I am not a lawyer, I am a judgment broker. This article is my opinion, based on my experience in California, and laws vary in each state. If you ever need legal advice or a strategy to use, please contact a lawyer.
Judgments are not guaranteed, they are only chances for getting some money in the future. When the economy was good, judgments were sometimes a way to get money. Now they are only a chance of getting some money.
In the ideal situation, your judgment debtor is wealthy and will repay your judgment after getting a single polite reminder. That is not the case 99% of the time. Most of the time, judgments are never enforced. If they are enforced, it is a slow process that often involves compromise, and with partial recoveries more often than full recoveries.
Here are the top ten reasons many judgments are never recovered:
1. The debtor can file for bankruptcy protection. Once a debtor files for bankruptcy protection, all creditors must stop all collection activities, at least until they later get written permission from the bankruptcy court. While there are exceptions, most of the time, bankruptcy kills judgments.
2. The debtor can die. While it is possible to show your judgment to the executor of the dead person’s estate, when there are no assets left, you will not get paid. Most often, you either get nothing or must settle for a fraction of what is owed.
3. The debtor can go underground, hide assets, or be poor. When you sue a debtor using a fake name, or when the debtor is a professional fraud that keeps most of their assets in names that cannot be traced to them, or is really poor, most of the time, that means a judgment against them cannot be enforced. Also, when you sue a company that is out of business, most of the time nothing can be done.
4. The debtor can move. It is not cheap or easy to domesticate judgments to another state. Some states make it extra hard for creditors, Florida being one of the worst. Some states impair judgment recovery with laws that specify that small claim cases cannot be assigned, or one must be a lawyer to recover any judgment, even a $100 one.
5. The debtor can become sick or get hurt. Disability (and social security) income cannot be reached by creditors, and disabled debtors often lose their ability to earn income.
6. The debtor can file an exemption claim. Every State has exemptions for a debtor’s personal property. If the debtor files an exemption claim, you must show up at the hearing. If you do not show up, the debtor wins.
7. The debtor can vacate the judgment. Especially with default judgments, asking the court to vacate a judgment is cheap and easy. The debtor may not win, however if you do not show up, the debtor wins.
8. The debtor can claim “it’s not me”. Especially when the debtor has a very common name, or grandpa, dad, and son, all have exactly the same name; it can be difficult to recover a judgment. It can take too much time and money to prove who is the actual debtor.
9. The debtor can hire a lawyer. Some debtors would rather spend $10,000 on lawyers, than pay $5,000 to satisfy the judgment against them.
10. The debtor can have many previous judgments and liens. When a debtor has a bunch of judgments against them already, most judgment enforcers will not even try to recover a judgment against the debtor. This is not always fair, because the first one to recover the judgment wins, even if there are 20 other unsatisfied judgments against the debtor.