Selling or Assigning Judgments — When to Transfer Your Judgment to a Buyer

🔄 1. What Is Judgment Selling & How Does It Work?

Judgment selling is the process of transferring your legal right to collect a money judgment to another person or entity — the judgment buyer — in exchange for immediate payment. The buyer pays the original creditor a discounted amount (less than the full judgment value) and then takes over all collection rights, stepping into the creditor’s shoes to enforce the judgment against the debtor using every available enforcement tool. The original creditor walks away with guaranteed cash. The buyer takes on the risk and expense of collection in hopes of recovering more than what they paid. 🔄

Judgments are legally assignable in all states — they’re considered personal property that can be bought, sold, and transferred like any other asset. The legal mechanism is an “assignment of judgment” — a document signed by the creditor transferring all rights, title, and interest in the judgment to the buyer. Once the assignment is filed with the court, the buyer becomes the new judgment creditor with full authority to pursue enforcement through wage garnishment, judgment liens, bank levies, debtor examinations, turnover orders, and every other collection mechanism available under law. A secondary marketplace exists for judgments — with specialized buyers, brokers, and collection firms actively purchasing judgments from creditors who lack the resources, expertise, or patience to pursue collection themselves. Understanding this marketplace gives judgment creditors an important option: if you can’t or don’t want to collect the judgment yourself, you can convert it to immediate cash by selling it to someone who will. 💰

📋 2. Why Sell a Judgment? Common Reasons Creditors Sell

💰 3. What Judgments Sell For — Pricing & Valuation

Judgment prices vary enormously — from less than 3 cents on the dollar for difficult-to-collect judgments to 50 cents or more for judgments with clearly collectible debtors and identified assets. The price reflects the buyer’s assessment of the likelihood of recovery, the expected collection amount, the time and cost required to collect, and the risk that collection may ultimately fail: 💰

📊 4. Factors That Determine Judgment Value

Judgment buyers evaluate every judgment individually, assessing risk and expected return through a set of specific factors: 📊

Debtor’s Asset Profile: This is the single most important factor. A debtor with verified employment (garnishable wages), real property (lienable and potentially foreclosable), vehicles (leviable), and business interests (subject to charging orders) is highly collectible. A debtor with no visible assets is speculative. Professional asset investigation documents the debtor’s collectibility and directly increases the judgment’s market value. Judgment Size: Larger judgments are generally more attractive to buyers because the potential return justifies the enforcement investment. A $100,000 judgment that costs $5,000 to enforce is a good investment. A $5,000 judgment that costs $5,000 to enforce is not worth buying. Most judgment buyers have minimum purchase thresholds — typically $10,000-$25,000 in judgment value, though some buyers purchase smaller judgments in bulk portfolios. Judgment Age: Fresh judgments (less than 2 years old) are more valuable than old judgments because the debtor’s information is more current, fewer enforcement opportunities have been missed, and the judgment has more remaining life before expiration. Judgments approaching expiration are significantly discounted because the buyer has limited time to collect before needing to renew. Debtor’s Location: A debtor with a verified current address in a state with creditor-friendly enforcement laws (strong garnishment, broad levy authority, generous lien rights) commands a higher price than a debtor in a debtor-friendly state or a debtor who has disappeared. Prior Enforcement History: If the creditor has already attempted and failed at enforcement (returned garnishments because debtor quit, empty bank levies, debtor examination failures), this reduces the judgment’s value because it suggests collection difficulty. Conversely, if no enforcement has been attempted, the buyer has fresh opportunities. Type of Underlying Claim: Some judgment types are more collectible than others. Contract judgments are generally more straightforward than tort judgments. Fraud judgments may be non-dischargeable in bankruptcy (a significant advantage). Consumer protection judgments may carry enhanced remedies. The nature of the claim affects both collectibility and the buyer’s appetite. Existing Liens: If the creditor has already recorded judgment liens against the debtor’s property, this significantly increases the judgment’s value to buyers. A lien already in place means the buyer has secured position on real property — the property cannot be sold or refinanced without addressing the lien. The buyer inherits this secured position through the assignment, giving them immediate leverage without needing to identify and lien properties from scratch. Similarly, active wage garnishments already producing monthly payments make the judgment immediately cash-flowing — dramatically more attractive to buyers than a judgment requiring months of enforcement setup before any money arrives. Debtor’s Cooperation History: A debtor who has appeared for examinations, provided financial disclosure, and shown willingness to engage (even if they haven’t paid) suggests a debtor who can be pressured into settlement. A debtor who has evaded service, failed to appear, and resisted every enforcement effort suggests a harder and more expensive collection effort that buyers factor into their pricing. 📋

