Comment by Cody Flecker on October 12, 2010 at 10:22am

Deficiency Judgements are like collecting on NSF checks. If you can find the individuals assets there is a chance that you will get paid in full. What happens if you cannot find the assets? Then, it becomes a waiting game. What you are waiting for is the " Come to Jesus moment" Here is where the waiting begins. We all know we live in a consumer oriented society. We all love to buy things especially new items. New items require financing. Your customer/consumer wishes to finance something, but wait...the finance manager says that there is a judgement pending against the consumer. Out of the clear blue, the consumer calls you and says that while in church, "I had this gnawing feeling that I should have paid all of my debts" All you do is keep your mouth shut and allow the consumer to talk on. The consumer then says" I know I owe you $1000, will you accept $ 500 and call it fair and square?" We know the consumer wil pay$ 500, here's where the negotiations begin. Figure out what you paid for the judgement, and negotiate from there. Good luck from Flecker the Collector.

Comment by Jerry Collins on October 12, 2010 at 10:28am

As we all know judgments are not cash. I do believe you are correct in stating that deficiency balance judgment will increase however, I do not see collection of those judgments being a great income producer. If the consumer has lost everything including their home what makes us think they are not just going to file bankruptcy, be done with it, and begin moving on with their life, tainted as it is. That was the one thing that in the past kept people from filing chapter 7 was that they were keeping a roof over their heads. Without that, what are they going to save by paying the deficiency? I predict a period of low rating credit scores while consumers pull themselves back together.

Comment by Lee Wind on October 12, 2010 at 12:33pm

I can't agree with the article. There are distinct problems associated with collecting this type of paper that buyers should be aware of. That foreclosures are being successfully challenged is only the latest news. Apart from that, this segment cannot be compared to other types of debt: each state has specific statutes regarding collection of foreclosure or short sale deficiencies, including difference in statute of limitations as compared to other consumer debt. In some states, these cannot be collected at all! Taking all of this into account, plus Jerry's astute comments, I'd say avoid this segment. Unfortunately, recent news also points to what might be much sloppier credit card debt paperwork - successful challenges to originator claims are in the offing. Should these result in a moratorium on sales and/or collections of these, whether government or industry imposed, the entire debt buying industry could be headed for a tailspin.

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