If you Owe more than $30,000 contact us for a case evaluation at (833) 428-0937
contact us for a free case evaluation at (833) 428-0937
Call us (833) 428-0937

SBA and Federal Debt Articles

We Provide Nationwide Representation of Small Business Owners, Personal Guarantors, and Federal Debtors with More Than $30,000 in Debt before the SBA and Treasury Department's Bureau of Fiscal Service

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SBA Articles

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Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure

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Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements

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Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.

$750,000 SBA 504 LOAN - NEGOTIATED TERM REPAYMENT AGREEMENT

$750,000 SBA 504 LOAN - NEGOTIATED TERM REPAYMENT AGREEMENT

Clients personally guaranteed SBA 504 loan balance of $750,000.  Clients also pledged the business’s equipment/inventory and their home as additional collateral.  Clients had agreed to a voluntary sale of their home to pay down the balance.  We intervened and rejected the proposed home sale.  Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.

$150,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

$150,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

Client personally guaranteed SBA 7(a) loan balance of over $150,000.  Business failed and eventually shut down.  SBA then pursued client for the balance.  We intervened and was able to present an SBA OIC that was accepted for $30,000.

$505,000 SBA 7(A) LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)

$505,000 SBA 7(A) LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)

Clients borrowed and personally guaranteed an SBA 7a loan.  Clients defaulted on the SBA loan and were sued in federal district court for breach of contract.  The SBA lender demanded the Client pledge several personal real estate properties as collateral to reinstate and secure the defaulted SBA loan.  We were subsequently hired to intervene and aggressively defend the lawsuit.  After several months of litigation, our attorneys negotiated a reinstatement of the SBA loan and a structured workout that did not involve any liens against the Client's personal real estate holdings.

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SBA FAQS
When Should An SBA Offer in Compromise Be Pursued?
When Should An SBA Offer in Compromise Be Pursued?

When certain limited circumstances occur and a Borrower or Guarantor does not have the ability to make full payment, the SBA may allow a settlement for less than the full principal amount due on the federal debt. An SBA Offer in Compromise (OIC) is not possible without the cooperation of responsible Borrowers and Guarantors. One of the basic elements of an SBA OIC is that the business has ceased operations and all business assets have been liquidated. The business owner’s assistance and help in maximizing the recovery on the business assets will help to minimize the amount of deficiency balance on the loan. As in most scenarios involving debt forgiveness, there may be tax implications and small business owners should consult their tax and legal advisors before starting the SBA OIC process.

What are the other benefits of Subchapter V?
What are the other benefits of Subchapter V?

The new Chapter 11 Subchapter V bankruptcy has many differences from a regular Chapter 11.  For instance, some of the changes are as follows:

  • Plan easier to confirm
  • Only debtor can file plan
  • Disclosure statement not required
  • Contested plan may be confirmed over objecting impaired class
  • Absolute priority rule not applicable
  • No creditors committee
  • No quarterly U.S. Trustee payments

These changes will result in faster and thus less expensive reorganizations for small business.

If There Were Multiple Individuals Who Signed Personal Guarantees In Connection With Our SBA Loan, How Much Will Each Of Us Owe?
If There Were Multiple Individuals Who Signed Personal Guarantees In Connection With Our SBA Loan, How Much Will Each Of Us Owe?

An SBA Guaranteed Loan with multiple personal guarantors considers each of the guarantors as being “jointly and severally” liable for the loan balance.  This means that anyone who signed the loan as a borrower, obligor or a guarantor, is liable for the entire outstanding balance.  Therefore, each and every guarantor can be pursued for the total loan balance.  The problem that manifests with multiple guarantors after an SBA loan default is when certain individuals have more personal assets than others.  Generally, lenders, the CDCs and the SBA target those personal guarantors who may have more assets than others. Hence, those individuals whose personal guarantees are “worthless” will generally not have to pay as much.

What is a Chapter 11 Subchapter V Bankruptcy?
What is a Chapter 11 Subchapter V Bankruptcy?

Chapter 11 of the US bankruptcy code focuses on “reorganizing” a business. This allows it to stay alive while restructuring debt and making a plan to repay creditors over time.

For many struggling businesses, the Chapter 11 Subchapter V is a long-awaited life preserver. A traditional Chapter 11 was extremely expensive for businesses. Businesses hope it eliminates some of the bureaucratic pitfalls of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

The BAPCPA was supposed to make filing for Chapter 11 easier. Instead, it included more reporting requirements and other burdens that bogged down the act and canceled out the benefits.

Subchapter V shares some similarities to the BAPCPA. Both have one-step confirmation, and both add new features that make filing for Chapter 11 easier for small businesses.

What Are "Litigative Risks" And How Do They Factor Into An SBA OIC?
What Are "Litigative Risks" And How Do They Factor Into An SBA OIC?

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.

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