Mariah, sounds like a real mess, and while I don't use livebucks I will definitely watch this one with interest.
However that being said, I think its stupid of them to claim they will eat all CB's and Refunds. If a surfer gets a refund or does a CB then the program should take that from the WM payout, especially with affiliate fraud as bad as it is nowdays (you wouldn't believe some of the things affiliates try when scamming a program!).
If they have had some huge chargebacks or a surfer who ripped them off blind, then I would be surprised if any affiliate program wouldn't treat it as a special case and watch the account/affiliate closely at the very least.
However in my personal opinion I think they should honor the payment terms you signed up to.
Good luck with it