What Can Go Wrong With Judgment Repayment

There is risks in almost everything, including getting paid back for your judgment. Often judgments come from someone being ripped off, and a few debtors try and scam the creditor once more as they “satisfy” the judgment. The classic one happens after you accept a check to satisfy your judgment, deposit the check, satisfy your judgment; and then a week after that, the bank tells you that check didn’t clear.

My articles are my opinions and are not, legal advice. I’m a judgment referral expert, and not an attorney. When you need a strategy to use or legal advice, you should retain a lawyer.

After somebody satisfies a judgment, they want their previous judgment owner to satisfy their judgment immediately. Although the judgment owner wants to be paid and satisfy the judgment, there is often reason to delay this until you are sure you’ve gotten paid “for sure”. Of course, very few things are 100% for certain. If the creditor satisfies a judgment and gets burned, often the sole option is to sue once more, usually and get another judgment.

The safest method of accepting a payment to satisfy your judgment is to meet the debtor at their bank and observe them get either a cashier’s check or cash (and depositing that cashier’s check with your bank or credit union ASAP).

Do not file the judgment satisfaction with the court unless you’re sure you’ve actually been paid. When your judgment debtor wants their satisfaction now, then only cash counts. Satisfactions have to get notarized, and that is fine because you could bring it, and not give it to the debtor or file it; unless you’re repaid cash, or with another solid funding source. The remainder of this article will discuss a few of the ways you can be burned, taking repayment on your judgment:

1) Filing for bankruptcy. As defined in 11 USC section 547, if your judgment debtor repays you and quickly files for bankruptcy, the BK trustee might rule it’s a preferential transfer; and order you to send to the court whatever your judgment debtor repaid you. Different from most other methods in which a judgment owner can get ripped off, there’s usually not any recourse in this circumstance.

2) Cash money. There is still some real-looking counterfeit currency floating around. Although not likely, you might receive such a bogus bill from your judgment debtor. An inexpensive investment to combat any counterfeit worries is buying a bill checker pen.

3) A personal check can be returned for insufficient funds, even several weeks after you deposit them. Stop payments can even be put on cashiers checks. It is usually safe to wait ten business days after deposit, before you can presume checks are good. If your judgment debtor’s check bounces, the debtor may owe more to you, and their dischargeable debt (if they file for bankruptcy) may get transformed into nondischargeable. Somebody could argue saying that your damages are just your returned check charges, and not the debtor’s amount of the bounced check. And, your cost of filing your new lawsuit to recover the check is a lot more than your bounced check fees.

4) Money order payments. Stop-payments may be placed on money orders. Be aware of a scam if the debtor buys a money order to pay you, and then takes the receipt back the very next day and tells their issuer the money order was lost (e.g., “my father put it in the shredder because I had left it on the top of some other papers, and Dad’s eyes aren’t very good”). That issuer may return the debtor’s funds to the debtor. After that, the debtor gives you that original money order they previously had claimed was lost. When you deposit their money order, it’s initially accepted by your bank and shows up as a deposit, but in about 10 days it bounces.

5) Accepting credit card payments or using web based companies like PayPal. There are portable credit card payment accessories such as SquareUp.com. Square is an accessory which takes credit card payments with a smartphone. What if you could meet the judgment debtor in court and scan the debtor’s credit card to pay off the judgment? This sure would be convenient, however they’re downsides and risks to doing this. There are 2 type of risks with taking credit card payments to repay your judgment:

5A) Certain contracts and laws with credit card merchant agreements mean you must be careful not to violate the terms of your contract. Contact the merchant to check that you may use your merchant account for purposes such as taking payments for repaying debts or judgments.

Businesses like PayPal may require special conditions, so read that fine print in their agreements. Those kind of conditions are put there because they are a merchant services provider or a credit card wholesaler. They are an aggregator of lesser transaction amounts charged by their individual clients, and do not need a legal capacity. If the company is not satisfied with any transaction of yours, they are able to just reverse the transaction and charge your account. The company have a solution, so a new lawsuit wouldn’t be needed.

5B) Credit card charges can be disputed or charged back. Imagine that you swiped your judgment debtor’s card using a portable device attached to your smart phone. Five minutes later, the debtor might be using the cell phone to cancel that same transaction. It is possible that an authorized credit card payment is little more than one more promise to pay. It is enforceable, however it requires a new lawsuit. If you have the debtor’s signature of acceptance on your authorization form, it will be harder to dispute in the future. You can also add credit card charges, if they’re on your authorization form.