I am not a lawyer, I am a Judgment Broker. This article is my opinion, and not legal advice, based on my experience in California. Laws vary in each state. If you ever need any legal advice or a strategy to use, please contact a lawyer. Most judgments are difficult, expensive, and time-consuming to recover.
When you have a large-sized judgment against a rich judgment debtor (especially one that owns real estate) that has not, and is not currently trying to hide their assets; it is relatively easy to find a contingency collection lawyer. It is also easy to sell such a judgment situation for cash up-front, or to find a very good judgment enforcer.
When you have an average-sized judgment against an upper-middle class debtor that has hidden some of their assets, or is now trying to hide them, it will be more difficult to find a contingency lawyer. If you can find one, they might work on a partial-contingency basis only, and require you to pay all the expenses. Or you can find a very good judgment enforcer.
When you have any-sized judgment against a poor debtor; or a tiny to medium-sized judgment against a low to middle-class debtor; it will be impossible to find a lawyer that works on any type of contingency basis.
Some people attempt to recover their own judgments. If you try to recover your own judgment and make no progress, and you cannot, or choose not to hire a lawyer to recover your judgment on a contingency basis; you have four choices:
1) Pay a lawyer by the hour, and for every expense, to try to recover your judgment, with no guarantee that you are not throwing in good money after bad.
2) Sell a judgment for cash up-front, for an average of 1-7% of its face value. In our down economy, when no debtor assets are showing, that price is closer to 1%. If your debtor is rich, one might get a better cash up-front offer.
3) Assign their judgment to a judgment enforcer, and get paid an average of 50% of whatever might be recovered from your judgment debtor. The judgment enforcer takes over the risk of throwing in good money after bad. If the judgment debtor is rich, one can find better future-payment recovery rates. If your judgment debtor is poor or has hidden their assets deeply, you might have to pay much more than 50% on a future-pay contingency recovery.
4-A) If your debtor is really poor, and/or your judgment is small; especially in certain states and counties, where the laws do not allow assignments of small claims judgments; you may never find an enforcer or a judgment buyer.
4-B) If you cannot find an enforcer, (almost no collection agency can help) try to settle with the judgment debtor for 20-40% of what is owed. If that does not pay off, it is probably best to forget about your judgment, or sell the judgment for anything you can get, perhaps less than 1%.
For most judgment owners that cannot easily find a contingency lawyer; because of either the size of their judgment, or the situation of their debtor; will want to choose option three above, assigning their judgment to a judgment enforcer.
Most judgment enforcers are not lawyers, which means they cannot represent anyone except themselves in court, or give any legal advice, or help anyone with any type of legal matter.
Anyone who is not a lawyer, cannot work for you on any legal matter, for example, recovering a judgment for you, or on your behalf. That means that if the enforcer is not a lawyer, you must assign your judgment to them, before they can try to recover your judgment.
I know some contingency collection lawyers that prefer judgment get assigned to them so they will be free to settle in tough cases.
The paperwork required to assign a judgment (which must be notarized) almost always includes the words “assigning all rights, title, and interest in the judgment”. Judgment enforcers have a fiduciary duty to split any recoveries made with you, as specified in the contract you signed with them.
There can be a small risk when one assigns a judgment to an enforcer. However, this potential risk is usually tiny for two reasons:
One reason is, if and when money is recovered, it is recovered with permission from, and documentation from the court, and usually also with a civil Sheriff. It is very easy to track the progress (or usually a lack of progress) of any judgment enforcer.
The other reason the risk of judgment assignments are very rarely a problem, is because in this economy, many judgments are never recovered. If your judgment cannot be recovered, what risk was there in assigning your judgment?
Assigning judgments is usually very safe. Using a judgment broker makes this even safer, as judgment brokers screen out most flakes and bad apples. Often, assigning it is the only way to have any chance of recovering some money from a judgment.
Some enforcers put “hold harmless” or indemnification wordings in their contracts, it is best to keep such wordings in a narrow scope and run your contract past an attorney if you put in such wordings.