SBA Debt Attorneys

Charge off is the process by which the SBA recognizes a loss and removes the uncollectible loan account from its active receivable accounts. The SBA’s policy is to be diligent and thorough in collection of federal debt and to promptly charge off all uncollectible accounts to more accurately reflect the status of the individual account and the Agency’s entire portfolio. It should be noted that a charge off is merely an administrative determination that does NOT affect SBA’s rights against any obligor nor reduce the SBA’s (or a participant lender’s) ability to proceed with any available remedy.

If the principal debtor used his/her primary residence as security for a loan to fund the small business, there are available loan modifications.

If as part of your SBA loan, you pledged your primary residence as collateral, neither Chapter 7 or Chapter 13 bankruptcy will likely help in the event of default.  However, Chapter 11 Subchapter V may help.

For instance, a small business debtor's plan may modify the rights of a holder of a claim secured by the principal residence of the debtor if the new value received in connection with the granting of the security interest was:

• not used primarily to acquire the real property; and
• used primarily in connection with the debtor's small business

Therefore, you could possibly use the Chapter 11 Subchapter V to save your house and modify the terms of repaying the loan if you pledged your house as collateral as part of your personal guarantee.  You will, more than likely, not rid yourself of the lien.  Preserving your home constitutes your goal with the new bankruptcy code.  If you have no other options, you should explore the new bankruptcy option.

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The SBA can compromise a debt (that is, it can accept less than the full amount owed on a debt) based on the authority contained in the following statutes and regulatory sources:a. Section 5(b) of the Small Business Act which gives the Administrator authority to effect compromise settlements.b. The Federal Claims Collection Act (31 U.S.C. 3701 and following) which provides a means for the settlement, adjustment, and compromise of claims by Federal agencies.c. 4 CFR § 183, which prescribes standards for the compromise of claims under the Federal Claims Collection Act.

SOP 50 51 2A, Ch. 17, 8-12 states that “[a]ny settlement amount must bear a reasonable relationship to the present value of the estimated amount of recovery available through foreclosure (using a forced sale equivalent value) and enforced collection. This value, combined with the earning potential of the debtor, will form the basis for the offer in compromise.“ Litigative risks” involve answering  certain legal questions as to the actual liability of the debtor and will be thoroughly explored by the SBA, if raised properly. The degree of doubt coupled with the potential costs, expenses and time involved in pursuing collection matters will generally determine the acceptable amount for a settlement. Thus, when considering an SBA OIC, it is very important for your qualified representative (who should have a background in litigation and thus be an attorney and have a working knowledge of SBA matters) to be able to advise SBA debtors regarding litigative risks and the costs associated with litigation and how all of these factors can impact the proposed offer to the Federal Government.

What Is The SBA Office Of Hearings And Appeals (OHA) And What Is Their Jurisdictional Power? CollapseThe Office of Hearings and Appeals (OHA) is an independent office of the Small Business Administration (SBA) established in 1983 to provide an independent, quasi-judicial appeal of certain SBA program decisions. The SBA OHA has authority to conduct proceedings in the following cases: Collection of debts owed to SBA and the United States under the Debt Collection Act of 1982, the Debt Collection Improvement Act of 1996, and part 140 of the aforesaid chapter; (t) Any other hearing, determination, or appeal proceeding referred to OHA by the Administrator of SBA, either through an SOP, Directive, Procedural Notice, or individual request by the Administrator to the SBA/OHA. The SBA OHA’s office is on the eighth floor of SBA headquarters above the Federal Center SW metro stop. Their office address is: 409 Third Street, SW, Eighth FloorWashington, DC 20416