## Doing the math on selling Bankruptcy accounts

Doing the math regarding selling open BK accounts to Peritus Portfolio Services.

Let’s say you have 8 open BK accounts where the principle balance is \$50,000

Let’s also say that the average amount of time for these 8 accounts to finish paying is 48 months.  This would be a combination of brand new ones and ones that have already started paying.

\$50,000 divided by 48 months = \$1,041 per month from the trustee for the 8 vehicles.

Let’s also say that Peritus offers you 41%(could be more or less depending on quality of the paper) for the \$50,000, which equals \$20,500 that you can have right now.

With the \$20,500, you purchase 3 automobiles at auction at \$6,833 each

You sell those 3 cars on terms averaging 16 months at an \$1,800 profit each (\$8633).  Total amount you have in 16 months (3x\$8,633 =\$25,899).

You also collect an average of 11% interest on that amount.  \$25,899 + 11%interest = \$28,747.

So, now you have \$28,747 in 16 months.

In a 16 month period, if you were to collect from the trustee, you would have 16 x \$1,041 (the amount you would get through the trustee assuming the BK customer keeps paying, that is).

16 x 1,041 = \$16,656.

The difference in your pocket is \$25,899 – \$16,666 = \$9,233

You buy more cars and turn the inventory 2 more times (48 months divided by 16 months = 3) during the 48 month average it would have taken you to collect the full amount from the trustee

Since each time you turn the inventory, you produce a larger amount, your profit during the 48 months that it would have taken you to collect the entire amount from the trustees is greater than just 3 x \$9,232 = \$27,696.  You are ahead more like \$30K to \$40K in that time span.

Even if you only have two open BK accounts, it still makes more sense to turn them into immediate cash and turn inventory.

This reasoning has been verified by Dealers and Dealer Associations as sound.

Reasons why you wouldn’t sell open BK accounts to Peritus:

• You have excellent cash flow and all the inventory you can handle
• You are a Repo service as well and your business plan is to sell the same car over and over again.