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Filing For An Offer In Compromise

Discover how to navigate the SBA Offer in Compromise process with our expert guide, featuring insights from Protect Law Group for effective debt resolution.

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Have you ever found yourself overwhelmed by an unmanageable amount of debt, unsure of what steps to take next? Navigating through complex financial obligations can be daunting, but options exist that may offer relief. One such option is filing for an Offer in Compromise (OIC), which can be specifically beneficial if you are facing significant debt with the Small Business Administration (SBA). This comprehensive guide will provide you with a detailed understanding of the Offer in Compromise process, especially as it relates to SBA loans, and how specialized legal services like those offered by the Protect Law Group could be indispensable.

Understanding an Offer in Compromise

An Offer in Compromise is a legal agreement between a debtor and a creditor that allows the debtor to settle their debt for less than what is owed. The purpose behind an OIC is not only to allow debtors a chance for financial relief but also to ensure that creditors recover a portion of the outstanding amount in a scenario where the debtor might otherwise face non-payment.

What is an Offer in Compromise with the SBA?

The SBA Offer in Compromise is a specific program tailored for small business owners dealing with overwhelming SBA loan debt. In cases where repayment of the full loan amount is not feasible due to financial hardship, an OIC can allow business owners to settle their debt obligations at a reduced amount.

Eligibility Criteria for SBA OIC

Before filing for an OIC with the SBA, it’s crucial to determine eligibility, which often centers around demonstrating genuine inability to pay and proving that the settlement amount proposed is the most they can reasonably offer. Criteria include:

  • Evidence of financial hardship.
  • Demonstrating that the amount proposed is justified and fair given the financial situation.
  • Assurance that the acceptance of the OIC is in the best interests of both the SBA and the taxpayer.

The Protect Law Group Advantage

Understanding the intricacies of SBA debt resolution often requires professional guidance. Protect Law Group stands out as a firm specializing in addressing the challenges faced by federal debtors. Their seasoned attorneys bring vast expertise to the table, ensuring clients navigate the OIC process efficiently.

Specialized Legal Services Offered by Protect Law Group

  1. SBA Offer in Compromise (OIC): Protect Law Group attorneys help in crafting a compelling case for settling your debt at a lower amount than owed.
  2. Structured Workout Agreements: They assist in negotiating extended repayment periods to ease the financial burden.
  3. Administrative Litigation: Legal representation before the SBA Office of Hearings and Appeals ensures that your case is defended expertly.
  4. Debt Negotiations: The firm’s skilled negotiators work to secure favorable terms with SBA and lenders.
  5. Litigation Support: In case of legal proceedings initiated by the SBA, Protect Law Group reviews your case to chart the best legal strategy.

The Application Process for an SBA Offer in Compromise

Navigating the OIC application involves several meticulous steps, each critical to the outcome of your filing.

Step 1: Comprehensive Financial Disclosure

The first essential step is preparing a detailed disclosure of your financial situation. This includes all assets, liabilities, income, and expenses. Accurate disclosure helps build a trustworthy relationship with the creditor and sets the groundwork for successful negotiations.

Step 2: Submitting the Offer

The offer submission involves a formal proposal indicating the amount you can reasonably pay. It should reflect a sensible calculation of your current and future ability to settle the debt. The assistance of legal professionals like Protect Law Group ensures that the proposal is well-formulated and supported by necessary documentation that justifies the offered amount.

Step 3: Review and Negotiation

Once submitted, the OIC is reviewed by the SBA to assess its merits. During this phase, negotiations may occur, requiring further clarification or additional documentation. Professional legal services are critical at this juncture to communicate effectively with the SBA, propose modifications if needed, and push for acceptance of the offer.

Step 4: Acceptance or Rejection

The SBA ultimately decides whether to accept or reject the OIC. Acceptance would mean that the debtor is released from further financial responsibility as per the agreed terms. In contrast, rejection might necessitate other debt relief strategies or an appeal.

The Role of Protect Law Group in the OIC Process

In addition to navigating the steps of the OIC process, the Protect Law Group offers immense value through their client-centered approach. Their services extend beyond mere representation. They provide educational resources to better equip clients with knowledge about their legal standings and available options.

Expertise in Legal Framework and Negotiation

Protect Law Group attorneys are proficient not only in legal statutes but also in practical negotiation tactics. They employ a well-rounded approach that involves both applying legal authority to strengthen your position and engaging in negotiations to derive the best possible result.

Strategy Development and Implementation

Beyond individual case handling, the firm emphasizes the development of proactive strategies. By preemptively addressing possible issues and exploring all avenues of relief, they ensure that clients are not just reactive but adequately prepared for all outcomes.

Benefits of Engaging Protect Law Group for SBA Debt Resolution

The involvement of Protect Law Group yields several benefits for clients facing SBA debt issues:

Peace of Mind

Large debts can be stressful and draining. Professional guidance offers reassurance and confidence, knowing you have expert assistance at every step of the OIC process.

Cost-Effective Solutions

The firm prides itself on delivering relevant information and perspectives in a cost-effective manner. This is achieved by leveraging cutting-edge technology and ethical practices to provide clients with the most comprehensive solutions.

Track Record and Customer Satisfaction

With numerous resolved cases encompassing millions of dollars in settled debts, Protect Law Group’s track record highlights their expertise and success rate. Their commitment to exceeding customer expectations ensures an unparalleled client experience.

Alternatives to Offer in Compromise with the SBA

While an OIC is a powerful debt resolution tool, it might not always be the only or best solution for all business owners.

Structured Workout Agreements

These allow for renegotiation of the debt repayment timeline, offering more flexibility and alleviating immediate financial pressures without necessarily reducing the overall debt amount.

Federal Debt Litigation

In scenarios where negotiation does not yield favorable terms, litigation may be a necessary step. Through litigation, it is possible to contest the debt amount or reach a resolution through the court process.

Appeals and Administrative Hearings

Protect Law Group assists in filing appeals with the SBA Office of Hearings and Appeals, which can be pursued if there are legal or procedural errors in debt determination.

Conclusion: Choosing the Right Path

Filing for an Offer in Compromise with the SBA can provide a much-needed financial lifeline for struggling business owners. However, achieving a favorable outcome requires a comprehensive understanding of the process and skilled advocacy in negotiation and litigation.

Protect Law Group offers invaluable expertise in this field, guiding clients through the OIC process with a strategic and informed approach. With their broad legal knowledge and negotiation prowess, you can navigate your SBA debt challenges with greater confidence and effectiveness.

If you’re contemplating filing for an Offer in Compromise or exploring other debt relief avenues, engaging with an expert legal service provider like Protect Law Group may be the most prudent step you can take toward regaining financial stability.

$220,000 SBA 7A LOAN -DOT WAIVER OF ADMINISTRATIVE FEES & COSTS

$220,000 SBA 7A LOAN -DOT WAIVER OF ADMINISTRATIVE FEES & COSTS

Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection.  Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest.  We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.

$350,000 SBA 7A LOAN - NEGOTIATED STRUCTURED WORKOUT AGREEMENT

$350,000 SBA 7A LOAN - NEGOTIATED STRUCTURED WORKOUT AGREEMENT

Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. The client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but our SBA lawyers also saved him approximately $227,945 over the term of the workout.

$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

Client’s small business obtained an SBA 7(a) loan for $150,000.  He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made.  The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.

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