Actual Case Examples

 

The following are three examples of Debt Arbitration/Settlement cases providing an inside view of the business of providing solutions for Debt and Credit problems.

 

 

Example I


Business Supply, Inc. has a dispute with Acme Assembly Corp. over Acme's failure to pay an invoice of $12,000 for certain components which were ordered from Business Supply. Unfortunately, neither company knew of the services of a Certified Debt Arbitrator or Certified Debt Specialist beforehand, and so, communication broke down and the problem escalated.

Acme Assembly has some reasons for having failed to pay. Their purchase order for the goods was very specific that the components were part of a very large assembly and timeliness of delivery was crucial. Business Supply delivered the components a full 1 1/2 days after the deadline on the purchase order. Though Acme accepted the shipment, this delay cost several thousands of dollars, and refusing the order would have cost even more time and money. In the interest of a continued business relationship, Acme wanted Business Supply to acknowledge its mistake and correct it. But Business Supply's position was that such minor delays were common business practice and unavoidable it the context of large fulfillments, shipments and deliveries.

 

Eventually, Acme Assembly was referred to you (a Certified Debt Professional) and you take the case. Over a series of several days, you are able to use some friendly, consensus-building techniques of negotiation and communication, and you reach an out-of-court settlement of $4,000 which Acme will pay to Business Supply. Your work has not only saved Acme $8,000 off of the principal amount of the lawsuit, but you've also saved the additional interest, costs, and attorney fees which would have resulted had the case escalated to a lawsuit.

 

The gross fee on this case will normally be 35 % of the $8,000 on the principal that you saved your client. That's $2,800 (plus setup and monthly fees) for a case where the client could have spent thousands more. That's truly a WIN / WIN / WIN situation. One individual CDS can manage a portfolio of 20 cases simultaneously, and rather easily.

Example II

John Q. Public is a consumer and mortgage shopper who, like millions of others, has gotten himself into debt problems with credit cards. He comes to you with seven accounts totaling $35,000. He has a good job, but has realized that with the high interest payments, he'll never get out of debt. Rather than declare bankruptcy, he decides to use your professional CDS services. You arrange settlements with the individual credit card companies for a total amount of $12,250.

Your fees, (at 35% of savings for consumers), are $7,962.50

 

His total payout is $20,212.50 and John was able to save sufficient funds over 12 months and also use three other cards he decided to keep to pay the individual card settlements and your fees. He reduced his total debt from $35,000 to $20,212.50, (58% of what it was), and now it's low enough to be paid off within a foreseable time. The benefit to the card companies is that they didn't lose everything in an inevitable bankruptcy.

Since virtually every consumer with debt problems knows others with similar problems, you are able to receive several referrals from John.

 

 

Example Ill

 

Mr. and Mrs. O. are parents of three children, two of whom are living at home. Their financial problems started in 2002 when Mr. O. lost his job in construction. Since that time, he has been under-employed; his earnings have declined from an average of $52,000 annually between 1999 and 2002 to an average of $26,000 between 2003 and 2006. Starting in 2003, the family's total income has been only $35,000 which Mrs. O earns part of as an administrative assistant at an insurance company. Mr. and Mrs. O have struggled successfully to maintain payments on a home they bought in 1999 since their financial problems began in 2002.

 

Mr. and Mrs. O have also had significant credit card bills since the late 1990's. Despite their financial problems, they avoided default on those debts by making minimum payments between 1999 and 2002. However, the total amount of their credit card debts increased from about $11,000 in 2002 to about $29,000 in 2006, largely due to the accumulation of interest at an average annual rate of 18.5%.

 

Mr. and Mrs. O attempted to make payment arrangements with her credit card lenders so that she could focus on her mortgage obligation. They were told that no payment arrangements were possible and that they should "borrow money to pay off the debts." Mr. and Mrs. O went to consumer credit counseling where they were advised that their budget did not support any payments on credit cards. They were advised to consider chapter 7 bankruptcy in order to eliminate the credit card debts so that they could maintain their payments on the mortgage.

 

In September 2005, Mr. and Mrs. O obtained advice from a bankruptcy lawyer and seriously considered the option of bankruptcy but did not want to be burdened with the lengthy credit consequences. They were referred to you (CDS) by a friend, they were able to set up a monthly payment plan with you that suited their budget and within 3 years are expected to be credit card debt free without the need for bankruptcy.

 

 

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