Abstract:
A consumer having a delinquent loan is directed to a debt settlement provider by a data processing system comprising a data processor in signal communication with a memory. Initially, the data processing system obtains a credit report for the consumer reflecting at least a portion of the consumer&#39;s credit history. The data processing system then determines the delinquent loan of the consumer directly from this credit report. Finally, the data processing system transmits information about the consumer and the delinquent loan to the debt settlement provider.

Description:
FIELD OF THE INVENTION 
       [0001]    The present invention relates generally to methods and apparatus for providing financial services, and, more particularly, to data processing systems and methods to be performed on data processing systems for directing consumers with delinquent loans to debt settlement providers. 
       BACKGROUND OF THE INVENTION 
       [0002]    Debt settlement, also known as “debt arbitration” or “debt negotiation,” is a process in which a debtor makes an agreement with a creditor to pay off a debt at an amount less than the outstanding balance. Typically, a debtor only qualifies for debt settlement when the creditor is convinced that the debtor is experiencing some kind of financial hardship that prevents the debtor from being able to fully repay their debts. Debt settlement almost always involves debts that are unsecured, such as medical expenses, utility bills, and credit card debt. Debt secured by collateral, such as car loans or home mortgages, are generally not eligible for debt settlement because the debtor may pursue relief for non-payment by repossessing the collateral. 
         [0003]    Debt settlement is frequently facilitated by a third party service provider, a debt settlement provider (DSP). Such providers will negotiate with a creditor on behalf of a debtor and develop a debt settlement program. In such a program, a debtor is usually directed to start depositing money in a settlement account in lieu of paying the creditor. Subsequently, once these deposited funds are judged sufficient, the DSP attempts to negotiate a settlement offer with the creditor. Depending on the circumstances, the debtor may only have to pay 35-60% of the existing balance. 
         [0004]    The DSP, in turn, profits by charging a fee. The manner in which this fee is calculated varies. Some DSPs charge a percentage of the total settled debt as their fee, while others charge a percentage of the debt reduction they are able to negotiate. Even others charge a monthly fee. Accordingly, if a DSP is able to obtain a sufficient customer base, debt settlement may be very lucrative. For this reason, many DSPs desire to advertise their services. Nevertheless, such advertising is difficult to target at those consumers that may actually benefit from debt settlement services, and is also typically very expensive. The return-on-investment from such advertising is, therefore, often unsatisfactory. 
         [0005]    There is, as a result, a need for methods and apparatus that detect consumers that might benefit from debt settlement services, educate those consumers about the benefits of debt settlement in a compelling manner, and direct those consumers to DSPs that may be able to serve them. 
       SUMMARY OF THE INVENTION 
       [0006]    Embodiments of the present invention address the above-identified need by providing methods and apparatus that detect consumers that may benefit from debt settlement services and refer those consumers to participating DSPs. 
         [0007]    In accordance with an aspect of the invention, a consumer having a delinquent loan is directed to a DSP by a data processing system comprising a data processor in signal communication with a memory. Initially, the data processing system obtains a credit report for the consumer reflecting at least a portion of the consumer&#39;s credit history. The data processing system then determines the delinquent loan of the consumer directly from this credit report. Finally, the data processing system transmits information about the consumer and the delinquent loan to the debt settlement provider. 
         [0008]    In accordance with one of the above-described embodiments of the invention, a debt settlement referral system (DSRS) comprises a data processing system operative to communicate with a consumer over the Internet. In response to a request from the consumer, the DSRS obtains a credit report for the consumer and determines any delinquent loans directly from the credit report. The DSRS then presents the consumer with their credit report as well as with a debt settlement referral offer. The debt settlement referral offer summarizes the consumer&#39;s delinquent loans, provides a proposed settlement amount, and offers the consumer an opportunity to have the DSRS forward information about the consumer and the consumer&#39;s loans to a DSP. 
         [0009]    Advantageously, the above-described embodiment allows the consumer to conveniently learn about debt settlement services and to be easily put in contact with a participating DSP. The DSP, in turn, receives a lead on a consumer who is in a financial situation that lends itself to debt settlement and who is potentially interested in receiving debt settlement services. 
     
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
         [0010]    These and other features, aspects, and advantages of the present invention will become better understood with regard to the following description, appended claims, and accompanying drawings where: 
           [0011]      FIG. 1  shows block diagram of a DSRS and various external elements in accordance with an illustrative embodiment of the invention; 
           [0012]      FIG. 2  shows a flow chart of the configuration portion of an illustrative method embodiment for providing debt settlement referral services to a consumer; 
           [0013]      FIG. 3  shows an illustrative set of debt settlement parameters; 
           [0014]      FIG. 4  shows a flow chart of the debt settlement referral portion of the illustrative method embodiment for providing debt settlement referral services to a consumer; 
           [0015]      FIG. 5  shows an illustrative web page that requests indentifying information from the consumer; 
           [0016]      FIG. 6  shows an illustrative credit report; and 
           [0017]      FIG. 7  shows an illustrative web page that provides the consumer with a credit report and debt settlement referral offer. 
