Realistic Fees

I would like to address a question that often arises regarding the kind of realistic fees that can be expected in this profession.

As you research different commercial debt resolution / debt negotiation training courses, you may come across some programs that promise huge fees. I know of one in particular that cites a "case example" resulting in a fee to the debt negotiator of $17,500. (This same training material sells for about $5,000 and I suspect the huge fee is used to justify the huge cost.)

Although large fees are certainly possible, we need to always be cognizant of our client's ability to pay both our fee and the settlement. Setting your fee too high will only result in another problem debt for your client and create a collection nightmare for you. In most cases, I recommend capping your fee to avoid this problem. My program provides some general guidelines, but it is entirely up to each professional to set your own limits. An alternative is to set your fee at a flat rate to ensure your client can afford your service and avoid "sticker shock" at the end of negotiations. A thorough interview early on with your client will help you determine the best fee structure.

HOWEVER, there are a couple of situations where this is not necessary. Negotiating discounted settlements to debts hindering a real estate sale or a business sale can be worked without any limit to the fee. Since your fee will be paid from the proceeds of the sale and your successful efforts will always result in more money for your client, there is no need to set a cap. These situations can easily result in fees of tens of thousands of dollars for large or multiple debts.

As an example, I am currently negotiating settlements with 10 creditors on behalf of a business seller with debts totalling over $100,000. To date, I have negotiated a discount of over $60,000. When the business sells in early July, my fee will be in excess of $18,000 and my client will still see a net benefit of more than $40,000. I am assured payment because my fee will be paid out of escrow from the proceeds of the business sale.

Substantial fees can always be expected in this highly rewarding profession and a comfortable ongoing income is possible, but don't get carried away by setting your fees so high they can never be collected.

Scott F. Soape