his price. I said no, nobody will pay him $30K cash up front for his judgment.
An irony is, his judgment debtor seemed to have some assets. The 100K judgment owner, remained no closer to getting any money for his judgment; and he wasted so much time for himself and others.
Some people think that with the economy down, judgment enforcers and buyers will compete for their business. This is not reality, because the expense and difficulty of recovering judgments has dramatically increased. Judgments are not commodity items subject to supply and demand price rules.
Many people think they can get a much better price by shopping their judgment. They are wrong. The truth is a judgment is only worth what someone will pay for it based on the judgment debtor, not for what anyone brags they will pay "up to".
A judgment sale price, or the percentage fee for a future recovery effort, does not depend on the creditor's needs or wishes. It usually does not depend on the enforcer or buyer, and almost always depends on the situation of the debtor.
Imagine contacting 300 people and companies over a year, and not learning the real problem. The problem is, the judgment owner was not accepting a reality, that judgments are not cash, and are usually not worth much cash upfront.
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