       
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
       [0018]    The present invention will be described with reference to illustrative embodiments. For this reason, numerous modifications can be made to these embodiments and the results will still come within the scope of the invention. No limitations with respect to the specific embodiments described herein are intended or should be inferred. 
         [0019]      FIG. 1  shows a debt settlement referral system (DSRS)  100  for providing financial services in accordance with an illustrative embodiment of the invention. The illustrative DSRS is connected to several external elements, namely a plurality of consumers  110 , a DSP  120 , a credit bureau  130 , and a secure remote database  140  via a network  150 . The DSRS itself comprises a network server portion  160 , a data processing portion  170 , and a memory portion  180 . These three portions combine to form a data processing system, and each portion performs a particular function within the DSRS. More specifically, the network server portion is operative to receive and transmit data over the network between the DSRS and the external elements. The data processing portion comprises a data processor and is operative to perform the logical steps and computations associated with the debt analysis operations, and to generate analysis data. Finally, the memory portion is operative to store data associated with the debt analysis operations. The network, data processing, and memory portions may comprise, for example, AS/400®, iSeries , or i5® servers available from International Business Machines Corporation (Armonk, N.Y., USA), or any analogous server-type computers. 
         [0020]    It should be noted that the three portions  160 ,  170 ,  180  forming the DSRS  100  may, in fact, be implemented in a single computer or implemented in several linked computers. Their presentation as three separate elements in  FIG. 1  is merely to draw attention to their functionality rather than to present their physical form. Once their novel functionality is understood, the programming of the computer or computers to implement the functionality will be well within the ability of one of ordinary skill in the art. 
         [0021]    The network  150  preferably comprises the Internet (i.e., World Wide Web), allowing the consumers  110  to access the DSRS  100  using any internet-capable computer with a web browser program, such as a personal computer, cellular telephone, or personal digital assistant. This allows the DSRS to present its debt referral content to consumers in the form of information on web pages (i.e., this allows the DSRS to act as a web server that sends data formatted for presentment on web browser programs). Accordingly, computer-to-computer communications between the DSRS and the consumers is preferably performed using the Hypertext Transfer Protocol (HTTP), the Secure Sockets Layer (SSL) Protocol, or some combination thereof. For communication between the DSRS and the other external elements  120 ,  130 ,  140 , the Internet may also be utilized or a more private network connection may be chosen. Alternative network connections may include, as just a few examples, point-to-point (leased line), circuit switched, or packet switched Wide Area Networks (WANs). 
         [0022]    As will be described in greater detail below, the DSP  120  voluntarily enrolls with the DSRS  100  to become a “participating” DSP in order to gain exposure to consumers  110  that may be interested in acquiring debt settlement services. For ease of understanding, only a single participating DSP is shown in  FIG. 1 , but it is possible that several different DSPs may be enrolled with the DSRS at any given time. 
         [0023]    Lastly, the credit bureau  130  comprises one or more databases that store credit history data for the consumers  110 . The databases may, for example, be populated with consumer credit history data collected by one or more of the three largest credit bureaus, namely Experian® (West Orange, Calif., USA), TransUnion® (Chicago, Ill., USA), and Equifax® (Atlanta, Ga., USA). The secure remote database  140 , on the other hand, is a database external to the DSRS  100  that, in the present illustrative embodiment, is primarily tasked with storing sensitive financial information about the consumers. Such sensitive information may include, for example, the data gleaned from the consumers&#39; credit reports. Safeguards such as data encryption and other methodologies known in the art are preferably utilized to protect data stored in the secure remote database. The secure and remote nature of the secure remote database is utilized in response to governmental regulatory requirements and consumer expectations for securing this kind of sensitive personal information. 
         [0024]    The function of the different elements in  FIG. 1  will now be described with reference to an illustrative “direct-to-consumer” method embodiment for providing debt settlement referral services to consumers in accordance with aspects of the invention. For ease of understanding, the illustrative method can be broken up into two portions: a configuration portion, and a debt settlement referral portion. 
