I have had a few inquiries lately about getting leads outside the court cases. Although I do suggest most people new to this profession begin with recent lawsuits filed in their area (this is the quickest way to earn fees), building a good network for ongoing referrals is the best way to really GROW your business over time.
One referral source worth researching is through creditor businesses. You can identify possible companies by scanning lawsuits and looking for the same business listed as plaintiff on more than one case. These will probably be companies that have an ongoing problem collecting on past due accounts.
Once you have identified a few of these companies, send them a brief letter or call and offer your service to "collect" on their past due accounts at no charge. After you have their attention you can explain how you will be compensated by the debtor business but the creditor will benefit by receiving payments. They may only be willing to accept payment in full on these debts but you might be able to get them to take payment plans or a small discount or both. The more wiggle room to can get them to agree to, the easier job you will have when you approach the debtor companies.
Over the years I have developed relationships with several such creditor companies and they will occasionally provide me with a list of past due accounts to contact with all the information I need. When I talk to the debtor business owner, I let them know I can probably settle this dispute for them at a discount or at least set them up on a manageable monthly payment plan. Since I know exactly what to expect from the creditor and there is very little actual negotiation involved, I typically keep my fee at my minimum rate of $350.
If you can establish relationships with just a few creditor businesses like this, you may be assured several easy cases each month and an additional stream of ongoing fees. Set aside a few hours each week solely for the purpose of building your referral network from several different sources (see my previous Blog posts on Business Brokers & Factoring Companies) and you will soon see a substantial increase in your revenues.
Scott F. Soape
Monday, July 28, 2008
Thursday, July 17, 2008
A $3,000 Fee
The copy of the check shown above dated July 15, 2008 represents the balance of a $3,000 fee I recently earned (less $100 for a retainer I had already received). Here's how the case played out...
During a regular courthouse visit, I came across a case where an insurance company had brought a lawsuit against a trucking company for past premiums due on a policy. The lawsuit was for $80,059 plus attorney fees, back interest on the debt and court costs of $317 for filing the suit.
I sent a letter to the debtor business (defendant) at the address shown on the lawsuit and followed with a phone call a few days later. Once the owner of the company heard I was offering to settle out-of-court at a discount on a no results / no charge basis, he agreed to let me try. I got his side of the story & immediately faxed over an agreement for him to sign.
Although he had some dispute with the amount the insurance company claimed was due, this was basically a result of being short on funds to pay the debt in full in one lump sum. The owner gave me some general guidelines on what he could afford. HINT: clients will often give you a much lower amount than they can really afford thinking that will save them some money.
I quickly sent the attorney for the insurance company a low-ball offer of $29,200 (a hefty 63% discount), payable in 23 monthly installments of $400 with a balloon payment in the 24th month of $10,000. She rejected this offer but after a couple of counters she indicated she would accept $56,042 payable in 24 monthly installments of $2,483.82 bearing an interest rate of 6%. The settlement would be secured by an Agreed Judgment (see previous blog post). I saved my client over $21,000 even after he paid my fee! Although my fee was based on savings on the principal amount of the debt, I also saved him attorney fees which could have amounted to 1/3 of the debt (another $26,600).
Now, for this case, I had initially set my fee at 25% of savings rather than my usual 30% for 2 reasons: first, I knew what to expect from this creditor from dealing with them over the years, second, I knew my fee would be well in excess of my cap of $3,000 even at 25%.
There were some delays involved since the creditor requested financial information from my client in order to justify the discount but everything was completed within about 6 weeks and only took a couple of hours of my time.
This is only one example and these cases are filed all over the country, every week. Of course, while I was working this case, other cases were being worked and fees were being received. Keeping your pipe line full of cases and constantly prospecting for clients through courthouse searches and referral networking will ensure you a steady stream of fees.
The business is always out there and, using my proven techniques, YOU CAN GET IT!
Scott F. Soape
Tuesday, July 15, 2008
Building Synergy Referral Relationships
At the risk of giving away one of my trade secrets, I'm about to reveal one of the best reciprocal referral relationships of this profession. If you happen to be a competitor, please avert your eyes...
There exists a specialized area of alternative commercial finance known as FACTORING. Basically, the companies that work this business will issue "loans" against accounts receivable from a small business, collect on them and keep a small percentage of whatever they collect. The money they "loan" is not typically considered as debt since they are really buying the accounts receivable. As you might imagine, this helps the small business in many ways . These Factoring Companies provide an indispensable service for their small business clients:
1. They can help reduce bad debt loss.
2. Make cash quickly available for any use.
3. Provide a professional collection & credit service.
4. Give constant detailed reporting of progress.
5. They get paid from proceeds of their collections.
Most factoring companies are very flexible and will custom fit their service for each individual client depending on their needs. Some or even all of the cash your client receives for their accounts receivable from the factoring company can be used to make payment on the debts you settle (making your job much easier).