🏢 5. Who Buys Judgments? The Buyer Marketplace

The judgment buying marketplace includes several types of buyers, each with different specialties, volume requirements, and price offerings: 🏢

Professional Judgment Buyers: Companies that specialize exclusively in purchasing and collecting judgments. They have established enforcement infrastructure — including in-house attorneys, licensed investigators, and nationwide service networks. Professional buyers offer the most competitive prices for high-quality judgments because they collect at scale and have low per-judgment enforcement costs. They typically purchase judgments at 10-50 cents on the dollar depending on collectibility assessment. Collection Attorneys: Attorneys who focus on judgment enforcement sometimes purchase judgments directly, taking ownership rather than working on contingency. Attorney-buyers can be particularly effective because they handle the legal work in-house, reducing enforcement costs. They tend to be selective, purchasing only judgments with clear collectibility. Collection Agencies: Some collection agencies purchase judgments as well as collecting on assignment. They bring existing debtor contact infrastructure (skip tracing, automated calling, correspondence campaigns) but may lack the litigation capability for aggressive enforcement. Prices from agencies tend to be lower than from specialized judgment buyers. Individual Investors: A growing marketplace of individual investors purchases judgments as alternative investments — attracted by the potential for significant returns on deeply discounted judgments. Individual buyers vary widely in sophistication and enforcement capability. Some are experienced and aggressive enforcers; others are novices who may struggle with the collection process. Online Marketplaces: Websites and platforms that connect judgment sellers with buyers have emerged, creating a more transparent marketplace. These platforms allow creditors to list their judgments for sale and receive competing offers from multiple buyers, potentially driving up the price through competition. 📋

📋 6. The Assignment Process — How to Transfer a Judgment

📝 7. Legal Documents Required for Assignment

A proper judgment assignment requires several legal documents to be prepared, executed, and filed. Missing or defective documents can create enforcement problems for the buyer — and potential liability for the seller: 📝

Assignment Agreement: The primary contract between seller and buyer. This document transfers all rights, title, and interest in the judgment from the creditor (assignor) to the buyer (assignee). It should specify the judgment being assigned (case number, court, parties, amount, date of entry), the purchase price and payment terms, the seller’s representations and warranties (that the judgment is valid, enforceable, and not subject to any known defenses or pending appeals), the current balance owed (principal plus interest minus credits), a list of all active enforcement mechanisms being transferred (liens, garnishments, writs), and cooperation obligations of both parties. Acknowledgment of Assignment: A separate document filed with the court — formally notifying the court that the judgment has been assigned and requesting substitution of the new creditor on the court record. This document typically includes a certified copy of the assignment agreement and may require the seller’s notarized signature confirming the assignment. Once filed, the court docket reflects the new judgment creditor. Lien Assignment Documents: For every county where a judgment lien has been recorded, a separate lien assignment document must be recorded with the county recorder — transferring the lien from the original creditor to the buyer. Without this recording, the lien remains in the original creditor’s name, creating complications when the buyer attempts to enforce it. Garnishment and Levy Transfer Documents: Active wage garnishments must be updated to direct payments to the new creditor. The buyer (or buyer’s attorney) sends notice to the debtor’s employer identifying the new creditor and providing updated payment instructions. Active levies and pending sheriff sales must similarly be updated. Power of Attorney (If Applicable): In some transactions, the seller grants the buyer a limited power of attorney to execute documents on the seller’s behalf related to judgment enforcement — preventing the need for ongoing seller involvement in routine enforcement filings. 📋

