Probate Profits

August 12, 2023


Real estate assets are always valuable. It is possible to make a profit from the legal system of the probate process. The way it can work is, when someone passes away; and there are both judgment creditors and assets in the dead person’s estate. Make sure you learn the probate-related laws in your state. The probate process helps to make sure the creditors get paid, and any remaining assets go to the rightful heirs.

One of many judgment-related articles: I am not a lawyer, I am a judgment broker, and this article is my opinion based on my experience, please consult with a lawyer if you need legal advice.

At a probate estate, the Personal Representative (called the Executor in some states) is obligated to send out a notification of death to all known creditors. They also send out claim forms, which can be filed with the probate court.

Interestingly, few, if any creditors with a money judgment against the deceased are sent such notices. The reason is, most probate Personal Representatives do not check for any money judgments against the deceased debtor, or the deceased’s heirs.

For example, Tom passes away, and a Personal Representative is taking care of the probate estate. Tom has unpaid judgments against him, and the representatives usually do not look for judgments against the deceased, whether or not there are assets in the estate.

The way some people can make money, is to check both the probate and civil courthouses, for recently deceased persons. They then cross-check the deceased’s names with currently open probates for assets.

The next step is to look at each probate record, and check if the deceased has significant assets in their estates. If they do; then check the civil courts close to them, and see if there are any unsatisfied judgments against them. If there are, then you have a potential match, to potentially make a profit from.

You then either have a potentially good judgment lead that you can refer to (e.g.) a judgment broker; or try to negotiate to buy or recover the judgment yourself, assuming you know how to recover judgments.

If you approach a creditor with a judgment against the deceased, you can refer them to a judgment broker, offer to buy their judgment for cash up-front, or recover it on a future-payment recovery basis. Judgment recovery is not guaranteed; and most judgment creditors do not fully understand this.

When paying cash up-front for judgments; because they are not at all guaranteed; you must offer the creditor a small fraction of the judgment’s face value. Most creditors think their judgments are gold, but some creditors understand that getting any cash now is a good idea.

Some doing this business might offer an option to buy the judgment from a creditor at a discounted amount. By offering an option to buy the creditor’s judgment, you can pay them more for it, than typical buying cash up-front judgment cash-up-front pricing, because you are spared the risk of an unenforceable judgment because with an option, you are not obligated to buy the judgment. Basically, you and the creditor sign the option agreement, then you research the dead judgment debtor’s assets, and if there are assets you can liquidate to recover the judgment, then you can buy the judgment.

When you have an interest in a judgment, you can file a claim as a creditor with the probate court, and might eventually get a check. If or when the court mails you a check; it might take a month, or could take years.

The only difference between a typical judgment recovery attempt, is the debtor is deceased and will not go bankrupt or die again. Remember, probate courts have time limits, typically one year from the date of the death.

As a creditor, if there is nobody else already acting as the executor or administrator, you can ask the court to become named as the administrator, increasing the chances you will get paid. If you do this, you will have some legal duties, however you might get paid for those duties.

While anyone can file to become the executor of an open estate, the deceased’s immediate family (however usually not the deceased’s heirs over the estate assets of the deceased); and are given notice and time, to become the executor instead of the creditor.

Another option, is to look for judgments against the heirs of the deceased, so when they get their money, you may have a chance to file your judgment claim with them.

Probate courts are all federal courts. This system can also work in bankruptcy courts, however the risks of not recovering anything in a bankruptcy case is much greater.

The judgment might need to be recovered in a state or federal court. If the judgment enforcement effort is through a federal court, then you need to use a federal writ and a US Marshal; if there are assets. Sometimes, state court forms can be used in federal courts.

Examples of when state court forms may be used in federal courts include, because there are no federal abstract of judgment forms, or judgment renewal forms; so you would use your state’s court judgment renewal form.

An example of a federal writ is at www.cacd.uscourts.gov/sites/default/files/documents/Writ- of-Execution-Public-Instructions.pdf”

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