         [0025]      FIG. 2  shows a flow chart of the configuration portion  200  of the illustrative method embodiment wherein the DSRS  100  receives and stores data from the participating DSP  120  for later use in servicing the consumers  110 . In step  210 , the DSRS receives and stores a set of debt settlement parameters for the DSP. In the present embodiment, the debt settlement parameters comprise three parameters, namely: 1) the number of months required to cause an account that is not already in collections to be sufficiently past due to qualify for debt settlement; 2) the settlement percentage for such “sufficiently past due accounts”; and 3) the debt settlement percentage for accounts already in collections (“accounts-in collections”). As used herein, the term “debt settlement percentage” indicates the percentage of the outstanding debt balance that the DSP will offer to pay a creditor on behalf of a debtor in order to extinguish that debtor&#39;s debt with the creditor. For example,  FIG. 3  shows a set of debt settlement parameters  310  for an exemplary DSP, “ABC Debt Settlement Company,” presented in the form of a table. These debt settlement parameters indicate that ABC Debt Settlement Company will attempt to settle an unsecured loan that is more than  3  months past due, but not yet in collections, for an amount equal to 60% of the outstanding balance. ABC Debt Settlement Company will attempt to settle an unsecured loan presently in collections for 45% of the outstanding balance. 
         [0026]      FIG. 4  goes on to show the debt settlement referral portion  400  of the illustrative method embodiment. This portion is performed after a consumer  110  accesses the web site of the DSRS  100 . In step  405 , the DSRS offers to provide the consumer with the consumer&#39;s credit report. Many consumers will periodically order their credit reports in order to determine the status of their existing debts, their credit scores, whether the reports contain any errors, and whether there are any indications of identity fraud. If the consumer indicates that the consumer desires to receive the credit report, the DSRS moves on to step  410  and the DSRS obtains identifying information from the consumer. This may be performed by querying the consumer for the consumer&#39;s name, address, social security number, birth date, mother&#39;s maiden name, and other such identifying information.  FIG. 5  shows an illustrative web page that might be presented to the consumer during step  410 . Once this identifying information is received, the DSRS advances to step  415  and utilizes the information obtained in the previous step to obtain the consumer&#39;s credit report from the credit bureau  130 . 
         [0027]      FIG. 6 , in turn, shows what the credit report obtained in step  415  might look like. This particular credit report is in a text format that is typical of credit reports generated by Experian. Credit reports provided by other credit bureaus may be formatted somewhat differently, but typically include similar information. The report has several elements and codes that will be familiar to one skilled in the art and that are readily understood by reference to descriptive materials available from the credit bureaus and elsewhere. Briefly, in addition to personal data such as name and address, the report describes the consumer&#39;s public records on bankruptcies, liens, and civil law suits. In addition, the consumer&#39;s loan history, including existing and past loans, is presented in what are normally called “tradelines” or “trades.” The credit report may also present information on “hard” inquiries made by third parties (e.g., lenders) to the credit bureau, as well as the consumer&#39;s credit score. 
         [0028]    As can be seen in the credit report sample shown in  FIG. 6 , the tradelines (trades) provide detailed parameters for each of the consumer&#39;s existing loans. The tradelines, for example, include the loan type, original balance, term, opening date, monthly payment, and last payment. In addition, the tradelines also provide a Payment History Section (far right on  FIG. 6 ) which utilizes a series of numerical and letter codes to indicate the monthly status of the account over the past several months. In the present report, for example, a “C” in the Payment History Section indicates that the account was current on that month, while a numeral between “1” and “6” indicates that the account was past due by that number of months, and a “G” indicates that the account was in collections. The present report further provides a Payment Status Indicator (also far right on  FIG. 6 ). Here a “DELINQ  90 ” notation indicates that the account is presently 90 days past due, a “DELINQ  180 ” notation indicates that the account is presently 180 days past due, and a “COLLACCT” notation indicates the account is presently already in collections. 
         [0029]    Next, in step  420  of  FIG. 4 , the DSRS  100  searches the credit report for sufficiently past due accounts and accounts-in-collections (hereinafter, collectively called “delinquent accounts”). In accordance with aspects of the invention, it does so solely by reference to the credit report obtained in step  415 . More specifically, the DSRS parses the data presented in the credit report&#39;s tradelines to determine any existing loans that are past due by the number of months required to define a loan as sufficiently past due (as indicated in the debt settlement parameters  310 ) as well as any existing loans that are already in collections. If the credit report is similar to that shown in  FIG. 6 , for example, the DSRS may determine the delinquent accounts by examining the information provided in one or both of the credit report&#39;s Payment History and Payment Status Indicator sections, as indicated above. 