⚖️ 8. Sell vs. Self-Enforce — The Decision Framework

The sell-vs-enforce decision depends on your specific circumstances — financial resources, enforcement expertise, time horizon, and risk tolerance. Here’s a structured framework for making the decision: ⚖️

The sweet spot for selling is when the creditor has a moderate-sized judgment, limited enforcement resources, and the debtor presents collection challenges. The sweet spot for self-enforcement is when the creditor has a large judgment, access to enforcement counsel, and the debtor has clearly identified, collectible assets. Many creditors start by attempting self-enforcement, then sell the judgment after a year or two if enforcement proves too difficult or expensive. There’s no penalty for attempting enforcement first — in fact, the enforcement history you build (debtor examination transcripts, subpoena returns, investigation results) may increase the judgment’s sale value by giving the buyer more information about the debtor. The Time-Value Calculation: Consider the time value of money when making the sell-vs-enforce decision. A judgment that might yield $40,000 in three years through persistent enforcement has a present value significantly less than $40,000 — accounting for the cost of enforcement, the time delay, and the risk of non-collection. If a buyer offers $20,000 today, the creditor must honestly assess whether the uncertain $40,000 in three years (minus $5,000-$10,000 in enforcement costs) is truly better than $20,000 guaranteed right now. For many creditors — particularly those with immediate financial needs or limited enforcement resources — the guaranteed payment is the smarter choice. 📋

🔍 9. How Investigation Increases Judgment Value

Professional asset investigation is the single most effective way to increase a judgment’s sale price. Judgment buyers are essentially pricing risk — and investigation reduces the buyer’s risk by confirming what the debtor has and how collectible the judgment is: 🔍

Before Investigation: Without asset information, the buyer must assume the worst — the debtor may be unemployed, own no property, have no vehicles, and maintain no reachable financial accounts. This uncertainty forces the buyer to price at the low end (5-15 cents on the dollar) to protect against the risk that the judgment proves uncollectible. After Investigation: With professional investigation confirming the debtor’s current address, current employer (and approximate income), real property holdings (and equity), vehicle registrations (and values), and business interests, the buyer can price based on verified collectibility rather than speculation. A confirmed employed debtor with real property and vehicle equity represents a near-certain collection — justifying a price of 33-50 cents on the dollar. The Math: On a $50,000 judgment, the difference between 10 cents/dollar (no investigation — $5,000 sale price) and 40 cents/dollar (with investigation — $20,000 sale price) is $15,000 in the creditor’s pocket. The investigation cost ($75-$300) generates a return of 50-200x. No other investment in the judgment process produces comparable returns. What Investigation Should Cover: For maximum impact on judgment sale price, the investigation should confirm the debtor’s current address (verified through multi-source skip tracing), current employer, all real property owned (directly or through entities), all vehicles registered, all business entities owned, and any other identifiable assets. The more comprehensive the asset picture, the more confidently the buyer can price the judgment — and the higher that price will be. 📋

🤝 10. Contingency Collection — The Middle Ground

Between self-enforcement and outright sale, there’s a middle option: contingency collection. Instead of selling the judgment at a discount, the creditor retains ownership but hires a collection attorney or firm to enforce on a contingency fee basis — the collector receives a percentage (typically 25-50%) of whatever they recover, and the creditor pays nothing if nothing is collected: 🤝

