Did you know that money judgments are considered assets similar to securities and property? That means they can be freely bought and sold. Who would buy a money judgment? More importantly, why would a judgment creditor (a.k.a. the winning party) even think about selling?
One of the more common reasons for selling is a lack of time and resources. A judgment creditor simply doesn’t have the time and money to put into collection efforts. Not really knowing how to collect is another reason. There may be as many reasons as there are judgment creditors willing to sell. But as with anything else, there are pros and cons.
The Pros of Selling
Selling an outstanding judgment might seem like an attractive proposition when you really do not have the desire to chase down a deadbeat debtor. Selling immediately ends it for you. You get paid and you do not have to try to collect. In addition:
- You’re Guaranteed Something – Selling to a collection agency or attorney guarantees that you get at least something. Try to collect on your own and you could wind up with zero when all is said and done.
- You Can Protect Your Reputation – Some judgment creditors sell because they don’t want their reputations damaged by their own collection efforts. Let’s face it, consumers do not think very highly of the debt collection industry. Some creditors simply do not want to be saddled with the industry’s bad reputation.
If you sell, the time you would otherwise put into collecting can be put into other things. Perhaps you are a landlord. You would rather spend your time improving your properties than going to court. Or maybe you run a small business. You would rather put your efforts into keeping your customers happy.
Simply put, selling puts money in your pocket and alleviates the need to pursue any further collection efforts. The judgment is over and done with. You move on.
The Cons of Selling
Selling can seem attractive if all you are looking to do is get out. But there are some distinct disadvantages to selling. First and foremost is giving up all of your legal rights to the debt. It is no small thing. When you sell, you are selling ownership of the debt to the collection agency. If they turn around and collect the entire amount due plus interest, you are not entitled to any of it.
In addition, collection agencies and attorneys do not pay full price. They pay considerably less, sometimes as little as pennies on the dollar. So while you may enjoy the freedom of getting out from underneath collection efforts, is it worth sacrificing 50-75% of what you are legally owed?
There Is Another Option
Let us say you did want to get out from the hassle of judgment collection but didn’t want to sell. Is there another option? Yes. That option is hiring a collection agency on consignment. Under the consignment model, the agency provides a service for which it is paid. It is paid based on its ability to collect.
Judgment Collectors in Salt Lake City, UT, works on consignment. If they do not collect, they don’t get paid. But they manage everything. Once a case is turned over to them, they make contact with the debtor. They search for assets, file legal documents, and so forth. They also cover their own costs.
Selling is one option when you are faced with collecting a money judgment. It might be an attractive option as well. But collecting in-house or hiring a collection agency on consignment are two additional options to think about.
