The Purchase
Method
Using the assignment method of judgment
recovery, the judgment was assigned to you. In this example
you will actually purchase the judgment outright. In most
collection cases, the older a debt is, the less value on the
dollar it has. This is because there is no interest
accruing. Therefore your purchase price will be a deep
discount of the original face value
Below is a table of what collection agencies
typically pay, per dollar, for past due account receivables.
|
Age |
Value |
| 30 days |
$0.97 |
| 6 months |
$0.67 |
| 3 years |
$0.14 |
| 6 years |
$0.05 |
Often times older judgments are the
easiest and most profitable to pursue. Why? People are
willing to accept pennies on the dollar for what they
believe to be a "worthless" judgment.
Also, interest has greatly increased
the value of the debt. Finally, in many cases, even if the
debtor originally couldn't pay his or her debt, many have
turned their lives around. Now... they have the means
to pay.
For example, you find a six year old $4,200
judgment. After performing an asset search you locate the
debtor. You determine that she owns a new Toyota Camry, free
and clear, is employed, and has more than enough cash in the
bank to pay this debt.
You contact the judgment holder, and offer
to purchase the judgment for 5 cents on the dollar or $210.
He has long since written the debt off and gladly sells you
this seemingly "worthless " piece of paper. Over the
past six years, this debt has grown by $2,520, and in a few
weeks you would get back $6,720. That's 32 times your
investment!
Legal Revenue Service,