Compromise of Principal Worksheet

File Number:  123456789

1.  Current principal balance                        \$________

2.  Accrued charges

b.)  accrued penalty                            \$________

c.)  accrued interest                           \$________

Total (Item 2a  +  Item 2b + Item 2c)           \$________

3.  Interest rate (express as percent; i.e. 5% not .05)

a.)  Annual Interest rate                       ________%

b.)  Monthly interest rate (annual rate/12)     ________%

4.  Monthly payment                                  \$________

5.  To determine if this is a candidate for compromise apply the following rule:

Divide the current principal balance (plus any accrued charges) by the monthly payment; and multiply the result by the annual interest rate.

_________ + _________ / _________ x ____________ = _________

Item 1       Item 2      Item 4       Item 3a

If the result is less than 5.5, no compromise is necessary.  If the result is 5.5 or greater complete the balance of the worksheet to determine the amount, if any, to be compromised.

6.  First month interest (Item 1 x Item 3b/100) \$_________

7.  Period within which debt must be repaid (months)

(Item 1/Item 4 x 1.35) __________

If  Item 6 is >/= to Item 4, then all accrued charges are compromised; skip Item 8 through 10, and go to Item 11 to determine the amount of principal to be compromised.  Otherwise, continue with Item 8.

8.  Period to repay full amount of debt (months)

a.)  Period to repay accrued charges       ________ mos.

(Item 2/Item 4) – (Item 1 x Item 3)

b.)  Period to repay principal             ________ mos.

Total (Item 8a + Item 8b)                  ________ mos.

If Item 8b is </= to Item 7, no principal need be compromised.  Skip to Item 12.

If Item 8b is > Item 7, the amount of the principal must be compromised.  Continue to the next item.

9.  Maximum amount of accrued charges to be compromised.

(Item 8 – Item 7/Item 8a) x Item 2         _________

If no number is generated here, then there are no accrued charges to be compromised.  Proceed to the next item.

10.  Apportionment of compromise

a.)  Item 9 or Item 2, whichever is less

b.)  Admin Charges (Item 2a or Item 10a, whichever is less)

c.)  Balance (Item 10a – Item 10b)

d.)  Penalty (Item 2b or Item 10c, whichever is less)

e.)  Balance (Item 10c – Item 10d)

f.)  Interest (Item 2c or Item 10e, whichever is less)

11.   Amount of principal after compromise \$___________

If this amount is more than the original principal, then there is no compromise of principal.

12.  New debt balances.  (If Item 10 was skipped then consider item 10a thru 10e as zero)

a.) Accrued admin charges (Item 2a – Item 9b)

b.) Accrued penalty (Item 2b – Item 10d)

c.) Accrued interest (item 2c – Item 10f)

d.) Principal Balance (Item 11; or, if Item 11 was skipped, use Item 1)

Calculations performed by: __________________   Date:________

Certified by: _______________________________   Date:________