Another Actual Case

On September 12th, I contacted a business owner who's company had been recently sued. After explaining my offer to negotiate an out-of-court discounted settlement on a no results / no charge basis, he agreed to let me try. I quickly faxed him a contract.

This case involved a worker compensation insurance company suing for past premiums that were due. Since I deal with the attorney for this company on a regular basis, I knew going in what to expect in the way of a settlement. However, I always start my negotiations with them low just in case they're not paying attention. You never know!

The principal amount of the debt was almost $19,000 (plus court costs, attorney's fees and back interest on the debt) so I initially offered $8,500 as a lump-sum payment. I also indicated any higher amount would require at least a two year payment term. They rejected this offer and countered at $15,000 payable with a down payment of $1,000 followed by 24 monthly payments of about $633 each. There would be an 8% interest rate applied to the outstanding balance and the settlement would be secured by an Agreed Judgment (please see previous blog entry of July 4th). My client would also have to pay the court costs of $272 but no attorney's fees (these could have amounted to over $6,300 or 1/3 the principal). This counter offer was comparable to other settlements I had worked with this same creditor and I knew it was their best deal... approximately a 20% discount with some standard provisions.

I presented these terms to my client on September 25th and they accepted on the 29th. As usual, the plaintiff's (creditor's) attorney is preparing all the documents and sending them to me. I will forward them to my client upon receipt of my fee. For this case my fee was set at 30% of the savings and came to over $1,100. The entire process only took a little over 2 weeks and involved a couple of phone calls and one settlement offer letter but ALL parties benefited.

As I have previously stated, the negotiation process need not be complicated or difficult. A simple offer to get the ball rolling is all it takes once you land a client.

Scott F. Soape

Referrals From Bankers

As I have mentioned before (and in my Business Plan System), building a good referral network for new leads is essential to building a strong commercial debt resolution practice. A regular stream of referrals from several different sources can enhance and perhaps even exceed your court case leads.

When you think of the type of business or professional that might come into contact with companies experiencing financial difficulties, bankers should quickly come to mind. Loan officers deal directly with local business owners and are often the first to know when a company is having a problem. It is part of the banker's job to help their commercial loan customer figure out ways to resolve their cash flow problems... primarily so they won't default on their loan(s) with the bank.

Make a few phone calls each week and find out the names of branch managers and / or presidents of banks in and around your area. Send these bankers a short letter offering your service to their commercial customers that might find themselves in financial difficulty. It is important that you let the bankers know you will not be trying to negotiate discounts on the bank loans. Rather, you will assist their customer with their other obligations making more funds available for loan payments.

As with most other marketing efforts, a follow-up phone call will greatly increase your odds of developing a good relationship.

There are many different sources for referrals you can tap into that can help you build a thriving practice. Make a point of contacting these folks on a regular basis and you will soon see a difference in your revenues.

Scott F. Soape

Helpful Websites

There are dozens of great websites that can assist you with your commercial debt resolution practice... locating people, calculating loan payments, identifying company owners, finding phone numbers, identifying referral sources, etc.

Here are just a few FREE sites I use on a regular basis with my practice:

www.ZabaSearch.com lets you plug in a name and state of residence to get all possible listings of past addresses and phone numbers.

www.YellowPages.com will give you phone numbers based on input of an individual or company name & city or an address. It will also give you an address if you input a phone number.

www.Calculator.com will help with calculating payments for payment plan settlements.

www.USPS.com can provide a 4 digit zip code for a specific address.

Of course a simple Google or Yahoo search can provide websites for companies and information about who the owners are. All these free sites make our job easier and ensure we are presenting our service to the right people and providing the right information. Please feel free to leave your comments here for other sites you find helpful in your own practice.

Scott F. Soape

Negotiating Settlements

I think it often comes as a surprise to many people new to this profession that negotiating settlements can be the easiest part of the job. Remember, BOTH parties (creditor & debtor) are motivated to settle their financial disputes.

Creditors know the assurance of some money now is always better than the hope of more money later. Even if a creditor receives a judgment in their favor after filing a lawsuit, they still have to try and collect the money. This can be a long and expensive process with no guarantee they will ever see any money for their efforts. Debtor businesses even have the option to simply close up shop and walk away if there are limited or no assets. They can also hide assets or channel them into areas that cannot be touched by creditors.

Debtors, of course, are almost always happy to pay less than what is actually due or at least set up a manageable payment plan with the creditors. Also, since their income is reliant on staying in business, they prefer not to close up shop and walk away.

There is really no trick or special skill to the negotiation process. Often, simply making an offer to the creditor and waiting for a counter or acceptance is all that is entailed. My turn-key Business Plan System provides all the information needed to successfully begin negotiating settlements immediately and includes suggestions and guidelines for all types of situations.

Don't be put off by thinking you have to be some kind of master negotiator to succeed in this profession. With my guidance, anyone can prosper as a professional commercial debt negotiator.

Scott F. Soape

Ethics - Client Relations

As expressed in my Business Plan System, you must always remember your service has been retained to reach the very best possible settlement terms for your client.

It may be tempting to think the quicker you reach any settlement, the quicker you get paid, but that is a sure way to also quickly work yourself out of this business. Sadly, there are (and probably always will be) a small number of people in this profession who place their own interests ahead of their clients' interests. This unfortunate situation reflects poorly on the rest of us doing our best to provide quality service to our clients and will eventually lead to stricter regulation of the industry.

Here are a few recommendations you may want to incorporate into your practice:

1. Maintain client confidentiality.
2. Initiate negotiations and complete settlements in a timely manner.
3. Clearly state fee arrangements in a written and signed agreement.
4. Accept cases only when legitimate benefits can be provided.
5. Provide written documentation to clients on all settlements.
6. Refer clients to competent legal counsel as needed.
7. Never offer legal advice.
8. Maintain truth in all communications.
9. Avoid conflicts of interest in all cases.
10. Maintain a professional attitude in all communications.

As with all endeavors, if you know you have done your best, you can always be PROUD of your results... and your business should flourish!

Scott F. Soape

Referrals From Creditors

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

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