Returning Lemon Judgments

August 13, 2023

As of 2016, most civil judgments are never paid; because the judgment debtors have insufficient current available assets. Most creditors are far too optimistic about the short and long-term values of their judgments.

This article is my opinion, and not legal advice. I am a judgment referral expert, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.

If you are trying to recover someone else’s judgment, how do you deal with lemon judgments? Nobody knows the future. The plus part is some of those lemons will pay off over time. The economy could change, or the debtor could inherit something, or get a job or a bank account with money past the protective exemptions one day.

What if you are holding a lemon judgment, and the OJC (Original Judgment Creditor) wants it back? Tell the OJC you have your liens down, and will keep tracking the judgment debtor. However, if they insist on getting their judgment back, just assign it back to them.

If there are no available assets, and the judgment debtor is a lemon, no matter how much you have spent; assign it back if the OJC insists.

If the OJC has a property lien down, and you take assignment of the judgment, you now also now own that lien. It is the same when you return the judgment to the OJC, any liens you purchased become legally the OJC’s property (again?).

If you have a lemon, before you spend any more money, tell the OJC. Tell them your plan; to put down liens, and check the debtor every year, to check if they have any assets, and that your goal is to get the money, just like they want the money. Tell them “it is a good idea to let me keep it”. If they resist, simply assign their judgment back.

If the debtor owns real estate property, if there is not enough equity when considering your State’s homestead exemption; then keep it for your retirement, and notify the OJC that is what you are doing, to benefit both of you. Explain that the judgment has limited routes for enforcement, and you have done as much as you can, and most likely it will pay off one day, if it is left with you.

As for a real “turnip” judgment, reassign it back at the first hint the OJC wants it back. Yes, you may have spent (e.g.) $150, however it is a lesson in screening incoming judgment debtors and creditors better.

Many judgment enforcers continue to take crummy judgments because they are handed to them. Some people say this is a “numbers game”, however it does not have to be. If we screen well, and put our money into the screening process rather than in the enforcement part, we may find increased profits.

To summarize, there are many reasons to return a hopeless judgment, a few to start with:

1. Every step you take on this case will cost you more money and/or time.
2. Each case you choose to keep in this manner takes up more space.
3. The OJC is very likely to call you regularly wanting an update (more time/money).
4. The hopeless JD is quite likely to remain a hopeless JD forever.
5. You will obviously get no word-of-mouth advertising from this OJC, you might get quite the opposite…

One way to run a judgment business is to take lots of losers, but make it up with volume. One just has to hope there are going to be nuggets of gold amidst all the trash.

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