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JudgmentBuy Article:

Courts Stopping Judgment Recovery

For years, I have been telling people that the potential value of their judgment depends only on the available assets of their judgment debtor. Some people do not want to hear that, and then visit and become disappointed by scam web sites that advertise they pay (e.g.) 50-75 percent cash upfront for judgments. The people behind those web sites are flakes, because they totally ignore at least 99 percent of the people who send judgments to them. Also, when they actually do occasionally buy judgments, they never pay any more for a judgment than what it is actually worth, usually less than 5% cash upfront.

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. Most judgments sell for a tiny fraction of their face value cash upfront because they are not guaranteed, a hassle and/or an expense to recover, and most are never recovered. Most judgments need to be actively recovered, and the chances for any recoveries have historically depended on what the judgment debtors can be forced, or persuaded to pay over time.

Because of the economy, some courts are cutting back on services. Some may limit support the court actions required for judgment recovery attempts, or have long delays that make it difficult to recover judgments. Whenever a court downsizes or cuts support for judgment recovery attempts, it reduces the worth of all judgments issued by their court.

Already, the courts in some counties are reducing or stopping support for some post-judgment recovery procedures, which deprives judgment owners of their chance for recovering any money. Without court support and services, the only way to recover a judgment is to attempt to work out a settlement deal with the judgment debtor. However, those settlement deals will be for very small potatoes, because most judgment debtors will know there is no way to levy their assets without a writ from the court.

Some judgment recovery experts and attorneys I know had contemplated beginning inverse condemnation lawsuits in Federal courts. Their plan was to claim that the state's action of allowing or making courts stop post-judgment court support, deprives creditors of the value in their property (the judgments) without compensation (reverse eminent domain); to attempt to make the state condemn judgments, and buy them from the judgment owners. Of course many in the judgment business like to talk, but few take action.

If that talk turned into action, and inverse condemnation lawsuits worked for judgments, that would sure wake up the relevant states; and help them understand there is a cost to not keeping civil courts fully open. Condemnation and inverse condemnation court lawsuits are usually bifurcated, meaning the courts rule on two issues separately and sequentially:

1) A trial to determine liability, if there is none, it stops here.

2) A trial, sometimes in front of a jury, to determine the appropriate amount of compensation. The compensation is usually based on what property was taken or damaged. Laws allow the recovery of attorney and appraiser fees in successful condemnation lawsuits.

Alas, historically, most regular and inverse condemnation/eminent domain actions involved situations related to real property. A lot of legal research would be required to determine whether inverse condemnation might possibly apply to judgments. Another problem with this idea is that the cash upfront value of judgments is difficult to determine with accuracy.

Court closures are a hot issue, because whenever a court closes, or stops supporting post-judgment activities, that wipes out the value of judgments even faster than bankruptcies do; and much faster than the bad economy hurts judgment recovery in general. Any court not willing to support judgment recovery should not be issuing judgments.


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