subject: Why Settle The Judgment? [print this page] I am a judgment broker, and I am not a lawyerI am a judgment broker, and I am not a lawyer. This article is my opinion, and not legal advice. If you ever need legal advice or a strategy to use, you should contact a lawyer.
When plaintiffs first get a judgment, they are usually very confident that the judgment can be sold for big bucks, or can swiftly get collected in full. That confidence often disappears after they address the realities which make judgment recovery difficult. For the judgment debtor, settling a judgment saves them money and hassles, and provides them peace of mind.
The primary reason for the creditor to settle a judgment is when they believe that they are not likely to recover most, or the whole amount due. The reasons to be convinced of that become apparent, after they do a proper job of researching the judgment debtor and their situation. Seven popular reasons to settle judgments are:
1) You cannot find enough, or any, of the judgment debtor's available assets. Because of laws, many assets (e.g., disability, social security, pensions, tools used in the business of your judgment debtor, etc.), are not available.
2) There does not seem to be any way the debtor can or will, be able to significantly repay the judgment.
3) You would prefer to be paid some money now, than gamble on perhaps getting paid some money in the future.
4) Enforcing your judgment might push the judgment debtor into bankruptcy. For example, if your debtor recently received a chunk of cash, and other than that, they have little money. You know it would take many years, with the risk of them going bankrupt, to possibly collect in the future, so you decide that settling is a good idea.
5) There's a legal flaw with the judgment (e.g., your debtor's name is not spelled correctly), that might make your judgment difficult to collect. You might attempt to settle, before that flaw is discovered by your debtor.
6) To avoid the expenses and hassles of recovering a judgment. Most judgments sell for less than 5 percent on a cash up-front basis. Pure (future payment) contingency enforcers most often charge 50% for average judgments. It takes time and money to recover a judgment, so settling can make sense.
7) You feel charitable and wish to try to put this done with, and even help the debtor, by settling.
When you think it would be advantageous to settle with your debtor, go for it. Some judgment debtors don't pay after settlements, so make certain your judgment debtor demonstrates to you that they possess more than enough assets sufficient to settle with you.
