When The Original Judgment Creditor Dies

August 13, 2023

What happens when a judgment recovery specialist has a future-payment contingency recovery contract with an original judgment creditor, then recovers some money from the judgment debtor, and then finds out the original judgment creditor has died?

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.

First of all, this issue only comes up if you had a future-payment contingency contract for that judgment. If you bought the judgment for cash upfront, there is no need to share anything recovered from that judgment (except with the taxman).

With any cash upfront judgment sale, the buyer usually takes all the risks, and there are only two situations where you might contact the original judgment creditor:

1) The very rare combination of circumstances when: A large judgment is for (e.g.) fraud, and it was won by default, the debtor has assets, and has filed for bankruptcy protection. In this rare combination of circumstances, the fraud might need to be proven once again; at a motion for a summary of judgment for fraud. At such a bankruptcy court hearing, testimony and evidence from the originally defrauded judgment creditor might be very helpful.

2) A motion to vacate a default judgment. Everything depends on the circumstances of the proof(s) of service. The original judgment creditor might know how to contact the former process server(s), so you can ask them to be a witness at the hearing, etc.

Again, with a cash upfront judgment sale, the buyer take all the risks. There is nothing that obligates the original judgment creditor in the two situations above, to help the buyer; and you might have to bribe them to cooperate. Other than the two situations above, there is never any reason to contact the original judgment creditor after a cash upfront judgment sale has been completed.

When you have a future-payment contingency obligation contract with an original judgment creditor; if you recover some money, you need to pay the original creditor. What if they have since died? You have two choices:

1) Do the wrong thing, which happens more often than it should; and simply keep that money. If someone related to the deceased creditor asks you about that money someday, you might have to pay them.

2) Do the right thing, and find out who is the executor of the late creditor’s probate or estate. Often, that person will be the surviving spouse or the creditor’s next of kin. Then, pay them their share. If you cannot find a representative of the former creditor’s estate, keep the money for a while; then report the original creditor’s share to your state’s unclaimed property department.

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