The Assignment Method
Three years ago Robert "won" a judgment
against David for $4,800. He has been unable to collect any
of the judgment. David moved, however through skip-tracing you quickly locate David. You discover where he
lives, works, and banks. You determine that he has just
moved into a condo that has very little equity, but holds a
job netting $440 per week. Plus he has $2,650 in his bank
account.
You contact Robert and strike a deal. The
deal will give him 50% of everything you collect from David,
up to 50% of the original judgment. Robert decides that if
you could help him get $2,400, that would be $2,400 more
than he has now. He eagerly signs the contract.
But it gets better . . . much better. At the time the
judgment is awarded, the court also declares that the debtor
must pay the legal simple interest rate (10% annually in
most states) from the award date. The judgment ($4,800) plus
interest for three years ($1440) has now become a debt of
$6,240. David is legally obligated to pay every cent.
Next, you simply fill out the appropriate court forms and
the sheriff seizes David's bank account for you. This is
quick income. You split this income with your "partner"
Robert. ($2,650 down $3,590 to go)
Since David's bank account didn't satisfy his entire
debt, you next file the appropriate court forms to execute a
continuing garnishment of his wages. Most states will
take only a percentage (often 25%) leaving David with enough
money to live. This is fine anyway, because if you took
more, David would likely walk away from his job.
This 25% garnishment now generates a
recurring weekly cash flow (for roughly the next 32
weeks) of $110. You'll then split the cash flow with Robert.
Now $55 per week might not sound like a lot, but wait till
you get 20 or 30 of those checks coming in every week!
These
are your bread and butter judgments. Go away on
vacation for three weeks and the checks keep coming in,
while you are away. Let's say David is fired or quits his
job. You simply file the appropriate papers to attach a
lien to his condo.
Even though it doesn't have much equity in
it now, someday it will. When David sells or refinances the
property anyone who has a lien on it will be paid
before David gets his share.
This equity is terrific for security in
procuring personal and business loans to expand your
company. This will also be your long term retirement
income. Because your agreement with Robert allows you to
keep the post judgment interest, here's the actual break
down of cash and percentages.
Break Down Of Cash Proceeds and Percentages
|
Judgment |
Principal |
Interest |
Total $ |
Total % |
|
You |
$2,400.00 |
$1,440.00 |
$3,840.00 |
61.54 |
|
Robert |
$2,400.00 |
$0.00 |
$2,400.00 |
38.46 |
| |
|
|
$6,240.00 |
100.00 |
Picture this for a moment. Robert is ecstatic.
You just recovered $2,400 for him that he would have never
seen. You're absolutely elated because you've just
been paid $3,840 for your intelligence and expertise.
A true
win/win situation . . . and just when you thought it
couldn't get any better, on top of all that you get to add
100% of the costs that you incurred to collect this
judgment. Every penny. Admit it, this is starting to peak
your interest, isn't it? Well wait till you see the
next example.
Legal Revenue Service,