A general rule about judgment recovery is that judgments are often expensive and difficult to recover, and everything depends on the judgment debtor’s situation. In this article, I list some other reasons why some judgments may never get recovered.
As a judgment broker, I match judgment owners with judgment buyers, recovery experts, collection agencies, and contingency collection lawyers. Every day, I see lots of “show stoppers” such as when the judgment debtor cannot be found, has filed for or got bankruptcy protection, or the judgment has expired.
Every day I also witness the other reason a judgment may never get enforced – the attitude or beliefs of the original judgment owner. Below are the most common creditor-related reasons that some judgments may never get enforced:
1) “My judgment is very valuable and is worth the face value and the interest accrued, and not a dollar less”. The problem with this belief is that it is not reality, because judgments are only worth what available assets the debtor has to repay the judgment.
2) “A fair rate to recover a judgment is 10%, anyone who charges more than that is trying to rip me off”. This is simply not true. Judgment recovery is often difficult and expensive. The average recovery charge is about 50%. When the judgment is large and the debtor is rich, the rate may go way down. If the debtor was Bill Gates, Warrant Buffet, or Larry Ellison, then maybe 10% is a fair charge to recover a judgment. If your judgment debtor is poor, or has deeply hidden their assets, you might even have to pay 90% to get your judgment recovered on a future-pay contingency basis.
3) “I was burned once, I do not want to be burned again, I am afraid a judgment enforcer or lawyer will run away with my money”. The funny thing is, I hear this concern with judgments for less than $5,000. (Imagine someone tossing away their business, their reputation, and risking jail or a lawsuit, for a chance of stealing half of $5,000.)
Everything that is done to recover judgment money is done under the supervision of a Sheriff, after the creditor gets permission from the court. Any money recovered is recorded at the court. This means no money can be hidden from you.
While anything can happen in this world, getting ripped off by a recovery professional, especially one referred by a judgment broker, is very unlikely. You are more likely to be struck by lightening. Even if something bad happens to a judgment recovery professional, that does not mean your judgment is lost.
4) “My debtor has to pay me, the law says so. I will just keep renewing my judgment and the debtor will one day have to pay me”. In an upward economy where everyone was planning to have upward mobility and get big raises, and buy bigger and better houses; this idea often worked. It now takes requires enforcement actions to recover a judgment. If the judgment debtor was going to pay you voluntarily, you would not have to had to sue them. A judgment is just a piece of paper until someone spends money and time to try to recover it.
5) “I would rather let my judgment expire than share any part of it to be recovered”. This means you might as well throw your judgment away. Again, unless someone spends money and time to recover a judgment, it is just a piece of paper.
6) “Our in-house people handle this, we do not need any help recovering our judgments”. The problem is the reality of the situation. While your in-house solution might be very good, the fact remains there are some judgments they have made no progress on. It is smart to send the judgments your in-house solution cannot make progress on, to a recovery professional.
7) “I do not want to give up control of my judgment. I am worried about losing it”. The problem is that anyone who is not a lawyer or a collection agency, must take legal ownership of judgments before they can recover them. One answer is to use a good contingency collections lawyer or agency, who works on your behalf, and you retain ownership of your judgment.
8) “I want a bull-dog, someone who will make my judgment debtor miserable, and take every dollar ASAP. I do not want to wait forever to get my money”. The problem is if one is too aggressive, it may just cause the debtor to file for bankruptcy protection, which can make your judgment become worthless.
Most judgments are not easy or cheap to recover, and it does not help if the judgment owner is not realistic. May your judgment be recovered.