Recovering judgments often depends on the economy. In 2017, our general economy remains very weak, which means that most judgment debtors are now poor. One choice might be to scale back or close your judgment recovery business. Another choice is to work more and take tougher judgments, while being more careful about spending money trying to recover them. You could also outsource some of your judgments, so you can recover judgments further away, even nationwide.
Judgment brokers are good for judgment enforcers, collection agencies, and collection attorneys because they help reduce judgment shopping, and they screen every judgment creditor and debtor (with only public data records) for each free judgment lead. This article is my opinion, and not legal advice. I am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.
In 2017, the overwhelming majority of judgments are tough. Some enforcers, collection agencies, and contingency lawyers might read this article and laugh, and would say they never take anything except slam dunk easy judgments. In our current economy, easy judgments are getting rarer, and you may go a long time without seeing an easy judgment.
As long as expectations are realistic, more contingency recovery experts will probably need to take more grade B and grade C judgments to stay in business; taking care not to waste money on hopelessly broke judgment debtors. Most judgments have poor debtors, and some have clever debtors who have hidden their assets. With either type of tough judgment, some good strategies are often the same:
1) Everyone needs to reduce their expectations. Recovery is a long shot, often takes a long time, and a partial recovery is a win. Even recovering five percent of what is owed can sometimes be considered a success.
2) There is nothing wrong with taking a tough judgment as long as you do not waste money on poor debtors. With poor debtors, just check on them every year or so, to see if they come into assets. Tough judgments should not take up too much of your time. Over time, some available assets might show up within a group of tough judgments.
How does one recover judgments against poor debtors? One tactic is to look to see if their parents own property. If so, record and maintain a property lien, in case the judgment debtor one day inherits property. Another tactic is to check annually for jobs judgment debtors may have found. In this economy, I do not recommend looking for judgment debtor’s bank accounts, unless you know they are earning or receiving income.
When the judgment debtor hid their assets; by definition, it is a tough judgment. Almost without exception, every judgment owner vastly underestimates how expensive and difficult it can be to find and undo fraudulent transfers; and how short the time limits are, to try to undo fraudulent transfers. With clever debtors, you can either:
A) Hire private investigators and/or schedule and serve judgment debtor and third-party examinations with document production requests, to dig in deep, and try to find the assets and the way to reach them.
B) Do nothing except reevaluate the judgment debtor’s situation every year, to see if they have let their guard down, and have some assets showing.
C) Especially if the creditor is complaining, or you cannot afford to dig deep, return the judgment.
With large judgments having fraudulent debtors with hidden assets, the strategy can be similar to that with poor debtors, except perhaps checking for bank accounts every few months makes sense; and debtor examinations with document production requests might be a good gamble. When there are hidden assets, money spent trying to recover a judgment is speculative, however there is a chance for recovery.
Sometimes sued business entities dissolve, or were or are now, merely empty shells. The original judgment creditor should have sued people, or a parent company, or different entity. With these kinds of judgment situations, one must prove alter-ego, or try some other expensive and complicated legal procedures (or return the judgment). This can make sense if there is an actual reason to attempt to tie alter-egos to the judgment debt, and if the potential alter-egos have assets. Again, I am not a lawyer, just a reminder that many judgment recoveries require expenses, and extra hassles.
Almost all judgment enforcers have judgments creditors assign judgments to them. However, some do not file the assignment at the court until they run a credit report on the judgment debtor. Usually, when you own a judgment, you have the right to pull a credit report on your judgment debtor. If you run a credit report and do not like what you see, you can return the judgment assignment papers to the creditor, and explain you cannot help. It is a good idea to tell the judgment owner why you rejected their judgment, to help prevent them from over-shopping their judgment.