When Is It Appropriate to Sell a Money Judgment for Cash?

Winning a money judgment can constitute a significant moral victory. But it doesn’t necessarily guarantee payment. It is common for money judgments to remain unpaid for years after the fact. It is also common for judgment creditors to sell their judgments for cash. When would doing so be appropriate?

For the record, selling is optional. A creditor could choose to stick with it and pursue collection efforts for as long as it takes. Another option is to assign the judgment to a collection agency that works on consignment, like Salt Lake City-based Judgment Collectors.

Assigning a judgment on consignment will be discussed later in this post. For now, let’s take a look at selling a judgment for cash.

A Discounted Sale

Selling a money judgment for cash is also known as ‘assignment’ or a ‘discounted sale’. The second term denotes one of the realities of selling a judgment for cash: the creditor gets less than the judgment’s real value. How much less? Judgment Collectors say it can be pennies on the dollar.

Debt collectors willing to purchase judgments take a risk every time they do so. They need to cover their own costs and earn a profit at the same time. Therefore, they cannot afford to pay full value. The price they are willing to pay is commensurate with the amount they expect to collect and the time it takes to collect it.

When Selling Is a Good Move

Getting pennies on the dollar seems like good motivation not to sell. So why would a judgment creditor do so? Consider the following:

• Quick Cash – A creditor struggling with cash flow problems might decide to sell hoping to get a quick infusion of cash. It might not be much, but even a little is better than nothing at all.
• Collection Costs – Creditors actually spend money to collect. If the amount they expect to spend is higher than what they believe they can collect, a sale makes sense.
• Time Commitment – Collection also requires an investment in time. Some creditors would rather sell and move on. They would rather put their time into other things.

The reality is that collecting a judgment can be both complex and costly. Creditors need to weigh all the risks and rewards to determine whether it is better to pursue collection or just sell.

Assigning a Judgment on Consignment

A judgment creditor might want to pursue collection but lack the time, money, and knowhow. Assigning the judgment on consignment is a possible solution. Think of it as the best of both worlds. The creditor doesn’t have to settle for pennies on the dollar, but he also gets to turn the judgment over to professionals.

A Simple Model

The consignment model is simple. Let us say you were to contact Judgment Collectors for help with a judgment in Utah. Their team will evaluate your case and then make an offer. You could accept or reject the offer accordingly. If you accept, Judgment Collectors would immediately assume all collection efforts.

Their team would research enforcement options. They would handle asset discovery and making contact with the debtor. Every penny they spent would come out of their own financial resources. You will only pay them for their service if they manage to collect. Usually, payment is based on a percentage of the amount collected.

The best part is that you don’t pay a dime if the agency doesn’t collect. So you have nothing to lose with the consignment model. But sell your judgment outright, and you might have to settle for a lot less.