The answer lies in knowing what your opposition wants.  You can control the outcome of any negotiation or transaction if you know what your opposition wants.  Instead of focusing on the desires of our clients; “my client wants to keep his home” , “my client wants his PG released”, “my client wants to avoid a judgement”, we instead focus of what the banker wants, and from our experience in workout we know exactly what that is.  Through delivering what the banker is seeking we simultaneously achieve our objectives.  This happens because the bank wants to work with us.  We already know what they need, when they need it, and we cooperate immediately.  If someone does have real estate, they need to know the liquidated value and how much is owed against it.  If someone is a high earner, they need to see their monthly personal expenses along with their recent tax returns.

We give them this information up front, and if there is exposed equity or liquid cash, we settle for an agreed upon amount that covers the client’s liquidated net worth.  The bank gets what it wants, a settlement short of a legal battle that is equal to or greater than what they would experience through a forced liquidation or bankruptcy.  And if you’ve noticed, we too have achieved our objectives.  We worked with the bank so there is no judgement (likely),  we account for the equity in real estate in a liquidation scenario and therefore our client keeps their home, and because we show the bank the required monthly expenses of our clients, their income is also not a stake.  Instead of picking a fight, we give the banker what they want as quickly as possible and all of a sudden your recent enemy becomes an ally.

Many bankers are astonished at this approach as many borrowers in default will avoid the bank, have horrible communication, do not cooperate with the data and documents requested of them, and when they do finally communicate with the bank, the first words out of their mouths are “I want this or I need that”…. That doesn’t work.  You need to know what the banker wants and find out a way for both sides to be successful.  Deliver the opposition what they need and you too will succeed.

So this all begs the question… What does the banker want? Simple, the want to protect their SBA guaranty (for SBA loans) and they want a settlement offer that actually reflects the value of assets and of the guarantor, and finally, they want cooperation.  The bankers we deal with have hundred of defaulted loans they are currently working on in any given moment.  Cooperation, documentation, honesty, respect of their binding regulations, and adequate settlement are the only things they are looking for.

This is where we come in. Recently I dealt with a high earner who had high income and multiple properties…. We settled almost $300,000 in debt for $20,000… I knew what the banker needed.  I did not dodge him, I did not express what my client wanted or needed, I cooperated completely.  Without him having to ask me I got all of the documents nessary to support both the bank and the SBA’s regulations and helped the bank secure its SBA guaranty… And when all the facts were laid out, the real estate had no value in today’s economy and my clients monthly expenses were deemed justified and his income was not at jeopardy.

I knew what my opponent needed, I gave it to him, we became allies,and together we both won.

Call us, 413-584-2581, we can do the same for you.

They may be right!

There are stringent rules that govern collection practices and credit reporting and most major creditors violate them every day.  They call friends and family, they call you when you have asked for communication only by mail. They have many aspects that are blatantly out of line.

How do you fight back?  You owe the debt, what can you do?

Ask for verification.  Ask for how they are calculating fees and interest in writing.  Ask for verification that you originally signed for the credit and for the charges that make up the debts they are trying to get you to pay.  How about asking for proof they are even allowed to collect a debt in your state and what the statute of limitations are in your state?

There are tons of hoops that creditors are supposed to be jumping through, but unless you show them you know where they are the dog and pony show will go on will creditors simply marching around the obstructions.

Use the magic word, it’s not please, it’s Verify.

Several weeks ago I presented the bank with a very aggressive settlement offer. I presented my clients financials, and expected the bank to realize that although the offer was small, it was all that my client would ever be able to afford.

Unfortunately, the banks lawyer told me that they had a hard stance on not passing any offer through to the SBA that was under 30%.  Instead of giving up, I called the lawyer and asked him where they expected to get that kind of settlement offer. We went back and forth for some time, but finally he came to the realization that it would be better for him to accept a small offer, than legally pursue my client for something he does not have.

