Debt Collections Legal Solutions

5383 South 900 East | Suite 103 | Salt Lake City, UT 84117(801) 361-0502 | www.juristec.com

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Table of Contents• Juristec Overview

– Comparison to Traditional Solutions– Value Proposition– Proven Results– Why Juristec?

• Appendix A: Market Direction– Increase in Debt to Household Income– Commercial Bank Charge-Offs– Debt Collection Industry

• Appendix B: Juristec Details– Juristec Technology– Juristec Tenets of Excellence– Management Team– Frequently Asked Questions

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Executive Summary

• Juristec automates the process of collection litigation to efficiently and cost effectively manage high volumes of bad debt.

• Our goal is to provide solutions for debt that is currently not being effectively collected including late-stage and small-balance bad debt.

• Our focus is on the needs of our clients and how we can enable them to capture value lost through bad debt.

• Our team has tremendous experience in collection litigation, strategy planning and consulting, and technology implementation for ASP services.

• Our mission is to provide best-in-class technology and services that will enable clients to better manage and collect their bad debt.

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Advantage in Debt Collection Over Traditional Law Firms

LowLow

High

High

Bad

Deb

t Bal

ance

Ability To Pay

$500

$5,000

$50,000

High-balance debtors have a greater likelihood of filing for bankruptcy and defaulting on their debt. Law firms typically settle for what they can get.

Low-balance debtors have a greater capacity to pay off their debt and can make manageable installment payment rather than defaulting.

Clients using Juristec are fundamentally better at collecting on bad debt because clients can collect on “affordable” debt.

WrittenOff

Juristec pushes the cost of each case down making it possible to pursue low-balance debtors that traditional law firms can not pursue

Typical Collections

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Current solutions for collecting late-stage debt are inadequate. Juristec significantly improves the effectiveness of collecting older debts.

*Based on five-year average of Peterson & Simpson’s debt collection law practice. Cases received by Peterson & Simpson are late-stage (8-14 months) and low-balance ($1,000-$1,250 average) and are focused mainly in Health Care.

4%

15%

25%*

Collection Industry

Late-Stage/Secondary Placement

Collection Industry

TotalEarly Stage/Primary

Late-Stage/Secondary PlacementCollection Through

Juristec*

10%

20%

Advantage in Debt Collection Over Traditional Collection Firms

With Juristec, Clients / Attorneys utilize the effectiveness of litigation with the high volumes of collection agencies.

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The FTC continues to receive more complaints about third-party debt collectors than about any other single industry.

Complaints to the FTC

3rd-Party

In-House

Complaints to the FTC, In Thousands

Nilson Report (835, 857, 880)

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Collection Agency Traditional Law Firm Client Using Juristec

Collection Capabilities

Calls, Demand Letters (non legal), Credit Checks

Demand Letters, Litigation, Garnishment, Bench Warrants

Demand Letters, Litigation, Garnishment, Bench Warrants

Regulations Tightly regulated by FDCPA

Partially regulated by FDCPA but has many more options

through litigation

Partially regulated by FDCPA but has many more options

through litigation

Obstacles Under FDCPA, collectors can no longer contact if

debtor requests no contact. Does not take legal action.

Bankruptcy Bankruptcy

Contingency Fees 50% 33-50% 25-40%*

Collection Stage Early: 60-180 days Any Any (Typically late-stage: 180+ days)

Case Load 10,000-25,000 per year 200-500 per year 10,000-25,000 per year

Average Case Size 1,000 5,000 1,000

% Collected 10-15% 20-30% 20-30%

Comparisons

*By increasing volume of cases to a law practice and providing the means to process them, client can better negotiate legal fees with attorney.

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Juristec adds value to clients, attorneys and debtors. Enables clients to maintain a professional relationship with debtors through litigation.

Client

Attorney Debtor•Permits debtor to pay manageable installments without undue cost.

•Allows debtor’s payments and costs to be accurately posted and tracked.

•Reduces Attorney’s fees, for which debtor is liable, through efficiency.

•Provides due process to debtor through court.

•Allows debtor inquiries to be quickly and accurately handled.

•Allows client to capture 20-30% more of their bad debt.

•Lowers costs and minimizes losses.

•Retains control over handling of individual cases.

•Enables the collection of small-balance and late-stage cases.

•Includes checks to prevent legal errors, malpractice, and missed deadlines.

•Increases professionalism and decreases risk of counter suits.

•Allows attorney to handle greater caseload.

•Tracks all money transactions for auditing.

•Collates similar cases for efficient work distribution.

•Automates repetitive procedures to reduce processing costs.

•Informs client through real-time reports.

•Provides full audit trail of case work and payments.

•Enforces client’s procedures and policies.

•Extends the statute of limitations allowing client longer time to collect.

Value Proposition

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Compiles cases and generates batch of

demand letters. Demand letters sent

Summons and Complaint are

delivered by legal officer to debtor and is

filed with the court.

