It is not unusual for judgment creditors to ask about normal contingency fees before deciding to proceed with turning a judgment over to a collection agency. Unfortunately, it’s not possible to provide a black-and-white answer. Every case is different. Each case’s fee structure is contingent on multiple factors.
Though we cannot provide a solid number, we can explain a bit more about how working on contingency differs from selling your judgment to a collection agency. Know that Judgment Collectors prefers the contingency model.
Selling vs. Contingency
Before we get into the pricing question, let’s talk about selling versus contingency. If you were to sell a judgment to a collection agency, you would transfer ownership of the judgment, along with all of its legal rights and obligations, to the agency. You would get your fee, and that would be that. You would no longer have any legal right to collect from the debtor.
Conversely, if you were to work with Judgment Collectors on contingency, you would essentially be authorizing us as an agent to collect on your behalf. You would maintain complete ownership of the judgment. You would maintain all the rights and obligations that come with it.
You would pay us only after we collect. That is where contingency fees come in. Our contingency fee is usually based on a percentage of the amount we collect. But that’s not guaranteed. We could base pricing on other factors.
What Goes Into Determining Contingency Fees
So how do we determine contingency fees? We look at a judgment entirely. Our examination considers several important things:
- Judgment Age – We look at the age of the judgment. In other words, how long ago was it entered? This matters because older judgments are more difficult to collect. A general rule states that collection difficulty is commensurate with age.
- Collection Complexity – Next, we look at the complexity of the case. One judgment might be fairly easy to collect given the availability of plenty of debtor assets to work with. Another may be more complex because of the nature of those same assets.
- Court Actions – Certain types of collection efforts, like writs of execution, require additional court action. We need to consider such actions because they add time and expense.
- Judgment Collectability – We also need to look at the collectability of the debt. In other words, we need to be reasonably assured we can collect something before we can determine a contingency fee.
Please note that Judgment Collectors covers all our own costs during collection. We cover the cost of property searches, obtaining proprietary databases, filing additional court paperwork, etc. Once you turn your judgment over to us, the only additional fee you will pay is the contingency fee – and that is provided we manage to collect.
Why Choose the Contingency Model
As a judgment creditor looking for help from a collection agency, you ultimately have to choose between the sale and contingency models. Why go with contingency?
First and foremost, collection agencies willing to purchase judgments tend to pay pennies on the dollar. If you sell, you are not going to walk away with much. You’re not guaranteed to get a lot more through contingency either, but your chances of a higher payoff are much better.
Second, the contingency model dictates that we only get paid when we collect. The model motivates us to do our very best on behalf of our clients for the simple fact that we don’t want to work for free or at a discounted rate. That is why we think contingency is better, the fees themselves notwithstanding.