I got an email last week from a woman who had contacted me 3 years ago for help with her defaulted SBA loan. Not unlike many prospects, we had a consultation, and I never heard from her after that. Not every consultation results in a client, so I had no hard feelings that she chose not to hire me. That said, I was eager to hear what had happened since then, and in particular, who she had retained to guide her through the SBA Offer In Compromise process.
I asked her to catch me up, and she explained that her husband insisted on using another consultant because a fellow franchisee had used him and got good results. That consultant has charged her a total of $30,000, and last week the bank obtained a judgment against her and her husband. Ouch. Apparently her consultant was dumbfounded that the bank rejected their SBA settlement offer, and stated that it was a highly unusual result. I delved a little deeper into the situation, at which point I myself became dumbfounded. Based on her situation, it was clear to me in about 30 seconds why the offer was rejected. She then offered an insight that I was already aware of: “It turns out that my guy doesn’t know anything about SBA settlements”. That, my friends, is an expensive lesson.
To save you $30K in exchange for no results, here is what you should be taking away from this article:
1) When it comes to settling debt, hire a specialist, not a generalist. If you had a rare form of cancer, you wouldn’t see a family practitioner just because your friend uses them, you’d see a cancer specialist. Along the same lines, it does you no good to have someone who is a debt settlement “generalist” if you have an SBA loan. The SBA has very specific criteria, and you should not be paying an “expert” to learn the rules as they go. The number of people who tell me that they originally hired an attorney with no SBA experience really astounds me. It’s not a matter of competence (I’m sure most attorneys are competent); it’s a matter of being a subject matter expert about a specific topic.
2) Pay for results, not time. The reason I charge the majority of my fee only upon a successful settlement is because I know that for most people, they don’t want to sink a lot of money into hiring a workout consultant unless they get results. Hourly rates can end up costing you an arm and a leg while leaving you no better off.