Although we did not come to a final settlement this week, I plan on wrapping this up next week with an offer that my client can actually afford. Once again, logic and common sense prevails and leads to success!

Short sales, while becoming a more popular alternative to foreclosure, are extremely difficult to navigate and complete successfully.  The process takes months, the buyer must be both flexible and patient, the guarantor must be smart and save cash reserves for future settlements while in this period of time where he is not paying his mortgage, the bank must do its appraisals and BPOs, HUD1s are exchanged, negotiations take place, and finally a closing is schedule… At which point the only remaining concern is that the buyer’s financing can close on time. Using a third party consultant or representative is extremely important.  They come with experience, the separate you from your creditors, and if they are good, they will maximize you debt reduction… This is what we do every day

The client I referenced early not only eliminated over $200,000 in debt, avoided foreclosure and auction, but did not pay his mortgage for over a year which allowed him to build funds to settle his other debts.  A huge success all around.  Many would have abandoned when things got tough, when foreclosure notices we sent from the bank… We did not and we won!  We made the best of a difficult situation, the buyer got a good price, the bank was able to turn the collateral into cas, and my client was able to avoid an auction.

I currently have two workouts that were in a holding pattern waiting for the bank.  The bank had denied the initial offer as “too low” which is not unusual.  What is unusual, is the fact that the bank refused to give me details.

I asked to be provided with where, in my client’s financials, the bank saw the money he must have to increase his offer and was met with a wall.  The bank has a right to not endorse the offer, but they have no right to not tell you why.  There has to be communication to figure out what they have an issue with so you can fix the issue and proceed.

After meeting this wall to the point where the files were to be sent to the Department of Justice for collections, I decided it had been long enough.  I was done playing the bank’s game.

The benefit of doing many Offers in Compromise through the years is that our office has a lot of contact information at the SBA.  I called one of these contacts and then sent her an email and laid out my case.  I let her know I am more than happy to increase the offer if she could tell me where the bank saw money I could have the client gather for them.  The SBA loan officer did not simply review the Offer as I had hoped, but she did provide me with a set of emails for the various SBA offices that the bank uses to submit their own offer packages.

This will force the SBA to contact the bank on my client’s behalf and ask why it was not endorsed and give my client and therefore me the letter stating the bank’s problems and more importantly, the ammunition I need to complete the Offers.  Sometimes if they bar the front door you need to find a window or another door to make your way in.

This can be due to many factors, but the workout strategy and Second Wind has never failed.  The most common issue I see is when client’s are too emotionally attached to their businesses and attempt to work out the debt despite the business not truly being viable.

On friday I concluded a relationship with a client who was honorable and paid us our due for the success we had achieved for him thus far.  We settled over Five-Hundred Thousand dollars in debt and he only paid less than Forty-Five Thousand to the creditors.  A huge victory.  Not to mention one of the debts was his SBA note and so he will not have to worry about the federal government coming to get him.  The client was happy with our success and though he still have hundreds of thousands of dollars in credit card debt, he decided he could not pay for the expert advice and negotiations of Second Wind.

The total fees were tallied and the client wired us a final payment.

Along with the respect of this office, for being a client who stands by his word to pay us for our work, I gave this individual advice and strategies to move forward as well as sharing all of the relevant spreadsheet and conversations I was working on with the creditor.  We will continue to give coaching where needed, even though the client has terminated the normal Second Wind relationship.

Some may view the fact that the business could not produce enough revenue to fund a workout as a failure.  I view the fact that the client will still receive aid and, even more importantly the fact that he stood by his word and even though he could have attempted to run away and use some of our payment for applying to settlements, as a major success.  We succeeded in stripping massive quantities of debt and in keeping a positive relationship with the client, despite his financial condition.

I would have liked to work till the client had no debt, but instead we gave a valuable service while employed by the client and even more valuable tools to continue without us.

