No matter what kind of case we mediate, we eventually run across that tough one where one side admits owing money or agrees to pay and they don’t have the means to do it.  Is all hope lost?  Maybe, but maybe not!  Unfortunately many cases like this that could settle don’t because the mediator or parties haven’t explored all possible solutions.

Provided below are a few ways you might consider breaking impasse when settlement seems improbable:

1. Graduated payments.   Can something be paid now?  Start with a low payment and increase the amount over time.  For example, pay “x” amount now for 6 months, then “x +y” for 12, then “x+y+z” for the next 12, and so on.
2. Delay payments.              Delay the first payment for 60 days, for example.
3. Consent Judgment (without a fieri facias (fi.fa.).  Offer the creditor a consent judgment of a higher amount than the amount owed to encourage payment.  For example, the creditor could take a consent judgment for $100,000 (cap); however, if the debtor makes all payments as agreed and pays off $30,000, based on agreed upon terms, the $70,000 difference would be forgiven.  Since no fi.fa. is issued, no collection efforts take place other than the debtor’s voluntary payments and there are no negative effects on the debtor’s credit report.
4. Negotiate the cap.          Instead of asking for a $100,000 cap as in the above example, negotiate a $50,000 cap.  Then only $20,000 would be forgiven if payments are paid as agreed and the creditor still received $30,000.  This is a great and flexible tool that I have found often helps to reach an agreement.  Start off with the high cap and negotiate toward a lower cap.
5. Consent Judgment (with a fi.fa.).             Offer a consent judgment with a fi.fa. but with the agreement the creditor will not pursue collection efforts if payments are made as agreed (i.e., an offer of forbearance).  This is a stronger position for the creditor who may be concerned about having to potentially litigate a possible defense to a fi.fa.
6. Consent judgment (w/no payments).    The debtor may wish to offer a consent judgment to the creditor for a flat negotiated amount with no payments to avoid further litigation costs.
7. Offer (longer) grace periods.      Instead of giving 3 days, see if the creditor will offer 7.
8. Offer multiple grace periods.      See if an additional grace period or periods would relieve the anxiety of the debtor.
9. Collateral.           Determine if the creditor has collateral to offer as a security interest.  Have the parties prepare a promissory note and security deed if applicable.  This may or may not involve payments and could involve a security interest only.
10. Interest Forgiveness.      If the creditor wishes to charge interest, see if the interest could be forgiven or reduced if the debtor makes payments as agreed.
11. Balloon Payment.            See if the parties would agree to minimal payments for a future balloon payment to give the debtor time to recover financially.
12. Seek other forms of payment.    Could the debtor offer stock, a business interest, split a retirement account or offer some other alternative payment to cash.

These are several ideas in an area ripe for creativity.  They may or may not work, but at least you know you tried several options, and one thing’s for sure, the parties will appreciate your efforts!