Judgment enforcers that are not lawyers or licensed collection agencies need to get judgments assigned to themselves. The reason is, when you are not an attorney, you can just (usually) represent only yourself, and can’t represent anyone else. That means in addition to an acknowledgment of judgment that is notarized, if you are not purchasing the judgment for cash upfront, you also must use a future-payment contingency agreement for purchase. These kind of purchase agreement vary per state and by the judgment collection expert.
This article is my opinion and is not, legal advice. I am a judgment broker, and not an attorney. When you ever need legal advice or a strategy to use, you should retain an attorney.
Included in every future-pay judgment enforcement agreement, will be wordings about interest. Each state has varying rates for judgment interest. Judgment interest is most often simple interest, and isn’t usually compounded. Certain states permit one-time interest compounding when a judgment gets renewed. After judgments are purchased for cash upfront, judgment interest isn’t the concern of the original judgment creditor any more. Any interest due is not nearly as important as the assets of the debtor.
In a purchase contract agreements, should you split the judgment interest that you might recover, or keep all interest? My answer is, it is up to you, and what the original judgment creditor will go along with. It can depend on the situation. Most judgment enforcers share collected interest with their original judgment creditor, some do not. Even when your agreement usually states that you keep all the judgment interest; because there’s a lot of competition with so many judgment enforcers, and creditors who shop judgments around so much; sometimes you need to strike a compromise to split any potential interest recovered, to land a judgment.
Usually, judgments are not enforced. If When they are, usually, not with the total amount including all earned interest. With situations where the debtor owns available assets, accrued interest is occasionally compromised as a bargaining chip for judgment settlement. Most judgment debtors do not get impressed by chips to bargain with like forgoing owed interest, and instead responds to levies, garnishments, and debtor exams.
The accrued interest on a judgment must be calculated, particularly when a writ of execution is obtained from the court. Often, judgment interest must be documented using a form or a declaration at the court. There are many free judgment interest calculators on the web, and professional-grade programs and spreadsheets that your can buy.
Keeping track of interest on judgments isn’t always simple. Even in states such as California with interest on judgments is ten percent simple interest per year; expenses and partial payments may be complicated, and change the total owed, most often after they are filed at the court. Some states have judgment interest rates that change, or are related to Federal interest rates.
One of the reasons to keep careful track of the interest owed is for those rare situations when you collect in full. It is not legal to collect more than what is owed. On judgments for consumer debt, there are strong FDCPA laws which can punish those who miscalculate and over-collect whatever is owed.