How Contingency Works: The creditor enters a contingency agreement with a collection attorney or firm. The collector handles all enforcement — debtor examinations, asset subpoenas, garnishment, levies, and all court proceedings — at their own expense. If the collector recovers $100,000 on a 33% contingency, the creditor receives $67,000 and the collector keeps $33,000. If the collector recovers nothing, the creditor pays nothing. When Contingency Makes Sense: Contingency is often the best option when the judgment is large enough to attract contingency collectors (typically $25,000+), when the debtor has identifiable assets making collection likely, and when the creditor wants to participate in the upside of a successful collection rather than accept the certain but deeply discounted payment of a sale. Finding Contingency Collectors: Not all attorneys accept contingency collection engagements — they’re selective because they bear all the enforcement costs and risk. Judgments with identified assets and clear collectibility attract more contingency interest. Judgments against seemingly judgment-proof debtors are difficult to place on contingency. Like judgment selling, professional asset investigation before approaching contingency collectors increases the creditor’s chances of finding a collector willing to take the case. Contingency vs. Sale — Comparison: A $100,000 judgment sold outright at 25 cents on the dollar produces $25,000 guaranteed cash immediately. The same judgment placed with a contingency collector at 33% who eventually recovers $80,000 produces $53,600 for the creditor (67% of $80,000) — but only after months or years of enforcement, with no guarantee of any recovery. The contingency option has higher potential upside but comes with timing uncertainty and collection risk. The sale option has lower return but provides certainty and immediate liquidity. The right choice depends on the creditor’s financial situation, time horizon, and risk tolerance. Hybrid Arrangements: Some creative arrangements combine elements of both — the collector pays the creditor a small upfront advance (10-15 cents on the dollar) and then pursues collection on contingency, sharing additional recovery above the advance on a negotiated percentage split. This gives the creditor some guaranteed money immediately while preserving upside participation in successful collection. 📋

⚠️ 11. Risks & Pitfalls in Judgment Sales

Judgment selling is generally straightforward, but several risks and pitfalls can trap unwary sellers: ⚠️

Selling Too Cheap: The most common pitfall is accepting the first offer without investigating the debtor’s assets or shopping the judgment to multiple buyers. A creditor who sells a $100,000 judgment for $3,000 without investigating may have sold a highly collectible judgment that was worth $30,000-$50,000 on the secondary market. Always investigate before selling and obtain multiple offers. Buyer Non-Payment: Some less reputable buyers agree to purchase judgments but delay or default on payment — taking the assignment paperwork and filing it with the court before paying the seller. Protect yourself by requiring payment before signing assignment documents, using an escrow arrangement for larger transactions, or requiring the buyer to provide proof of funds before proceeding. Representations and Warranties: The assignment agreement typically requires the seller to represent that the judgment is valid, enforceable, and hasn’t been satisfied or discharged. If these representations are inaccurate (the judgment has a pending appeal, the debtor has filed for bankruptcy, or there are known defenses), the buyer may have claims against the seller. Disclose all known issues honestly. Seller’s Cooperation Obligations: Assignment agreements often require the seller to cooperate with the buyer’s enforcement efforts — signing documents, providing testimony, and assisting with discovery. Understand these obligations before signing and ensure they’re reasonable and time-limited. Notification Requirements: Some states require notification to the debtor when a judgment is assigned. Failure to provide required notification may create procedural defects that the debtor can exploit to challenge the buyer’s enforcement efforts. Scam Buyers: Unfortunately, the judgment buying market includes some unscrupulous operators who pose as legitimate buyers but use deceptive practices — requesting assignment documents before making payment, offering unrealistically high prices then renegotiating after assignment, or simply disappearing after obtaining the assignment. Protect yourself by verifying the buyer’s legitimacy (business registration, references, track record), requiring payment before signing assignment documents, and using an attorney to review all transaction documents. A legitimate judgment buyer will have an established business, verifiable references from past sellers, and a professional transaction process. 📋

💰 12. Tax Implications of Selling a Judgment

The tax treatment of judgment sale proceeds depends on the nature of the underlying claim and the seller’s tax situation — consult with a tax advisor for specific guidance: 💰

