A Speedy Settlement

 One of the benefits my clients receive when they retain my services to negotiate an out-of-court settlement on their behalf is my long-term relationship with many creditor attorneys.  These attorneys know from experience they can rely on my representations for my clients and I know how their best deals are typically structured.

Yesterday, I was hired to negotiate a settlement on a lawsuit recently filed by a creditor I have dealt with regularly for over 20 years.  After our initial consultation, I assured my client I should be able to reach acceptable settlement terms for them in a fairly short period of time.  (The norm for this particular creditor and their attorney is 1 to 3 weeks depending on the circumstances of each claim and they NEVER accept less than 50%.)

This morning, I sent a carefully worded offer to the attorney outlining my client's need for a 50% discount and monthly payments based on what I already knew they had agreed to with many other similar claims.

I received an acceptance shortly after noon this same day.

My client is now able to put the concern of a lawsuit behind them without yet being served AND enjoy manageable payments on 50% of the claim.

Graduated Payments

 I negotiated a settlement last month for a client with a company that had been heavily impacted by the COVID pandemic.  Although his business was beginning to turn around, revenues were still very low and he was unable to commit to more than $100 per month on any settlement.

The creditor was pressing for much higher payments to retire their claim as quickly as possible but this would have resulted in a quick default based on our revenue projections.

Using some creative thinking, I was able to convince the creditor and their attorney to accept graduated payments starting at $100 per month with payments increasing by $50 every 6 months resulting in the final few payments eventually reaching $350 each.  This arrangement allowed my client time to rebuild his business while providing the creditor with payments that would increase over time and eventually retire the debt.

Properly Worded Settlement Offers

 While the need for a discount on a claim may be obvious to a debtor business owner, the commercial creditor may need some convincing.

Properly worded offers can often make the difference.

Simply telling a creditor you are unable to pay a debt and lobbing an offer for less their way is rarely good enough.  Likewise, threatening them with bankruptcy is a poor strategy for a discounted settlement.

Most creditors need to be convinced they should compromise on their claims.  Providing some background on the events that led to the past due account and inability to pay will give the creditor some understanding of a debtor company's financial situation and help bring them to the negotiation table.

If a creditor understands they risk non-payment without some form of compromise or flexible repayment terms, they are more likely to see they are actually part of the solution to receiving at least a partial payment.

Merchant Cash Advance Loans

 My office has been working more and more MCA loans over the past many months with about a dozen cases currently in various stages of settlement negotiations.

Most of my clients involved in these claims took on Merchant Cash Advance loans when sales started to decline during the onset of the COVID pandemic last year.  After struggling to meet terms of repayment, they are all now in default and have been sued for the outstanding balances.

Fees and interest can easily range from 40% to 300% of the amount borrowed

Unlike conventional loans, MCA loans can carry repayment percentage rates substantially higher than what would normally be considered illegal under usury laws.  Since they are tied to a percentage of a company's future sales, they are not technically considered loans and payments are typically set as daily or weekly ACH withdrawals from the borrowers bank account.  Unless they are tied to a percentage of credit card sales, payments remain the same regardless of whether actual sales are up or down.

A Financing Option of Last Resort

I encourage any business owner to carefully consider whether or not the immediate infusion of cash will be worth the long term commitment of repayment with a Merchant Cash Advance loan.

Bank Account Holds

 One of the most frustrating situations some of my clients have encountered is a bank account garnishment.

These arise when a commercial creditor moves to enforce a judgment they have been awarded by the court and they can completely disrupt normal business activities for the debtor company.  Once a garnishment has been placed with the bank, they are required to immediately freeze all related accounts.

Removing a garnishment is never a quick process.

Creditors typically require at least partial payment on their claim along with the assurance of additional payments for the full amount before they will agree to release a garnishment.  Unfortunately, this often becomes a "catch 22" situation since payment may be impossible until the hold is lifted.  The cases I have dealt with required some creative solutions.

Even after a creditor agrees to release a garnishment, the bank must be satisfied there will be no liability on their part before they unfreeze accounts.  This often requires a review by their legal counsel and may involve some extra expense to the debtor company for related attorney's fees.

The best way to avoid a bank account hold is to communicate with creditors and arrange acceptable payment terms.  Even if a judgment has already been awarded, most commercial creditors prefer voluntary payment within the debtor company's means.

1st Quarter Client Savings of $290,500

The 1st quarter of 2021 was a busy one and a great start to the year for my clients.  Working with total claims of $584,700, I was able to negotiate savings for my clients of over $290,500.

A few cases only involved negotiating manageable monthly payments on the full claim while others entailed negotiating substantial discounts on my clients' behalf.  As with all settlements I negotiate, the final outcome had to be acceptable to both parties.

A Buyer's Agent

 Occasionally, my role as a commercial debt resolution specialist is misunderstood.  The biggest misconception is that I am helping my clients avoid paying their creditors what they are rightfully owed.  In fact, one of the first things my clients typically tell me is that they want to pay their past due accounts in full but, due to a variety of circumstances, they are just unable.

My job entails convincing my client's commercial creditors to accept less and / or accept payments that my client can manage.

Think of my role as that of a Buyer's Agent in a real estate transaction.  It is my job to get my client the lowest price and the best payment terms.  I cannot force commercial creditors to compromise on their claims any more than a Buyer's Agent can force a home seller to accept less than they want for their property.  Like a home sale, the terms of a debt settlement must work for both parties or there is no deal.

Knowing how to approach a commercial creditor, their attorney or their collection agent and present my client's position to justify a favorable settlement is as important as a Buyer's Agent knowing how to present a purchase offer below the asking price of a property.  Any information I might be able to gather regarding the creditor's position is as important as a Buyer's Agent understanding a seller's motivation to sell.  Maybe they are highly motivated to settle a claim and they are willing to compromise; maybe they are firm on their price.

As an agent and advocate for my client, I always strive to get them the best settlement terms possible on their problem or disputed accounts.  However, the final outcome of any negotiation must be acceptable for both my client and their commercial creditor or there will be no settlement.

A Settlement Savings of 92%

 Last week, I was able to assist a struggling small business and the owner with a sizable problem debt. The company had been sued in Colorado by an equipment leasing firm for $197,000 and the owner was on the hook personally as a guarantor.

My initial negotiations resulted in a settlement offer from the leasing company for $20,000. This was acceptable with my client but I pressed for a little more and finalized negotiations with a $15,000 settlement payable in 30 monthly installments of $500 each at 0% interest.

The result was a savings to my client of $182,000 on the principal claim with a manageable payment plan allowing him to continue business and avoid potential bankruptcy. Counting waived attorney's fees, court costs and interest on the debt, actual saving was more than $185,000.