Debtor files answer with firm/court.

Summary Judgment

Pre-Trial / Trial

Judgment

Default Judgment (Debtor doesn’t

appear)

Supplemental proceedings:

Judgment extends statute of limitations from 4 to 8 years.

Attorney can garnish wages/bank account if

debtor is non-compliant.

Legal Process is Complicated

Judgments place liens on real property and can prevent debtors from obtaining further

credit.

Attorney

Debtor

Court

Client

Debtor receives demand letter

Payments made. Debtor is encouraged to pay off debt or set up payment plan at any

time during the process. Attorneys can move case along without undue cost or loss of

efficiency if payments are missed

Firm files with court.

In-House collections contact debtor

Debts not paid sent to legal team

Payment Received

Client can forgive the Debtor’s debt at any time in the process

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Juristec is the Solution

Juristec updates case proceeding quickly and

easily, assigns ticklers for further proceedings.

Juristec tracks time intervals and generates

filings for the court. Attorney has several

litigation options to obtain judgment.

Juristec tracks payment and creates ability for periodic payment from

debtors.

Juristec creates error-free pleadings completed in

one-step process. Cases can be sent electronically

to the court.

Client has access to Juristec database with all

case information. Database is backed up on a secure

network daily.Client

Attorney

Debtor

Courts

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Demand LetterJuristec automates all litigation procedures, tracks deadlines and payments.

Greater effectiveness when demand comes from an attorney.

PleadingsMost responsive debtors settle or make payment arrangements before going to trial.

Legal officer serves pleadings directly to the debtor. FDCPA prohibits other collectors from personal visits.

Trial/JudgmentCourt orders debtor to pay. Attorney can question debtor about personal finances.

Most cases are ruled in favor of the creditor.

Judgment allows attorney to take appropriate action against the debtor.

Post-JudgmentAttorneys may garnish wages or place liens on property to compel debtor to pay.

Judgments can prevent debtors from obtaining future credit such as home/auto loans.

43% Collected Pre-Judgment* 57% Collected Post-Judgment

Proven Results

*Based on five-year average of Peterson & Simpson’s debt collection practice

When demand letters are no longer effective, litigation should begin.

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Proven Results – Case StudyJuristec ASP is a proven technology that has been used to collect over $75 million in late-stage collections.

Collected: $75 Million

Collected: $75 Million

Collections for Peterson & Simpson, Attorneys at Law

Total Remittances:$300 Million

Peterson & Simpson was a small, but very effective legal practice with two attorneys, one paralegal, a few administrative assistants and part-time file clerks.

The firm received 500 new cases per week with an average case size around $1,000, with $500 as the minimum. Cases were received between 8 and 14 months past due after several collection attempts had been made.

Each case was prosecuted to judgment and a debtor's exam unless paid or settled. Cases that warranted it were garnished. The office staff created a series of pleadings and letters with minimal input and without resorting to word processing, which provided a complete audit trail of pleadings and transactions. The firm allowed debtors to make installment payments; the program calculated a per diem interest rate. The firm was able to move forward on those who defaulted in payments without any loss of efficiency.

The platform allowed the firm to maintain a high level of professionalism in their practice, enforcing the office standard forms, eliminating human error, and automatically calculating interest, costs, attorney fees and balances. Judges appreciated the firm’s pleadings because of this efficiency.

The client received monthly reports including payments, costs, and important status changes. Development of the first electronic filing system with the Sandy Court in Utah increased ease of filing cases. In the firm’s 25 year history, they collected $75 million out of a total $300 million in outstanding debt from over 85,000 cases.

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Juristec enables its clients to:

– Capture revenue that has been written off to bad debt by the client.

– Focus on collecting a higher volume of small-balance and late-stage debt.

– Increase the ease and professionalism of their debt collection process.

– Maintain oversight of the collection process. Allows client to have adequate communication with customers and prevents over-zealous collection practices.

– Track and document each case and efforts for collection.

Why Juristec?Juristec provides both technology and services that allow clients to cost effectively litigate on a high volume of low-balance and late-stage bad debts while maintaining control of the case.

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Table of Contents• Juristec Overview

– Comparison to Traditional Solutions– Value Proposition– Proven Results– Why Juristec?

• Appendix A: Market Direction– Increase in Debt to Household Income– Commercial Bank Charge-Offs– Debt Collection Industry

• Appendix B: Juristec Details– Juristec Technology– Juristec Tenets of Excellence– Management Team– Frequently Asked Questions

15Federal Reserve Flow of Funds, Commerce Department

Debt to Household Income

Mortgage

Consumer

“The household sector is much more exposed to consumer credit than it has been for a long time; in fact, than it ever has been. We are at a record level now of the ratio of total debt outstanding to household income.” - Bill Hampel, Senior Vice President, Credit Union National Association

Commercial Bank Charge-Offs

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-

5,000

10,000

15,000

20,000

25,000

30,000

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

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Q3

Charge-off Rate Delinquency Rate Charge-offs

$24.2 Billion

3.7%

1.5%

Federal Reserve Board

If consumers don't repay their debts, then sellers will seek to increase the prices of the goods and services to those of us who are paying to cover the cost, and if consumers don't repay their debts, creditors will be less willing in the end to lend money to consumers, and that will decrease our future purchases.

