Is an Offer to “Buy” Your Judgment Legitimate?
As a successful plaintiff, you were ecstatic about winning a $22,000 judgment against your former client who refuses to pay. Unfortunately, you won the judgment over two years ago and still have not been paid!You Google “buy my judgment” and “sell my judgment” and it appears there are thousands of companies anxious to pay you cash for your judgment. A cursory reading of these sites indicates they will purchase your judgment for cash. However, many of the sites include a sentence such as:”We purchase your judgment, in its entirety, usually on a ‘future pay’ basis, without application fees or up-front costs of any kind.”The key phrase is “future pay”. They will not be giving you cash when they “purchase” your judgment.Their “purchase” of your judgment should be in exchange for their promise to expend commercially reasonable efforts to collect your judgment. However, once you assign the judgment to them, you lose control. They own the judgment, and they decide how much effort to expend in collecting the judgment, if any. Unless there is a contractual obligation for them to commit a specified amount of resources, they: 1) own your judgment and 2) can do what they want.Their purchase of your judgment is analogous to a free option on Exxon stock. If Exxon stock is selling for $80 per share, they agree to pay you half of any increase in excess of $80 per share. You assign them the Exxon stock, and if it goes up, they pay you half of the increase.You may wonder why these companies that offer to “purchase” your judgment will not pay you cash at the time of transfer. In our experience, there are four main issues: 1) they do not have the resources to pay you up front, 2) they are not confident in their ability to collect and are not willing to take any risk, 3) they do not have the resources to thoroughly and efficiently research the debtors assets to determine whether the debtor can pay, and 4) they do not have access to or are not willing to pay for the legal resources that are sometimes required to collect the judgment. For example, ask how many motions for turnover they have processed?Most of the individuals operating “judgment enforcement” operations are honest people trying to help individuals and business collect debts. Their intentions are honorable and they often get good results. It is difficult to discern the good from the bad. A simple way to resolve the resultant questions is to sell your judgment for cash.