Trading Judgments
There are four reasons that judgments are bought
. The first reason is to buy a judgment, and try to make a settlement with a debtor to make a fast profit. The 2nd reason to buy a judgment is to try to recover as much as possible from a judgment debtor over time. The 3rd reason to buy a judgment, is to later attempt to sell it in the future to another buyer at a profit. The 4th reason is for a strategic reason, and that is the subject of the rest of this article. This article is my opinion and is not, legal advice. I am a judgment broker, and not an attorney. When you ever want legal advice or a strategy to use, you should contact an attorney.Other than attempting to make money, there's more strategic reasons to buy judgments. While reasons vary, usually one judgment is purchased to offset all or some of the debt from another judgment. Usually, strategic judgment purchases have nothing in common with trying to make a profit from the judgment purchase.
More and more strategic judgment purchases involve a judgment broker, as brokers handle introducing judgment sellers to purchasers in ways which usually will reduce the chance for greedy beliefs stopping a successful purchase price settlement from being reached.
As an example, a company called Creditor won a judgment on a company called Debtor. Then, another company named Buyer wants to buy the judgment from the Creditor. If a Buyer contacted the Creditor themselves, the Creditor will probably want much more than the judgment is worth, as they know Buyer (needs) to purchase Creditor's judgment and has directly approached them.
Instead, if a judgment broker contacts Creditor, and tells them they will try to locate a qualified buyer for Creditor's judgment at no cost and without any obligation, then a Creditor is more likely to then sell their judgment for a fair market price, instead of try to get an imaginary and inflated price.
A judgment broker is a third-party matchmaker which helps third-parties purchase judgments for tactical reasons. A judgment broker get compensated only for success for the judgment buyers, a small percentage of a successful purchase. Judgment brokers are most often not lawyers and don't own judgments in any way, they are just matchmakers.
A common aggravation that happens on tactical judgment sales, is when a judgment creditor is a business. Too often employees (especially with large companies, government-related agencies, and non-profit companies) think only of their own pockets, and that they won't directly benefit if they help their boss find or make income. I have seen the following kind of complication occur several times:
Some company called Buyer wishes to purchase a certain judgment where Creditor got a judgment on Debtor. If Buyer contacted Creditor directly, which would show their cards, that Buyer needs to purchase the judgment; and Creditor would probably demand much more than what the judgment is worth and the deal would not succeed. So, instead, Buyer contacts a judgment broker, with an offer of (e.g.) 20K for that 150K judgment, which is about 13%, that is more of a percentage paid than 99.5% of any other cash upfront judgment sale transactions.
If a judgment broker contacts people working with the Creditor company, they are usually not interested. It turns out that from the workers to the president, not one employee wanted to help their employer make $20,000 from a 6-year old judgment against a long-gone defunct corporate debtor. Without this sale, the company would never get $20,000 for their judgment, with a market value of less than $100 (Debtor is a defunct and out of business corporate debtor, having no persons liable for paying that judgment, and no assets).
Yet, not one company worker seemed to care about helping their employer in such a way. It almost seems as if what is required, is 30K so (e.g.) 2 employees could be bribed 5K each, if they would successfully persuade the company owner(s) to sell the judgment for 20K. Of course bribes aren't above board, and it's too bad that many tactical judgment sales won't work when employees do not care. In some situations, what works is to keep contacting different officers, directors, and workers until one is found who cares about their company's financials.
Tactical judgment sales can and do work, although all parties must be aware of the reality that judgments always sell for a very steep discount of their face value, and helping your employer is the right thing to do.
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