Yes, You Must Be in Default to Enter into a Workout Negotiation, Universal Default!

One of the more ridiculous practices, but it is very true; you must be in default to engage in a workout negotiation. The bank's logic being, why negotiate a reduction if the borrower is current; obviously they can pay, they surmise.

Unfortunately, any intelligent attempt to demonstrate through projections trends, advance orders, broken contracts, declining orders, etc., falls on deaf ears...no workout discussion until default. Despite the additional reality that if a workout were entered into before default and total destruction and loss, it is possible that greater amounts of borrowed money could be paid back as well as keeping the business going.

With credit cards, it is required that at least 90 days of default is required before a workout will be discussed.

One frequently misunderstood situation, when working out any secured note, or debt, either with banks or leasing companies, if current on credit cards, this infuriates and prevents successful workouts with defaulted secured notes and loans. The banks and lessors and collection agencies or lawyers can check your credit activity and can see if you are current on any other debt...being current on other debts, especially lower priority debts creates a difficult problem for the workout.

When in workout, be in default on everything.