A judgment – whether from civil court, a divorce decree, probate court, bankruptcy court or another type in the State of Texas – is a real piece of property and a thing of value.
Can I Sell My Judgment to a Collection Agency?
Like other forms of property, judgments can be legally bought and sold. In fact, selling collection agency court judgments for cash is a booming business, and there are marketplaces that deal exclusively in judgments.
Why might you want to sell your Texas judgment? Sometimes, a plaintiff, also called a creditor, successfully wins their claim and follows all of the right steps to collect on an award from a defendant or debtor, including levying the debtor’s bank account, garnishing their wages, placing judgment liens on their property, and using post-judgment discovery tools like subpoenas and interrogatories to find out exactly where the debtor’s assets are hiding.
Yet, despite doing all the right things, it may still take a long time to get paid; longer than the creditor wants. After all, the creditor had to bring a lawsuit in the first place, because there was damage, or an injury, a breach of contract, or an injustice where the creditor lost something and needed to be made whole.
You may not wish to invest more than a certain amount of time, effort and resources in getting your judgment paid by the judgment debtor. That is why you would seek out an enforcement buyer with resources standing by to do it instead, paying you cash today for a judgment that they can pursue tomorrow.
When selling a judgment to a collection agency, you are giving the purchasing entity the right to step into your shoes and become the new judgment creditor. Any actions they bring for judgment enforcement will be in their name, for they will now own the judgment.
This is a right that they are willing to pay for. But just how much they are willing to pay?
How Much Can I Sell a Judgment For?
The amount for which you can sell your judgment depends on the age of the debt, the amount of the debt, and the financial status of the debtor. Many novice judgment sellers expect to be paid more than what their judgments are worth. But this often is not the case.
Experts advise that creditors selling judgments for cash could be offered as little as “pennies on the dollar” for their hard-earned judgments.
You should always take stock of your judgment before placing it on the auction block. Here are some points to consider when valuing your judgment prior to trying to sell it to a contingency judgment enforcement buyer.
If the debtor has no visible assets or cash in the bank, it may seem impossible to collect the judgment (they are referred to as judgment-proof) and expect buyers to beware. Additionally, judgments against debtors who have declared bankruptcy, who have poor or erratic work histories, or who have other judgments against them are low-value judgments.
Default judgments in Texas are also low value, as these have been awarded simply because the debtor failed to show up to court, and not after a fact-finder such as a judge or jury assessed the merits of the case. Do not expect much of an offer for one of these types of judgments.
If the debtor has a good job and no bankruptcies, you may be able to sell your judgment for cash, but probably not much more cash than a few pennies on the dollar. This type of judgment is a better candidate for a collection agency who will pay you after they collect – something known as a “contingency” judgment.
The highest value judgments are those judgments against a debtor who clearly owns real estate with equity and which is not protected under Texas homestead law.
A seasoned judgment buyer will consider the amount of real estate equity available to enforce the judgment, subtract the administrative and other costs of enforcing the judgment, and likely make you a “cash” offer for a judgment of this type. Experts predict you will see far more than pennies on a dollar for a judgment against a debtor with real assets in play, perhaps even more than 50% of a return on the original judgment award.
How to Sell Your Judgment
1. Do Your Homework
When you have finally made your decision to sell your judgment, research and compare judgment collection agencies known to treat clients fairly and offer the best prices. Consider the reputations of the judgment buying companies, user reviews, colleague endorsements, years of operation, testimonials and success stories.
If you have a live contact at the agency, ask them for some comparable examples of judgments like yours which they have purchased and pursued.
2. Put the Terms of the Judgment Sale in Writing
When you have chosen your judgment collection agency, make sure to have a written contract that shows that both parties have agreed to the transaction. Make sure key terms are outlined – such as price, how payment will be made, what documents the creditor is required to provide, and that the creditor will have no further liability for enforcing the judgment after the sale is complete.
A good practice is to request something called an “indemnification clause”- common in contract law – that guarantees that the judgment buyer will protect you from any lawsuits or actions related to collecting a judgment in Texas.
3. Transfer Your Judgment for Cash
Most judgment buyers will overnight or e-mail you a few pages of documents to sign and return. They will likely ask you for the docket number of your case where the judgment was won, and the name and venue of the Texas court where it was won. If you are selling your judgment for cash, they will include a check.
Placing Your Judgment in a Marketplace
Prior to a cash sale or a contingency arrangement, you may add the step for selling your judgment of placing it in a competitive judgment marketplace. This will give you a forum to use to shop around for the best offer, as well as to compare other similar judgments, how they are marketed, and what they sell for.
Judgment marketplaces position themselves as a resource to educate the general public about the economic advantages of buying and selling judgments, making them a place to go to learn even if you haven’t committed to selling your judgment yet.
Contact Attorney Seth Kretzer for Help Collecting a Judgment in Texas
If you wish to know more about selling judgments from the State of Texas as well as judgments from other states, you will need a judgment collection attorney with specific experience with these topics, and who has the right knowledge and resources to help you.
Contact Seth Kretzer online today to discuss your judgment and how to facilitate a sale.