Debt collection plays a key role in keeping prices low and ensuring that consumer credit remains widely available across sectors of our economy.

- Deborah Platt Majoras, Chairman, Federal Trade Commission

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Debt Collection

LowLow

High

Pric

e

QuantityHigh

NormalQuantity

Quantity w/o Debt

Collection

NormalPrice

Price w/o Debt

Collection

Debt collection plays a vitally important role in this system of consumer credit. Collecting on a debt, of course, benefits individual creditors who are repaid money they're owed, but it also has much broader economic benefits.

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Table of Contents• Juristec Overview

– Comparison to Traditional Solutions– Value Proposition– Proven Results– Why Juristec?

• Appendix A: Market Direction– Increase in Debt to Household Income– Commercial Bank Charge-Offs– Debt Collection Industry

• Appendix B: Juristec Details– Juristec Technology– Juristec Tenets of Excellence– Management Team– Frequently Asked Questions

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Juristec TechnologyJuristec Utilizes Cutting-Edge Technology to Provide Greater Security and Flexibility

•Oracle has proven to be the most reliable and most secure database in the industry. Used by more than 50% of the top Fortune 100 companies and the American Hospital Association.

•Combining Sun's Enterprise Servers with the latest Solaris Operating Environment delivers enhanced security, manageability and performance. Sun™ Open Net Environment (Sun ONE) is based on Health Insurance Portability and Accountability Act (HIPAA) regulations regarding encryption for privacy of patient records.

•The Java™ platform is the foundation for networked and Web services. Java's "run anywhere" technology provides a highly flexible and highly scalable solution.

•SingleEdge: Through our security solutions co-location provider, Juristec provides a veritable fortress for our clients protected data.

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Juristec is an Application Service Provider (ASP) that provides technology to both Clients and Attorneys for the purpose of collecting bad debt through litigation.

•Enforces Client’s procedures and policies.

•Increases communication between Client and Attorney.

•Provides full audit trail of Debtor payments

•Includes checks to prevent legal errors, malpractice, and missed deadlines

•Greater Client control of individual cases.

INCREASESPROFESSIONALISM

GREATER SECURITY & SUPPORT

SIMPLIFIESCOLLECTIONS

BEST-IN-CLASSTECHNOLOGY

•High-level encryption standards

•Secure and automated data backup.

•Easy and rapid implementation with low maintenance.

•Real-time operating statistics and customizable reporting.

•24X7X365 monitoring and comprehensive contingency infrastructure.

•Provides document automation and one-step pleadings, which speeds the litigation process, eliminates errors and reduces costs.

•XML/EDI standards to import/export cases through a secure Web site.

•Attorneys work cases to collection and Clients monitor the progression.

•Payment and interest tracking system allows Debtors to make installment payments.

•Juristec provides a full technology solution for collection litigation.

•Manages all technical aspects including data and database management, firewall protection and encryption.

•Provides flexibility to handle high volume of cases with smaller debts.

•Proven technology currently in operation for 15 years managing 20-30,000 cases per year.

Juristec Tenets of Excellence

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Lawrence R. Peterson – Founder, President• Founding Partner of Peterson & Simpson, Attorneys at Law• 30-year member of Utah State Bar Association • Member of the Utah Collections Bar Association• Certified Solaris/Sun Systems Administrator• Juris Doctorate from University of Utah

Brent Peterson – Director of Business Development• Manager for the Cicero Group, LLC• Manager at Bond Street Limited, LLC• Chief Analyst for Blackford Capital, LLC• B.A. from Brigham Young University, degree in Economics

Management Team

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Frequently Asked QuestionsWill we be subject to counter-lawsuits if we litigate on our bad debt?Juristec provides greater professionalism and eliminates errors from prosecuting each case. Client also has the ability to filter out any cases they feel may be in question.

What about those individuals that don’t have the ability to pay for economic reasons?Those individuals who do not have the ability to pay are virtually unaffected by the process because they typically do not have assets that can be placed under lien. Often times they can qualify for charitable contributions by the creditor.

Why aren’t collection agencies able to collect as much as we can with Juristec?Consumers know that collection agencies tend to make idle threats in suing the consumer but never do, and therefore, collection letters are typically ignored. With Juristec, consumers will receive a demand letter from an attorney and will be summoned to court if payment arrangements are not met. Consumers are much more compelled to pay when faced with a lawsuit and can be forced to pay when judgment is rendered

If we use Juristec, will we stop using our collection agency?Juristec is typically utilized for late-stage (greater that 180 days) consumer debt. Most collection agencies see their results fall the longer the debt is outstanding.