Judgment Recovery: An Investment in Future Earnings
The concept of judgment recovery is a process where you, the owner of a judgment, deserves to be paid by the person who the courts say owe money for a judgment placed against them. Whether you obtained this judgment from winning a court case or from purchasing a judgment owed to another individual is of little consequence. In the eyes of the law, whoever owns the judgment has the right to collect on that judgment. For this reason, purchasing other people’s unpaid judgments for pennies on the dollar can turn out to be a very lucrative investment for making future earnings. This is only true if you take the necessary steps to recover the money owed on the judgments in your possession.
Judgments as a Lien
When a judgment is recorded against the title of a person’s property, there is a good incentive for that individual to pay off the judgment. The first order of business, when it comes to collection efforts, is to make sure you record the judgment as a lien against the title of the property of the person who owes you the judgment.
This gives you, the judgment holder, a lot of leverage to start applying pressure to the person who owes you money under the dictates of the judgment in question.
A Cloudy Title Gets You Paid
Every three to five years on average, people have a tendency to either move or refinance their homes. When they go to sell or refinance a home loan, this means that a title company is going to have to go through and check for clouds on the homeowner’s title. If the title company finds your judgment recorded against their client’s title, the client will first have to pay to clear the title before they will be able to either sell their home or refinance the loan on their home. Either way, this is a huge barrier in their way that helps to ensure that you will be paid on the judgment. So, in many cases, using the collection process as a method of investing to earn future income is itself a simple matter of waiting, because the regularity at which people try to sell homes and refinance home loans works out in favor of judgment holders.
Another way to pad your future investment income with judgment recovery efforts is to simply buy judgments for a low cost, and then sell them for a higher price to other people interested in buying judgments. This is a great tactic for someone who is able to pick up large numbers of unpaid judgments from businesses like contractors and such. Often when you buy in bulk, you can get these judgments so cheaply that flipping them for a little more than you paid later is both easy and lucrative. When people think of judgment collections, they imagine they should only be paid off by the person who owes them money for the judgment; but, why wait for that to happen when there are many investors willing to help you with your judgment recovery efforts by purchasing the judgment from you instead. As long as you realize a profit, what difference does it make?