You fell behind on paying your bills. As it turns out, one of your creditors sued and obtained a judgment against you. Not only do you owe the original amount, but interest is also accruing on your debt. It is not looking good. Now you wonder if the creditor can sell the judgment to a debt collection agency. If so, your life could suddenly get more complicated.

Can judgments be sold? Yes. Although each state has its own rules regarding debt collection and judgments, judgments are considered real property that can be sold and traded just like real estate or any other asset. The more intriguing question is why a creditor would sell a judgment to begin with.

Courts Don’t Enforce Judgments

As a general rule, courts do not enforce judgments. They enter judgments as a result of civil litigation. As for enforcement, that is left up to the creditor and its attorneys. That means you are not going to end up in jail because you failed to pay a judgment.

Under certain circumstances, this represents an untenable situation to creditors. One such circumstance is obtaining a judgment against a debtor who knows how to beat the system. After trying for years to collect, an unsuccessful creditor may be tired of investing time and resources in fruitless collection efforts. Selling to a collection agency makes the matter go away.

The advantage of selling a judgment to a collection agency is being able to rid yourself of the problem. Creditors don’t have to worry about collection efforts after they sell. They can forget about the judgment. However, there is also a significant disadvantage: selling means accepting less.

A collection agency willing to purchase a judgment is not going to pay full value for it. Why? Because they will incur certain expenses in their attempts to collect. They have to cover those expenses and earn a profit at the same time. The only way to do that is to pay less than full value.

Collecting on Contingency

Some collection agencies take judgment cases on contingency rather than buying them outright. Salt Lake City, Utah’s Judgment Collectors is one such example. Active in six states, Judgment Collectors prefers the contingency model over buying judgments from their clients.

Taking cases on contingency means that the firm assumes all the financial obligations involved in collection. They pay all their own costs along the way. As for getting paid, they have to collect from the debtor first. What they do is a lot like personal injury attorneys who work on contingency. Those attorneys only get paid if they win. Likewise, Judgment Collectors only gets paid if they manage to collect on the debt.

Dealing with Professionals

The take-away for you as a consumer facing debt collection is this: a creditor enlisting the help of a debt collection agency is serious business. You are now dealing with professionals who know how to use all the tools at their disposal to get paid.

Should a judgment entered against you be sold or referred to a collection agency, prepare yourself for trouble. You are not going to win. It would be far better for you to work with either the creditor or the collection agency to settle the debt as best you can. Otherwise, you risk losing more than just the amount you owe. Some of your assets could be at stake.

Judgments can be sold to collection agencies. It happens all the time. They can also be referred to firms that work on contingency. Either way, it is not a good situation for debtors.