         [0030]    The actual parsing of the credit report to determine any delinquent accounts in step  420  is performed by conventional data processing methods that will be familiar to one of ordinary skill in the art. Although not the only method coming within the scope of this invention, the credit report data may be, for example, initially converted into an Extensible Mark-up Language (XML) format in conformity with specifications provided by the Mortgage Banker&#39;s Association of America Mortgage Industry Standards Maintenance Organization (MISMO). In this manner, credit report data provided by different credit bureaus is normalized and provided with standardized XML descriptors and wordings. Commercial software, such as the MERit Credit Engine from Merit Credit Systems, Inc. (Montrose, Calif., USA), is available to perform this kind of processing on credit report data. Once so formatted, the DSRS  100  can easily cycle through the XML data and extract the desired account information. The XML format is also a convenient format for storing the credit report data for later use. In the present example, the data may be stored in the secure remote database  140 . 
         [0031]    In step  425 , the method  400  branches based on the results of step  420 . If the DSRS  100  did not find any delinquent accounts, the system advances to step  430 , wherein it presents the credit report to the consumer as requested by the consumer in step  405 . If, instead, the DSRS did find one or more delinquent accounts, it advances to step  435  and begins the process of preparing an offer to the consumer for referral to the DSP  120  (i.e., it begins to prepare a “debt settlement referral offer”). 
         [0032]    Preparation of the debt settlement referral offer begins in step  435 , wherein the DSRS  100  calculates the proposed debt settlement amount. The proposed debt settlement amount, PDSA, is simply: 
         [0000]        PDSA =( B   SPDA   ×SP   SPDA )+( B   AIC   ×SP   AIC ), 
         [0000]    where B SPDA  is the balance due on any sufficiently past due accounts, SP SPDA  is the settlement percentage for sufficiently past due accounts, B AIC  is the balance due on any accounts-in-collections, and SP AIC  is the settlement percentage for accounts-in-collections. Both SP SPDA  and SP AIC  can be determined from the debt settlement parameters  310 . If, for example, the consumer  110  has sufficiently past due accounts with a combined outstanding balance of $6,123, and has accounts-in-collections with a combined outstanding balance of $4,111, then the proposed debt settlement amount would be calculated to be $5,224 based on the settlement percentages provided in the exemplary debt settlement parameters shown in  FIG. 3 . 
         [0033]    In step  440 , the DSRS  100  then presents the consumer  110  with the consumer&#39;s credit report in combination with the debt settlement referral offer.  FIG. 7  shows an illustrative example of such a combined presentation, which is displayed for the consumer in the form of a web page (debt settlement referral offer in upper right). The debt settlement referral offer summarizes the total outstanding balance for delinquent accounts found in step  420 , and also provides the consumer with the proposed debt settlement amount calculated in step  435 . Lastly, the debt settlement referral offer provides the consumer with a button which allows the consumer to select whether that consumer wants to contact the DSP  120  regarding debt settlement services. 
         [0034]    In addition, and optionally, the debt settlement referral offer may also provide the consumer  110  with an estimate of the manner in which that consumer&#39;s credit score may be improved by settling the delinquent accounts using the services of the DSP  120 . 
         [0035]    Next, as indicated in step  445 , the illustrative method  400  ends if the consumer  110  chooses not to accept the debt settlement referral offer. If, on the other hand, the consumer accepts the offer, the DSRS  100  advances to step  450 . Here, the DSRS forwards the consumer&#39;s relevant information to the DSP  120  including the consumer&#39;s identifying information, credit report, delinquent accounts, and proposed debt settlement amount. The DSP is then able to contact the consumer directly and pursue a business relationship with the consumer if the DSP so desires. 
         [0036]    In this manner, the illustrative debt settlement referral method  400  allows the consumer  110  to conveniently learn about debt settlement services that may help that consumer substantially improve the consumer&#39;s financial situation. Such information may be very compelling to the consumer because the consumer is reminded about that consumer&#39;s present debt situation and also learns that the consumer may only have to pay a fraction of the consumer&#39;s outstanding debts to extinguish those debts. In addition, the DSRS  100  allows the consumer to be put in contact with the DSP  120  merely by selecting a single button on a web page. The DSP, in turn, receives a lead on a consumer who is in a financial situation that lends itself to debt settlement and is potentially interested in pursuing debt settlement negotiations with that consumer&#39;s creditors. The DSP is then free to pursue that lead directly with the consumer in order to provide those services. 
         [0037]    It should again be emphasized that the above-described embodiments of the invention are intended to be illustrative only. Other embodiments can use additional or different types and configurations of elements and process steps for implementing the described functionality. These numerous alternative embodiments within the scope of the appended claims will be apparent to one skilled in the art. 
         [0038]    Moreover, all the features disclosed herein may be replaced by alternative features serving the same, equivalent, or similar purpose, unless expressly stated otherwise. Thus, unless expressly stated otherwise, each feature disclosed is one example only of a generic series of equivalent or similar features.