REPOST: Mediation can help keep debtors out of the courtroom

Patrick McNamara elaborates on the Arizona Daily Star the important role of mediation in helping debtors avoid lawsuits, maintain control of their decision-making, and prevent them from receiving negative marks on credit reports. Read his full article below. 

Image Source: dailyfinance.com

The country’s consumption-centric culture fuels much of our economic engine.

But that drive to buy, on full display on days like Black Friday, also causes the accumulation of mountains of consumer debt, which if unpaid starts a cycle that often ends up in a courtroom somewhere.

It happens often enough that one Pima County judge has sought a less litigious way to resolve debt-collection issues that benefits both debtor and creditors and helps minimize the backlog of cases in the court.

 Creditors have to find ways to collect on those back bills. It might start with calls from collection agencies, but very often creditors resort to the courts to get their due.

“Mediation allows people to maintain control of the decision making,” said Anne Fisher Segal, a Pima County Justice Court judge.

Segal has been promoting mediation as an alternative to lawsuits in all the debt-related cases in her courtroom.

She said the process allows creditors and debtors to come together in a neutral setting to discuss possible solutions to outstanding debts.

Since 2012, about 60 cases on Segal’s calendar have been resolved through mediation.

To get the process started, Segal said the first thing a person should do when served with a legal complaint notifying them of a lawsuit is to answer the complaint.

Any form of answer will do — from a formal document written in appropriate legalese to a hand-written letter, Segal said.

This lets the court know a person has received notification of the lawsuit. Justice court, which hears cases where $10,000 or less is at stake, has form documents online and at the court to help defendants file answers. They can be found at www.jp.pima.gov/home.htm

More importantly, for debtors at least, filing an answer stops the clock from ticking before a creditor can request a default judgment.

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A creditor can seek the default judgment if a complaint goes unanswered for 20 days. After that, the debtor receives notification of the request and gets 10 more days to answer before a judge can award the judgment.

“It’s a tool that’s used a lot by lawyers, and it may not be as understandable to the nonrepresented litigant,” Segal said of such requests for judgments.

For the debtor, however, default judgment signifies the start of an aggressive collection process that can result in wage garnishment and seizure of all but $300 of the debtor’s bank accounts.

Mediation as alternative to lawsuits also can prevent a consumer from receiving negative marks on credit reports.

For a debtor who requests mediation, the benefits of mediation can be substantial. Consider credit-card debt, for instance, a debt category that accounts for much of the caseload in justice court.

With these debts, many times the holder of the debt isn’t the original creditor. Federal regulations require banking institutions to get outstanding credit-card debt off their books after 180 days of delinquency.

The banks often resort to selling that debt to companies that seek to collect. That debt often changes hand numerous times before the final holder ever moves to collect.

 “They generally have some negotiation room,” Suzanne Matthews said. Matthews is a retired lawyer from Texas now living in Tucson who volunteers as a mediator in Segal’s courtroom.

She said the creditors often show a willingness to work with debtors in collections cases, particularly in credit-card debt cases, because the debt usually was purchased for a fraction of the face value.

In addition, the mediation takes place in a confidential, impartial forum. Discussions held during mediation remain private between the two parties and do not become part of the court record.

As a mediator, Matthews said she’s not there to hand out legal advice. Instead, a mediator facilitates the negotiations with the goal of reaching an agreement.

Through the mediation process, creditors might agree to scheduled payment plans and in some cases agree to reduce settlement amounts.

Of course, agreements made through mediation do carry the force of law.

Just as with any contract, if a participant doesn’t meet the agreed-upon obligations, legal action can result.

Charles Whitehill, a retired lawyer who represented creditors in debt collections, said he always tried to help debtors find amicable agreements, often through mediation, to solve debt issues.

“I never had a debtor walk out of my office mad at me,” Whitehill said.

Whitehill practiced law in Tucson for decades starting in the 1950s. He worked in bankruptcies and business law and represented creditors like department stores and other retailers.

“People like to be treated like people, not like numbers,” he said.

That’s the whole point — treating people with fairness and attempting to make the legal system less intimidating, Segal said.

“Don’t be afraid of the legal system,” she said. “We don’t have debtors prisons.”

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Amero Partners is a team of financial experts that provides mediation and financial advice to diverse clients. Follow this Twitter account for the latest news and updates in the financial industry.

REPOST: Seven Things CEOs Need To Know About The 'Crowd'

The 'crowd economy' serves as a democratized channel of financial flows. This Forbes article discusses the ways entrepreneurs could strategically monetize the ‘power of the crowd’ and use it to their advantage.

Image Source: forbes.com

The crowd: you’ve probably already heard about this unnamed mass disrupting business models, changing work paradigms and even changing the way we find soon-to-be superstars (I’m talking about you, American Idol, Project Runway and The Voice). Companies incorporating the crowd into their business models are in vogue, and we’ve been seeing investors spend big bucks on businesses powering the crowd economy for the past year.

But just what should CEOs and business owners know about the crowd? Will it significantly change startups as we know them in the long run? Will it help large companies tap mass markets? Or is it only relevant for small businesses or tech startups that want to crowdfund capital?

