The Expert Podcast

If you're looking to purchase a judgment as an investment—a court judgment—or maybe you own a court judgment, whether you're a plaintiff or an investor, how do you decide which judgments are worth pursuing? How do you pick a court judgment that can make you money and avoid those that might not be as successful? Is there a method to investing in judgments that come from court settlements, defaults, or even litigated jury verdicts? We have many clients who ask us about investing in these types of assets and want to know how to find the good ones.

Here’s what we’ve discovered from years of investigation for clients. First of all, you want to find a judgment that is not a default judgment. In many jurisdictions, default judgments have limitations on how you can recover assets. Even if you find the assets, such as a bank account with a million dollars or real estate, you may not be able to seize or recover those assets directly. The court may give the debtor the benefit of the doubt before allowing recovery, such as providing them another chance to respond to the initial court hearing. Remember, we are not attorneys and do not provide legal advice, but these are common patterns we've observed.

Second, you should consider "seasoning." You want judgments that are neither brand new nor too old. Ideally, look for judgments that are at least six to eight months old but not older than three to four years. Judgments older than four years may be close to statutory time limits for recovery, which vary by state—five, seven, or even ten years. If a judgment is nearing its expiration and you haven't acted, you may lose the chance to recover assets even if they exist. Conversely, judgments issued very recently might still have assets that are being actively hidden by the defendant. After six to eight months, defendants may become more complacent, making it easier to locate hidden assets.

Once you've identified potential judgments within the right timeframe, perform a basic profile review. This isn't a full asset search yet, but rather an observation of the debtor’s living standard. What kind of house do they live in? Do they own it? What type of car do they drive? What lifestyle are they living? If the person is destitute, pursuing their judgment might not be worth it. However, individuals who have had wealth in the past often aspire to regain a similar lifestyle, even if they are currently down on their luck.

To gather this profile, you can use methods like visual observation, social media research, or simple Google searches. Be cautious about surveillance laws in your area to ensure your actions cannot be construed as stalking or harassment. Once you've determined that the judgment is worth pursuing, you can proceed with a formal asset search.

A proper asset search involves obtaining original records. This means pulling real estate records from the county clerk, vehicle records from the DMV, corporate records from the Secretary of State, and bank account records from reliable sources. Avoid relying on generic database searches or reports, as they may not provide the documentation needed for garnishments or liens. Using certified copies of records or hiring a licensed private investigator ensures the process is thorough and legally sound.

When running a formal asset search, consider the return on investment. A comprehensive search can take 10 to 12 hours of labor and incur costs for accessing records, such as real estate deeds or vehicle titles. Don't overlook smaller assets, like domain names or personal property. For example, seizing a debtor's website can disrupt their business, creating leverage for negotiation. Even seemingly insignificant assets, like an old jet ski, might lead to uncovering larger funds.

Finally, ensure your paperwork is flawless when filing garnishments, liens, or asset seizures. The responsible party—be it a bank, DMV, or domain registrar—must execute the action properly and cannot warn the debtor. However, if your paperwork contains errors, it could be rejected, giving the debtor a chance to move assets beyond your reach. Double-check all details to avoid this risk and maximize your chances of a successful recovery.