Many judgment owners spend a lot of time trying to sell their judgments for as much cash upfront as they can possibly get. Because judgments expire, and judgment recovery depends on the judgment debtor, the economy, costs money, takes time, and is financially risky; every real judgment buyer is now very conservative about how much they will pay for judgments. The JudgmentMarketplace is almost always a buyer’s market, because only one out of a hundred judgments can be sold to an actual judgment buyer for more than 1-7% of the judgment’s face value.
This article discusses the factors that determine the price that a judgment buyer will actually pay for a 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. The three biggest advantages of buying judgments for cash upfront are:
1) When one buys a judgment for cash upfront, it is almost certain that they will never again have any more contact with the original judgment creditor, after the sale and the assignment of the judgment. With future-payment contingency recovery recovery, excessive contact from original judgment creditors can be a headache.
2) When one buys a judgment for cash upfront, they will have a very firm standing in almost every court situation; when attempting to recover a judgment they own 100%, with no contingency arrangements or obligations. In some courts, especially bankruptcy courts, judges do not allow assignees of record, with future-payment obligations to the original judgment creditors; to represent themselves in their courts.
3) When one buys a judgment for cash upfront, they do not have any lingering obligations to the original judgment owner. They can settle their judgment quickly, for any amount they can negotiate; or recover as much judgment money as reality allows, and they do not have to share any potential profits, except for potential owed taxes.
The two biggest disadvantages of buying judgments for cash upfront are:
1) Nothing is guaranteed in judgment recovery. Anything one pays to buy a judgment for cash upfront, and then to attempts to recover the judgment, could be lost. The judgment debtor could file for bankruptcy protection, die, lose their job, claim exemptions, lose their house, get divorced, become sick or disabled, go to jail, move overseas, expertly hide their assets, pay a lawyer to fight every recovery effort, or attempt to vacate or appeal the judgment.
2) There is a chance of being ripped off. There are some alleged creditors who attempt to sell fake judgments, see my article about fake judgments. Also, sometimes the judgment debtor already paid off some, or all of the judgment; and the original judgment creditor never filed a partial or a full satisfaction of judgment with the court. If you get ripped off when buying a judgment, you can sue the original judgment creditor, but as we know, suing someone is not a guarantee of getting repaid later.
Judgment sale prices depend almost entirely on the available assets of the judgment debtor. Factors that strongly effect the purchase price of a cash upfront judgment sale, include what assets the judgment debtor currently owns, the age of the debtor, what state they live in, their employment or income status, when the judgment will expire, the debtor’s other unpaid judgments, their crime record and bankruptcy history, and their general stability.
Nationwide, average judgments sell for between 1 and 7 percent. I have introduced thousands of judgment owners to judgment buyers, and the largest percentage cash upfront sale transaction I have ever seen or heard about so far, (that really happened) happened only once, for 37% cash upfront of the judgment’s face value.
That single 37% cash upfront judgment sale had a one in a million type of judgment debtor. That very rare judgment debtor was fairly young, with no other judgments, who had no bankruptcy history, who owned several expensive properties with no loans or liens, a stable $200K per year income, and owned several luxury cars with no loans or liens.
The only reason that single judgment sold for 37% cash upfront was that the debtor was “perfect”, and owned somewhat liquid available assets worth at least 25 times as much as that one (non-default) judgment against them. If your judgment debtor is not rich, nobody will pay you that much cash upfront for your judgment.