Let’s separate the hype and realities of crowd-based funding, sourcing, and lending, and identify what you should focus on in order to participate in the crowd economy today:

1. You can put the crowd to work for free (and the crowd may even pay you for the opportunity). The beauty and power of the crowd economy is that anyone can participate — and in the right situations, the crowd will work for nothing. Wikipedia has enlisted the help of professors and universities to help maintain and update articles on their site. Simon Cowell created an entire business industry around crowdsourcing talent discovery with American Idol and the X-Factor. He’s not just making money from the discovery process either — he’s also raking it in through promotion and the eventual success of the artists (he ultimately gets paid by the customers that help select the artist).
2. You can pick who and what you want — since the crowd now has a reputation. With all kinds of information is readily available on the Internet, the crowd is no longer one type of person. Airbnb built an entire business around the concept of everyday people renting empty spaces in their homes to total strangers. By sharing the information about their listings, availabilities, and reputations, they were able to monetize and become a thriving business. That’s not all the Internet does. Need market research? Look no further than Mechanical Turk, Google Research, or UserTesting. Hiring? AngelList lets you ask your friends for referrals and give them a bonus if they find you a candidate.
3. You can access global talent and resources right from your desk chair. Just the other day I ordered a pair of shoes on eBay. They were shipped to me directly from Shenzen, China. The crowd doesn’t operate exclusively in the U.S. — and that’s a good thing. Aside from purchasing physical goods from the crowd (eBay, Etsy), you can also hire freelancers to work from across the country on sites like oDesk, Elance, and 99 Designs. Screen and hire quality, affordable contractors for your business, all without leaving your chair.
4. You can also access local and hyperlocal talent and resources. Sure, the crowd is global — but it is also extremely local and mobile. Companies like Gigwalk and Taskrabbit built their business around crowdsourcing errands for busy people — from picking up dog food to doing store-to-store product research. Especially in such a tough economy, the freelance economy is booming. Your local neighbors will jump at the chance to make some cash and simplify your life. Companies like Zaarly (disclosure: I founded it) have spawned a new generation of entrepreneurs by helping people make money doing what they love. Sometimes you just need to explore your local community to find what you need—and the crowd is making that easy.

• You can ask for a loan from your friends (or millions of strangers). Crowdlending already exists (and has for a while), and business is booming. According to LendingClub, they have funded over 100,000 loans for more than $1.3 billion. That comes out to almost $120 million in interest paid to investors. With those kinds of numbers, it’s only a matter of time before we see a company that is focused exclusively on helping crowdlend business loans (for now, Lending Club does offer certain business loans).

• You can sell products and services that don’t yet exist. Sites like Kickstarter don’t yet let you sell equity or a stake in your company to the crowd, but they do let you pre-sell your business products and services. You can pre-sell millions of dollars’ worth of product if your campaign hits the right nerve (and it’s a great way to test a concept before you ever spend a dime on product development).

• The SEC is making strides to allow for equity-based crowdfunding. Today, your company can use certain provisions of the 2012 JOBS Act to advertise to accredited investors (individuals with a net worth over $1 million) on platforms like AngelList or WeFunder, essentially allowing you to sell a portion of the company (and its future returns) to the crowd. Soon enough, experts expect the SEC to implement crowdfunding for the masses – allowing everyday individuals to invest in anything from a local restaurant to a high-growth startup. We are still waiting for those rulings as of September 2013, but with any luck you’ll soon be able to ask anyone in the crowd to help fund your business (for now, you’re limited to accredited investors — be sure to ask your lawyer to help if you have questions).

The crowd might have been introduced in 2012, but I believe it’s just starting to take off now. Can your business save money through the crowd? Are there ideas, product features or promotions that can be crowd-powered? Do new funding mechanisms, from Kickstarter and Indiegogo to Lending Club and AngelList, offer a unique model for your business? In the near future, playing to the crowd might be just the ticket for your business.

Amero Acquisition Partners provides business mediation services through a solution-focused approach to optimize cooperation among clients and help them achieve their preferred future. Visit this website to learn how the company helps hard-pressed businesses efficiently resolve highly specialized cases.

When businesses let go and let someone else

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Growing a company is not an easy task, especially with continually evolving demands in several aspects of the business. The factors that allow a business to thrive vary in every industry, but there is one in common: quality people.

Today, getting the right person for the job is not constrained by availability within the vicinity. Hiring people from another location is increasingly viable. Asia-based regional offices of global firms exercise this regularly, having built the ‘expat’ communities that eventually blossomed to full outsourcing workforces in East and Southeast Asian countries.


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Still, traditional company management, defined by who ultimately has control over the kind of talent hired, may not always be open to the idea of outsourcing. Understandably, there might be apprehensions for some companies who cannot physically see how things are being done. With costs adding to the constant pressure to remain competitive, companies should learn to relinquish some control and trust the mechanisms they set in motion on the other side of the world. A manager might not be able to physically oversee the work of a team hired for a specific job, but that doesn't mean that things are bound to go awry.

Those who employ these services can constantly give feedback about the work done virtually, in real time. Companies like Amero Acquisition Partners offering specialized customer services provide frequent progress reports to clients. This part of the process is not just for information purposes but also for relationship building. More importantly, a culture of trust and transparency overpowers distance in building healthy business relationships across continents.


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Read more about Amero Acquisition Partners on this website.