Now, here's the BONUS part for YOU, the factoring company will pay you a referral fee for any business you send their way that becomes a fee generating client. The standard rate is 10% of whatever fees they receive... for as long as they receive fees... and this can easily translate into thousands of dollars for you and continue for months or even years.
Most of your clients will be businesses experiencing cash flow problems and could qualify for factoring if they have enough and the right kind of accounts receivable. You will not only be doing a favor for your client by suggesting this alternative financing but you could earn yourself a substantial ongoing referral fee.
Also & importantly, if you build a relationship with several of these companies, they will send business to YOU! Face it, their clients are probably having cash flow problems or they would not have approached them in the first place. If you can offer to negotiate discounted settlements on their clients' problem debts, that leaves more money available for their other pressing needs.
Do a little Internet search for "factoring" or "accounts receivable financing" companies in your area and send them a letter about your business. As always, follow-up with a phone call and you will be on your way to building some of the best referral relationships for your business you can find. But keep this under your hat... I would hate for my competition to find out about this idea!
Scott F. Soape
There exists a specialized area of alternative commercial finance known as FACTORING. Basically, the companies that work this business will issue "loans" against accounts receivable from a small business, collect on them and keep a small percentage of whatever they collect. The money they "loan" is not typically considered as debt since they are really buying the accounts receivable. As you might imagine, this helps the small business in many ways . These Factoring Companies provide an indispensable service for their small business clients:
1. They can help reduce bad debt loss.
2. Make cash quickly available for any use.
3. Provide a professional collection & credit service.
4. Give constant detailed reporting of progress.
5. They get paid from proceeds of their collections.
Most factoring companies are very flexible and will custom fit their service for each individual client depending on their needs. Some or even all of the cash your client receives for their accounts receivable from the factoring company can be used to make payment on the debts you settle (making your job much easier).
Now, here's the BONUS part for YOU, the factoring company will pay you a referral fee for any business you send their way that becomes a fee generating client. The standard rate is 10% of whatever fees they receive... for as long as they receive fees... and this can easily translate into thousands of dollars for you and continue for months or even years.
Most of your clients will be businesses experiencing cash flow problems and could qualify for factoring if they have enough and the right kind of accounts receivable. You will not only be doing a favor for your client by suggesting this alternative financing but you could earn yourself a substantial ongoing referral fee.
Also & importantly, if you build a relationship with several of these companies, they will send business to YOU! Face it, their clients are probably having cash flow problems or they would not have approached them in the first place. If you can offer to negotiate discounted settlements on their clients' problem debts, that leaves more money available for their other pressing needs.
Do a little Internet search for "factoring" or "accounts receivable financing" companies in your area and send them a letter about your business. As always, follow-up with a phone call and you will be on your way to building some of the best referral relationships for your business you can find. But keep this under your hat... I would hate for my competition to find out about this idea!
Scott F. Soape
Friday, July 4, 2008
Agreed Judgments to Secure a Settlement
It is not uncommon for a creditor's attorney to request an "Agreed Judgment" when they settle on a pending lawsuit.
An Agreed Judgment is basically an agreement from the debtor business that they owe a specified amount to a creditor without going to court. Typically it will include the original amount claimed by the creditor, attorney fees, back interest on the debt and court costs for filing the original lawsuit.
When a creditor agrees to an out-of-court settlement after filing a lawsuit, this is their collateral for the settlement in case the debtor defaults on the settlement terms. It is used primarily when a payment plan is accepted by the creditor (rather than a lump-sum payment) and saves them from having to file a new lawsuit if the debtor business defaults on the payment terms with a settlement. Typically, the agreed judgment is dropped once all payments are received and they do not reflect on the client's credit report.
By signing an Agreed Judgment, a debtor business indicates they "agree" to the full amount due (plus extra expenses) if they do not comply with the terms of the settlement.
These are very common and should be expected under the above circumstances so let your clients know it is simply part of the deal once a settlement is negotiated.
I suggest you NEVER OFFER an agreed judgment during negotiations, rather wait to see if the creditor's attroney will require one. If one is required, ask if they will hold it and not FILE it for record unless & until there is a default on the payment terms. This is always negotiable.
Do not be surprised if you encounter these during your negotiations and ALWAYS feel free to contact me if you have any questions during your negotiation process. I am here to provide whatever guidance I am able for those that have invested in my commercial debt resolution Business Plan System.
Scott F. Soape
An Agreed Judgment is basically an agreement from the debtor business that they owe a specified amount to a creditor without going to court. Typically it will include the original amount claimed by the creditor, attorney fees, back interest on the debt and court costs for filing the original lawsuit.
