The fact that money judgments can be sold to collection agencies creates confusion among some of the first-time clients that contact us for help. They do not understand how judgments can be bought and sold. Likewise, they don’t understand that money judgments are transferable assets under the law.
Judgment Collectors does not purchase judgments. Rather, we work on consignment. We provide a service for which we get paid – but only if we succeed. You only pay us if we collect. The distinction between buying judgments and working on consignment is important to clients. Therefore, we believe it is equally important they understand judgments as transferable assets.
Common Transferable Assets
Most of us are familiar with the transferable asset concept. Someone mentions transferable assets and you might think of:
- Real estate
- Cars, boats, and RVs
- Jewelry and collectibles
- Stocks, bonds, and other securities
Viewing such assets as transferable isn’t difficult because they are all tangible. They are also owned by one party or another. You own your house. Should you choose to transfer your home to one of your children, you can do so because it’s your property. You could also sell your home to a complete stranger.
The difficulty people have with money judgments is viewing them as property. A judgment may not be a tangible piece of property you can hand over to someone else, but it is a legally recognized debt supported by a legal claim to any payments on that debt.
Think of it this way: as a judgment creditor, you own any future money applied to the outstanding judgment. That money could be transferred to someone else after payment. Well, the right to that money can be transferred before payment too.
Think Twice Before You Sell Your Judgment
The realization that money judgments can be bought and sold gives some potential clients an opportunity to think about selling to a judgment collection agency. We recommend against it. While selling a judgment has its advantages, they are far outweighed by the disadvantages. Consider the following:
- Sale Price – Collection agencies pay pennies on the dollar for judgments. They must in order to support their business models. That means you, as the creditor, stand to gain only a small portion of what you are legally owed.
- Collection Rights – Selling a judgment also means selling the legal claim attached to it. Once you sell, you also give up all legal rights to pursue the debtor for payment. You get what you get from the sale and that’s it.
- Incentive – Collection agencies have no incentive to maximize their offers. In fact, they will do everything they can to keep the price as low as possible. Like investors, they want to buy low and sell high.
Judgment Collectors prefers to work on consignment. What we do is very similar to what personal injury attorneys do: they work for free until they collect something. The fee for services is based on the amount collected.
Why We Prefer the Consignment Model
We prefer the consignment model because it is better for both you and us. From our standpoint, consignment offers us every motivation to succeed. It’s motivation for us to collect every last penny if possible. For your part, a consignment arrangement maximizes your payment but still relieves you of the responsibility of having to collect. You get the best of both worlds.
All of this is possible because the law views money judgments as transferable assets. A money judgment’s rather curious legal standing opens the door to collection efforts that would otherwise be off limits.