Our solution? We find either other buyers, other lenders, or both.  We do not let workouts fail due to barriers.  The debt forgiveness is too important.  We can introduce Hard money loans, high interest rates – but it gets the job done, we explore networks of lenders from private investors to large lending institutions, and if all that fails, we find a new buyer.  We need to focus on whats important; saving the hundreds of thousands and in some cases millions of debt that are choking the guarantors and not get caught up on interest rates, credit scores, and banks that won’t lend… With cooperation and patience from our clients we always succeed.

Recently we had a man who was doing a cash-out refinance on his home to have the cash to purchase the assets of a local small services company, saving the business opportunity and saving jobs for the employees.  He had over $300,000 in equity in his home, a decent credit score, and a decent income, not to mention the fact he only needed to borrow $45,000 above what his first mortgage was, and he was initially denied credit from a local bank.  Instead of giving up, we went through a group of lenders and found a private lending institution that qualified him for the refinance… Again we were promised the normal 60 days or less from this bank, and the process in total ended up taking over 100 days (another barrier to the process), but in the end the closing will occur tomorrow.  The funds will then be available to save this distressed business opportunity.

Saving America one business at a time

When working to settle credit card debt, I have found through experience that it pays to wait until the end of the month.  Collection agents that work for the credit card companies, law offices, and private collection firms all have monthly quotas they have to meet.  I have found that this can be exploited in order to get the best settlement possible.

I had success this week in settling one of my clients Bank of America business cards. I spoke with the collection firm handling the account in the middle of the month, and they gave me an offer for a 30% payoff in one lump sum. Instead of accepting the deal, I waited until last Thursday (the 22^nd), and submitted a lowball counteroffer of 22%. This morning the creditor got back to me, letting me know that they would accept a 25% settlement payable over three months! With only a few days left in the month they accepted the offer in order to make their monthly quota.

I was recently dealing with a situation which required the bank’s appraisal process to occur in a VERY short period of time. We already had our appraisal conducted, but needed the bank to get theirs done (due to the bank’s requirements for a private sale of assets). Here’s the caveat – it needed to be done in less than TWO WEEKS, as my client was moving out of his rented space and was planning on junking half of the equipment if this sale we put together didn’t go through.

Getting a bank to do ANYTHING, and I mean ANYTHING AT ALL in a period of two weeks is extremely difficult. Banks are big, sloth-like, bureaucratic beasts that never seem to get their acts together when needed most. Knowing this, I engaged the banker I was working with as soon as possible, explaining the situation and indicated just how important speed was in this case. I really emphasized that we had mutually beneficial interests – moving fast would benefit the bank and my client in preserving the opportunity for a sale.

The result? The banker sent out their appraiser within 48 hours to examine the assets. The numbers came back exactly where we needed to be and the sale was accepted. This is a prime example of getting the bank to work on OUR schedule.

I had great success this week in one of the areas that has historically been the toughest to deal with, a landlord issue. Throughout my experience, I have found that landlords are much more difficult to deal with than banks on all matters regarding settling an account for less than the total amount owed. In this particular case, my client owed $130k to their old landlord who they were not leasing from any more. They had closed their doors and liquidated the business, but this outstanding debt to the landlord stayed with them. The landlord had filed a judgment against my client in the hopes that they would someday be able to collect the full amount. After reaching out to the landlord, and realizing that there was no reasoning with him, I reached out to the landlords lawyer and explained the plight of my clients.                                                                                                                                             They had lost their only means of income when the business failed, and had not been able to find jobs since. They had no personal funds because they had invested everything they had into their failed business. I clearly laid out my case to the landlords lawyer, showing him tax returns and personal financial statements reflecting the dire financial situation that my client was in, along with an offer to pay 15% of the outstanding debt over the course of two months to settle the debt in full. With a clear and logical argument as to why this was the best offer they would ever hope to get, the lawyer accepted our offer. My client will finally be able to settle out this debt and move on with his life.