When a creditor agrees to an out-of-court settlement after filing a lawsuit, this is their collateral for the settlement in case the debtor defaults on the settlement terms. It is used primarily when a payment plan is accepted by the creditor (rather than a lump-sum payment) and saves them from having to file a new lawsuit if the debtor business defaults on the payment terms with a settlement. Typically, the agreed judgment is dropped once all payments are received and they do not reflect on the client's credit report.
By signing an Agreed Judgment, a debtor business indicates they "agree" to the full amount due (plus extra expenses) if they do not comply with the terms of the settlement.
These are very common and should be expected under the above circumstances so let your clients know it is simply part of the deal once a settlement is negotiated.
I suggest you NEVER OFFER an agreed judgment during negotiations, rather wait to see if the creditor's attroney will require one. If one is required, ask if they will hold it and not FILE it for record unless & until there is a default on the payment terms. This is always negotiable.
Do not be surprised if you encounter these during your negotiations and ALWAYS feel free to contact me if you have any questions during your negotiation process. I am here to provide whatever guidance I am able for those that have invested in my commercial debt resolution Business Plan System.
Scott F. Soape
Monday, June 23, 2008
Business Broker Referrals
I strongly encourage anyone in this profession to build referral relationships with as many Business Brokers in your area as possible.
Business Brokers list various businesses for sale and match them with interested buyers. They earn a commission based on the sale price of the business (usually 10%). They also assist in valuing a business and make recommendations to enhance that value before a sale. This sometimes entails cleaning up existing debts.
Due to the current economic conditions, there are many business owners trying to sell their businesses but finding it difficult given their problem debts. You will find most Business Brokers very receptive when you approach them and offer your service in negotiating discounted settlements before a sale. Your successful efforts not only benefit the business owner but also the broker by making the business more marketable and increasing their commission with a higher net sales price.
Most businesses in this situation will have several cases to work. In addition, your fees will be higher since there is no need to cap them. By tying the settlement payments AND your fee into the proceeds of the sale, everyone is assured payment from escrow at closing.
All parties benefit:
1. The owner gets more money.
2. The broker gets an easier sale and a higher commission.
3. The buyer gets a clean balance sheet.
4. The creditors get cash.
5. You get a substantial fee with assured payment.
Do a little on line research soon and locate business brokers in your area. Send them a short letter about your service and follow-up with a phone call a few days later. You will be surprised at how easy it is to build several steady referral relationships with these folks and have them send business to you.
Scott F. Soape
Business Brokers list various businesses for sale and match them with interested buyers. They earn a commission based on the sale price of the business (usually 10%). They also assist in valuing a business and make recommendations to enhance that value before a sale. This sometimes entails cleaning up existing debts.
Due to the current economic conditions, there are many business owners trying to sell their businesses but finding it difficult given their problem debts. You will find most Business Brokers very receptive when you approach them and offer your service in negotiating discounted settlements before a sale. Your successful efforts not only benefit the business owner but also the broker by making the business more marketable and increasing their commission with a higher net sales price.
Most businesses in this situation will have several cases to work. In addition, your fees will be higher since there is no need to cap them. By tying the settlement payments AND your fee into the proceeds of the sale, everyone is assured payment from escrow at closing.
All parties benefit:
1. The owner gets more money.
2. The broker gets an easier sale and a higher commission.
3. The buyer gets a clean balance sheet.
4. The creditors get cash.
5. You get a substantial fee with assured payment.
Do a little on line research soon and locate business brokers in your area. Send them a short letter about your service and follow-up with a phone call a few days later. You will be surprised at how easy it is to build several steady referral relationships with these folks and have them send business to you.
Scott F. Soape
Wednesday, June 11, 2008
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
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
Sunday, June 1, 2008
Judgment Collectors
I have recently begun an email marketing campaign offering my Business Plan System to judgment collectors as an additional source of revenues.
Since developing my training program, I have tried to occasionally target specific professions with people possessing complimentary skills for commercial debt resolution. Many of these professionals have found they can quickly add extra income to their existing practices by incorporating my proven techniques. CPAs, Bookkeepers, Insurance Agents, Financial Planners and other professionals have found this business offers a new way to generate cash flow and often create new clients for their regular business.
If you have received an email regarding my program, I hope you will take the time to seriously consider how commercial debt resolution might fit with your existing business and add a new source of revenues without detracting from or diluting your other efforts.
Scott F. Soape
Since developing my training program, I have tried to occasionally target specific professions with people possessing complimentary skills for commercial debt resolution. Many of these professionals have found they can quickly add extra income to their existing practices by incorporating my proven techniques. CPAs, Bookkeepers, Insurance Agents, Financial Planners and other professionals have found this business offers a new way to generate cash flow and often create new clients for their regular business.
If you have received an email regarding my program, I hope you will take the time to seriously consider how commercial debt resolution might fit with your existing business and add a new source of revenues without detracting from or diluting your other efforts.
Scott F. Soape
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