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

Negotiating A Settlement With The Lender

Learn key strategies to negotiate settlements with lenders, especially for SBA loans. Gain insights into legal assistance, benefits, and avoiding common pitfalls.

Schedule a Consultation

Have you ever found yourself in the challenging position of needing to negotiate a settlement with a lender? It’s a situation that can be fraught with complexity and stress, requiring a keen understanding of both your rights and the lender’s motivations. Navigating this negotiation process demands a structured strategy, especially when dealing with SBA loans and federal debt. In this article, we will explore the crucial aspects of negotiating a settlement with lenders, focusing on guidance provided by experts in the field such as the Protect Law Group.

Importance of Negotiating a Settlement

Negotiating a settlement can be a vital step in managing and resolving debt issues, especially concerning SBA loans. Effective negotiation can prevent more severe financial repercussions such as foreclosure, legal proceedings, or bankruptcy.

Benefits of a Settlement

A well-negotiated settlement can offer several advantages, including the reduction of the total debt amount, more favorable repayment terms, and the peace of mind that comes from resolving a significant financial liability.

Consequences of Non-Negotiation

Failing to negotiate can lead to harsher penalties, including additional legal fees, seizure of assets, or increased financial strain. It could also impede your ability to obtain credit in the future.

Understanding SBA Loans and Debt Issues

The complexity of SBA loans and associated federal debt requires a deep understanding of how these financial products work and the typical challenges faced by debtors.

What are SBA Loans?

Small Business Administration (SBA) loans are government-backed loans intended to support small businesses. They offer lower interest rates and more favorable terms compared to traditional loans.

Common Debt Issues

Small business owners often face challenges such as inability to meet payment schedules, discrepancies in loan agreements, or misinterpretations of the terms. Each of these issues can lead to debt delinquency, heightening the necessity for settlement negotiations.

Role of Legal Experts in Negotiation

Legal professionals play a crucial role in negotiating settlements, particularly when dealing with complex laws and regulations.

Protect Law Group’s Expertise

Protect Law Group emphasizes its proficiency in handling SBA and Treasury debt matters. Their legal experts assist clients by developing strategies, reviewing legal bases for appeals, and applying authoritative guidance to strengthen their clients’ positions.

Why Engage Legal Professionals?

Engaging legal professionals ensures you are adequately represented and that all negotiations adhere to the correct legal frameworks. This can drastically improve the outcome of settlement discussions with lenders.

Strategies for Effective Negotiation

A successful negotiation strategy can significantly influence the results of a settlement discussion.

Preparing for Negotiation

Preparation is key. This involves gathering relevant documentation, understanding your financial situation, and determining a realistic settlement goal. Legal advisors can assist in compiling and analyzing the necessary information.

Negotiation Techniques

Effective negotiation techniques include clear communication, establishing a strong legal position, and demonstrating a willingness to cooperate. Additionally, identifying mutually beneficial outcomes can lead to successful settlements.

The Offer in Compromise Program

One specific approach under the SBA framework is the Offer in Compromise (OIC). This program allows eligible debtors to settle for a lesser amount than owed, contingent upon demonstrating inability to pay the full amount.

Case Studies of Successful Settlements

Examining real-world instances of successful negotiations can provide valuable insights into what strategies work best.

Case Study 1: Small Business Debt Resolution

In one instance, a small business facing imminent foreclosure was able to secure a structured repayment plan through negotiation, allowing them to maintain operations while meeting their debt obligations over time.

Case Study 2: Offer in Compromise Success

Another example involves a debtor who utilized the Offer in Compromise program to drastically reduce their outstanding SBA obligations, bringing their financial situation under control and avoiding bankruptcy.

Common Mistakes in Negotiations

Understanding common pitfalls can prevent unnecessary challenges during negotiation.

Overlooking Legal Rights

Debtors often underestimate their legal rights or fail to seek legal counsel, which can lead to disadvantageous settlements.

Lack of Preparedness

Neglecting thorough preparation before entering negotiations can limit your ability to effectively argue your position.

Specific Steps in the Negotiation Process

Navigating negotiation requires a step-by-step approach to ensure all bases are covered.

Initial Consultation

The initial step involves consulting with legal experts to evaluate your case, understand options, and develop a tailored negotiation plan.

Developing a Plan

Creating a structured plan involves identifying objectives, timelines, and potential barriers. A clear plan will guide your negotiations and assist in maintaining focus on desired outcomes.

Filing Necessary Documents

Proper documentation is crucial. Ensuring all financial records and legal papers are correctly prepared and submitted will support your position in negotiations.

Entering Negotiations

Once adequately prepared, entering negotiations involves presenting your case, responding to lender queries, and working toward a mutually beneficial solution.

Finalizing the Settlement

The final stage is solidifying the agreed-upon terms into a legally binding document. This ensures the settlement is conclusive and all parties are clear on their responsibilities.

Protect Law Group’s Unique Offering

Protect Law Group distinguishes itself in the legal landscape with its specialized services and client-focused approach.

Comprehensive Legal Services

Their expertise encompasses SBA loans, debt management strategies, and litigation support, ensuring clients receive comprehensive assistance tailored to individual circumstances.

Customer Experience Excellence

Protect Law Group is recognized for exceeding customer expectations, providing not only legal expertise but also reassurance and support throughout the negotiation process.

Conclusion

Negotiating a settlement with a lender, particularly involving complex SBA loans, requires strategic planning, legal expertise, and effective communication. Legal professionals such as those at Protect Law Group offer invaluable support, helping navigate the intricate processes involved and securing the best possible outcomes for their clients. By understanding your rights, preparing thoroughly, and choosing the right legal partners, you can resolve your debt issues efficiently and move forward with financial stability.

Frequently Asked Questions

$298,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$298,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA.  Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice.  Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt.  After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.

$1,500,000 SBA COVID-EIDL LOAN - SBA OHA LITIGATION

$1,500,000 SBA COVID-EIDL LOAN - SBA OHA LITIGATION

Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency.  After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.

$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.

Read more Case Results
Providing real solutions to individuals who are facing SBA loan problems. Contact one of our experienced SBA Attorneys and Federal Agency Practitioners today for a Case Evaluation - (833) 428-0937.
©2021 Protect Law Group, All Rights Reserved.Design by T. Walker Consulting, Inc.