subject: The Surprise Costs Of Judgment Collection [print this page] By the time creditors win their judgment, many want to be done paying for courts, lawyers, process servers, private investigators, etc. Many creditors do not want to spend any more fees to have their judgment collected. Yet, some way or another, it takes money and time to enforce a judgment. This article is my opinion and is not, legal advice. I'm a judgment referral expert, and not an attorney. If you ever want a strategy to use or legal advice, please contact an attorney. This article discusses expenses, and lesser-known expenses, which creditors might have to pay as they try to get their judgments recovered, under 6 alternate choices.
1) When you collect a judgment yourself: The pros are that you keep full control, and you don't need to split what may be collected. If someone else collects the judgment, you must give up about 50% of what gets recovered, and others will often work on their easiest-to-recover judgments first. If you enforce your own judgment, you decide the priorities, and keep all possible recoveries. The cons are you gamble that any money and time you invest, will pay off. Judgments are not guaranteed, and any time and money spent attempting to enforce a judgment might easily be lost.
2) When you sell your judgment for cash up-front: The pros are you get some cash, and the only expense is $10 to notarize an assignment of judgment to a judgment buyer. The con is typical judgments (lacking a debtor having massive available assets) sell for 1% to 7% of their original value, and you can fritter away your time trying to prove otherwise.
3) When you assign a judgment to a judgment recovery specialist: The good part is they take over the financial risks and hassles of collecting the judgment. The cons are you must assign your judgment to the enforcer, and pay about $10 for the notarization of that assignment, and share whatever is recovered over time. Certain judgment owners don't like to assign their judgments, because of the risks of relying on any one person. Some judgment recovery specialists charge something to get started, and/or request that judgment owners to share some costs, and/or have provisions to charge a fee when the judgment is set aside, or your judgment debtor goes bankrupt, etc.
After you assign a judgment to a judgment recovery specialist, it often takes a long time for any possible progress to happen. Often, it is a case of the debtor with few available assets. However, you may eventually feel your enforcer isn't doing enough, and you might want your judgment returned. Your judgment recovery specialist might insist you first pay them back them for their court-approved costs. When your judgment enforcer disappears or does not respond, you have to then pay for a court motion and hearing, to attempt to unravel the assignment of the judgment to the enforcer.
4) If you pick a collection agency to collect your judgment: The good parts are you don't usually have to assign your judgment to them, as they represent you. They invest all the time and usually all the money needed to attempt to recover your judgment. The bad parts are that most collection agencies do not specialize in collecting judgments. Those that recover judgments take a portion of what is recovered, and some also require a fee to get started.
Some collection agencies also charge extra when they need to litigate to recover your judgment, because they have to pay their attorneys. This can occur when the collection agency has to domesticate a judgment to another state, undo fraudulent transfers, etc. Most often, clients get alerted prior to when such extra expenses are incurred, so if the client does not agree, often the collection agency will return the judgment. This is almost always an optional decision for the judgment owner, and creditors shouldn't, and hardly ever get surprise invoices from collection agencies.
There's a difference, if the collection agency is owned by lawyer(s) or not. When a collection agency is attorney-owned, in certain states, if lawyers represent their clients on contingency, the laws state their clients have to pay all or most court filing fees, and some other fees. When a collection agency isn't owned by attorney(s), the agency often pays the majority of court filing costs. The best collection agencies use lawyers to collect judgments, so judgment owners never have to pay any hourly lawyer fees.
Sometimes, when a collection agency brings up the topic of their client paying a filing or litigation fee (e.g.) to domesticate the judgment, the creditor will not want to pay. A solution is for a judgment owner to assign their judgment to the collection agency. The reason assigning a judgment to the collection agency works, is that after the judgment is assigned to the agency, they are no longer representing the creditor, so that agency can pay the court filing costs.
5) When you hire a non-contingency lawyer to collect a judgment: The good parts are you get some control of the timing and plans to collect your judgment. The cons are you must pay them a retainer and per hour, and all expenses, without any guarantee of success.
6) If you choose a contingency attorney to collect your judgment: The good parts are you do not have to pay for the lawyer's time, and they usually front some of the expenses, except where laws make the judgment owners pay court filing fees. Also, they usually get your money faster. The bad parts are contingency lawyers often only accept certain judgments, and might often first put their priorities on clients who pay hourly. If you later want your judgment returned, you might owe your lawyer some money due to their quantum merit contract clauses. Those clauses mean a contingency attorney can be paid for the work they did, if you decide to fire them.
