Debtmerica LLC
Where: Santa Ana
12-month sales: $17.4 million
Two-year growth: 1,462%
OC workers: 75
Business: consumer debt reduction services
Debtmerica LLC is growing by shrinking debts.
The Santa Ana-based company ranked No. 3 on the Business Journal’s 2009 list of fast-growing private companies with revenue growth of 1,462% for the two years through June 30, according to Business Journal estimates.
Debtmerica had estimated revenue of $17.4 million for the 12 months through June, up from $1.1 million for the same period in 2007.
It also was ranked on the Business Journal’s inaugural Best Places to Work list, published last month.
The company works with people facing unmanageable amounts of unsecured debt by working with creditors to accept less than they’re owned.
Borrowers working with Debtmerica stop making debt payments and start depositing money into trust accounts. Once money has built up in the accounts, payments for part of what is owed go to creditors.
Debtmerica makes its money by charging a fee equal to 15% of the debt enrolled in its program.
“The important thing about our program is that it’s not a get out of jail free card—it’s for people who are in tough shape who say, ‘I’m never going to get out of this hole,’” cofounder and Chief Executive Jesse E. Torres said.
Since Debtmerica’s 2006 start, the company has grown from Torres, cofounder and Chief Operating Officer Harry Langenberg and four others in Irvine to about 75 people today in two Santa Ana offices.
Hires this year have included a general counsel (Kristen Bemis), a marketing director (Carlos Caponera) and a product development manager (Miron Lulic).
The goal is to double revenue within a year, Torres said.
To do that, Debtmerica is looking to marketing. It hopes to make Debtmerica a household brand while using other sites it owns to target specific types of borrowers.
“One brand might appeal more to a female audience,” Torres said. “One brand might appeal to a male audience.”
The company has 35 Web sites registered, including DebtMiracles.com, DebtAffinity.com, ZapDebt.com and DebtInteractive.com.
It competes with credit counseling services and lenders that provide debt consolidation loans.
Debtmerica also has to contend with a cottage industry of debt reduction services companies—some legit, others not.
“A lot of the competition is coming from the very unscrupulous types,” Torres said.
Credit card debt makes up about 80% of what Debtmerica deals with. Another 10% is medical debt.
The rest is other types of borrowing not backed by homes, autos or other collateral.
“Typically we reduce debt to half of what the balance was,” Torres said.
Most customers stick with the program, he said.
“On a bad day, we’re probably going to keep 60% of consumers,” Torres said.
The economy has played a role in Debtmerica’s growth.
The company has seen an uptick in business with layoffs, the mortgage meltdown of 2007 and the larger 2008 financial crisis, according to Torres.
When Torres and Langenberg started the company three and a half years ago, he said he saw that the mortgage industry was about to implode.
He thought a debt reduction service was a better way to get people out of debt than the prevailing option at the time: consolidating unsecured debt into home loans.
“We just saw that there would be a void with the fall of the mortgage industry,” he said.
Torres and Langenberg put up a few thousand dollars of their own money, leased an office and enlisted a few sales people.
The company hasn’t gone after any venture capital funding.
“Tons of VCs are calling us now,” Torres said.
The founders still are involved in small details of Debtmerica. They need to be able to do any of their employees’ jobs well, Torres said.
Torres said he recently took a call from an elderly woman asking about DebtAmerica’s services who reached his extension by mistake.
“I’m not too big where I can’t take the smallest call,” he said. “You’ve got to get your hands dirty in today’s economy. You have to be able to do the lowest job and the highest job. You get surprised.”
Shvartsman is a freelance writer in Santa Ana.
