All of our clients here at Bridge Management Consulting ask the same question
during our initial consultation. How much will the Offer in Compromise cost?
Unfortunately there is no simple answer, every situation is different. The
Banker or the SBA workout offer needs to take everything into consideration
in order to get an OIC accepted to release the defaulted business owner of
his/her personal guarantee. A few main factors to consider are; how much you
owe, the assets exposed on your personal guarantee, and future earning
potential. It takes a good amount of work to put comprehensive package
together to submit an acceptable Offer In Compromise, as well as a strong
stomach to negotiate these types of settlements. Ryan Lineham and Sean Rosser
- Debt Consultants- Bridge Management Consulting - Ryan@BridgeMgt.com
Just to clarify, there is not an equation that can easily determine how much
a borrower can settle for. Sure, there are numbers that go into, but there is
often a certainly level of subjectivity. That's where a workout consultant
really adds value. If it were simply a formula, guys like us wouldn't be so
busy helping clients settle their debt. Yes, the basic premise of a
settlement is to determine what will yield a better result: a lawsuit or a
settlement? But it's also important to note that there are also many
non-financial factors that enter into the decision.
Jason Milleisen, Founder, Distressed Loan Advisors
Finding the right number for an Offer in Compromise proposal is not as hard as many people think. The Offer in Compromise has a direct connection to an equation that is very easy for a professional with the proper experience to quantify. Joel Stiner, the SBA's Commercial Loan Service Center Director, defines exactly how they determine what they will accept for an Offer in Compromise. Both Jason and Ryan touched on the points that they do not accept an offer if you have exposed assets, but they did not get to the most important terminology. An acceptable OIC package must be superior in value to the value obtained through, "reasonable enforced collection efforts." This means that if the lender or SBA sue the borrowing entity and guarantors, the value they will obtain, after costs, is the value you must beat to gain acceptance. There are always variables and I have noticed lenders can get more emotional than dealing directly with SBA representatives, but in the end this is the only equation that matters for success.
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Adam Gleason
Senior Strategist
Second Wind Consultants.
"How much will they settle for?" is also the most common question I get from
clients. I think it's important to note that settlements are based on
financial hardship, as opposed to settling for the sake of settling. I often
speak with people who have the money to pay their debt in full, and want to
know how I can help. The answer? I can't. The reason the SBA chooses to
settle is because it makes business sense, so if you have the money to pay,
do NOT expect a settlement.
Jason Milleisen, Founder, Distressed Loan Advisors
DLA | Performer | 11/9/2012 - 10:09 pm
Just to clarify, there is not an equation that can easily determine how much
a borrower can settle for. Sure, there are numbers that go into, but there is
often a certainly level of subjectivity. That's where a workout consultant
really adds value. If it were simply a formula, guys like us wouldn't be so
busy helping clients settle their debt. Yes, the basic premise of a
settlement is to determine what will yield a better result: a lawsuit or a
settlement? But it's also important to note that there are also many
non-financial factors that enter into the decision.
agleason | Window Shopper | 10/23/2012 - 4:41 pm
BMT | Window Shopper | 10/17/2012 - 9:31 pm
policy - thus, not a lot of room to negotiate.
We agree. If you have the money - settle and move on - no sense in fighting
something you can't win.
DLA | Performer | 10/17/2012 - 8:43 pm
clients. I think it's important to note that settlements are based on
financial hardship, as opposed to settling for the sake of settling. I often
speak with people who have the money to pay their debt in full, and want to
know how I can help. The answer? I can't. The reason the SBA chooses to
settle is because it makes business sense, so if you have the money to pay,
do NOT expect a settlement.
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