Whether you’re a plaintiff seeking to cash in on a court judgment or an investor eyeing potential opportunities, navigating the landscape of judgment investments requires careful consideration and strategic planning. In this guide, we’ll explore key factors to help you identify lucrative judgments, avoid potential pitfalls, and make the most out of your investment.
Choosing the Right Judgment: A Critical Decision
Investing in judgments isn’t a one-size-fits-all endeavor. To increase your chances of success, consider the following factors:
1. Avoid Default Judgments
In many jurisdictions, default judgments come with limitations on asset recovery. Courts may grant the defendant the benefit of the doubt before allowing asset seizure, providing them with an opportunity to respond to the initial court hearing. It’s advisable to steer clear of default judgments to ensure a smoother asset recovery process.
2. Embrace Seasoning
Striking the right balance in timing is crucial. Aim for judgments that are neither too fresh nor too old. A sweet spot lies in judgments that are at least six to eight months old but not exceeding four years. This timeframe allows for increased chances of asset recovery without running into statutory limitations that may hinder garnishment.
3. Assess Living Standards
Before delving into a comprehensive asset search, conduct a preliminary observation of the defendant’s living standards. This can be done visually or through online platforms. Look for cues on their lifestyle, residence, and possessions. While this step is not an actual asset search, it provides valuable insights into their financial situation.
Conducting a Full Asset Search: A Strategic Approach
Once you’ve narrowed down potential judgments, it’s time to embark on a full asset search. Here’s a step-by-step guide:
1. Leverage Certified Records
Avoid relying solely on online databases for asset searches. Instead, access original records from official sources such as county clerks for real estate records, DMV for vehicle records, and the Secretary of State for corporate records. Ensure that you or the investigator obtains certified copies of these records for legal validity.
2. Consider Small Assets
Don’t overlook seemingly insignificant assets. A business website, a jet ski, or an insurance policy may reveal hidden financial connections. Tracing funds from these smaller assets can lead to a more comprehensive understanding of the debtor’s financial landscape.
3. Be Mindful of Timing
Timing is crucial when conducting an asset search. Waiting a few months after the judgment is issued allows for the dust to settle and increases the likelihood of discovering overlooked assets. However, don’t delay too long, as certain statutory limitations may come into play.
4. Evaluate Return on Investment
While a full asset search incurs costs, consider it an essential investment in maximizing returns. Factor in the potential recovery from the identified assets and weigh it against the costs incurred during the search process. Don’t compromise on thoroughness for short-term cost savings.
Ensuring Seamless Asset Recovery: A Final Checklist
Once you’ve identified the assets and are ready to initiate the recovery process, ensure that your paperwork is impeccable. Any errors or inaccuracies could lead to rejection by the responsible party, tipping off the debtor and jeopardizing the success of the asset seizure.
Investing in judgments requires a meticulous and strategic approach. By carefully selecting judgments, conducting thorough asset searches, and adhering to proper procedures, you can increase your chances of a successful investment. Remember, knowledge is your most valuable asset in this endeavor, so stay informed and make well-informed decisions on your journey to investment success.