Business Judgments: If the judgment arose from a business transaction (breach of contract, unpaid invoices, business fraud), the judgment sale proceeds are generally taxable as ordinary business income. However, if the original debt was previously written off as a bad debt deduction, the sale proceeds may be treated as bad debt recovery — taxable to the extent of the prior deduction. Personal Injury Judgments: If the judgment arose from a personal injury claim, the sale proceeds may be tax-free to the extent they represent compensation for physical injuries or physical sickness — following the same tax treatment as if the creditor had collected the judgment directly. Non-physical injury claims (emotional distress, defamation) do not receive this favorable treatment. Capital Gain vs. Ordinary Income: Some tax authorities have taken the position that judgment sale proceeds are ordinary income rather than capital gains, regardless of how long the creditor held the judgment. Others have argued that a judgment held for more than one year could qualify for capital gains treatment if sold at a gain. The characterization depends on the specific facts and applicable tax law. Reporting Requirements: The buyer may be required to issue a Form 1099-S or other informational return to the seller, reporting the purchase price. The seller must report the proceeds on their tax return regardless of whether a 1099 is issued. Accurate record-keeping of the judgment’s original value, any prior deductions taken, and the sale proceeds is essential for proper tax reporting. 📋

❓ 13. Frequently Asked Questions

🤔 Can I sell any judgment?

Most money judgments are assignable and can be sold. Some exceptions exist — certain court orders (such as child support orders or domestic relations judgments) may have restrictions on assignment. Check your specific jurisdiction’s rules, but the vast majority of civil money judgments from contract disputes, tort claims, landlord-tenant actions, and business disputes are freely assignable to any willing buyer. ⚖️

🤔 Does the debtor need to approve the sale?

No. The debtor’s consent is not required for judgment assignment. The creditor can sell the judgment to any buyer without the debtor’s knowledge or approval. Some jurisdictions require that the debtor be notified of the assignment after it occurs, but the debtor cannot block or veto the sale. The debtor’s obligation to pay the judgment remains identical — only the identity of the creditor changes. 📋

🤔 Can I sell a judgment that’s been partially collected?

Yes. Partially collected judgments are commonly sold. The sale price reflects the remaining balance (original judgment plus accrued interest minus payments already received), not the original judgment amount. Provide the buyer with a complete accounting of all payments received so the remaining balance can be accurately calculated. Active enforcement mechanisms (garnishment, liens) can be transferred to the buyer as part of the sale. 💰

🤔 What if the debtor files for bankruptcy after I sell?

Once the judgment is sold and assigned, the bankruptcy risk shifts entirely to the buyer. If the debtor files for bankruptcy after the sale, the buyer bears the loss — not the seller. This risk transfer is one of the primary advantages of selling rather than self-enforcing. The seller has already received their payment and is not affected by the debtor’s subsequent bankruptcy filing, assuming the assignment agreement doesn’t contain unusual clawback provisions. 📋

🤔 How long does the sale process take?

The entire process — from initial contact with buyers through payment and court filing — typically takes 2-6 weeks. Simple sales with willing buyers and clean judgments can close in as little as one week. More complex sales involving large judgments, multiple liens, or active enforcement mechanisms may take longer to document and transfer. The court filing to substitute the new creditor usually takes 1-3 weeks depending on the court’s processing time. ⏱️

🚀 14. Professional Investigation to Maximize Value

At PeopleLocatorSkipTracing.com, we help judgment creditors maximize their judgment’s value — whether they plan to self-enforce, sell, or pursue contingency collection. Our professional asset investigation confirms the debtor’s current location, employment, property, vehicles, and business interests, providing the collectibility evidence that drives higher sale prices and attracts better contingency collectors. The $75-$300 investigation investment can add thousands of dollars to your judgment’s market value. Serving judgment creditors and their attorneys since 2004. Results in 24 hours or less. ⚡