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Cross-Servicing Dispute

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Cross-Servicing Dispute

Cross-Servicing is a consolidated government-wide program operated by Treasury's Bureau of Fiscal Service (BFS) that fulfills the requirement of The Debt Collection Improvement Act of 1996 (DCIA) to collect delinquent, non-tax debt on behalf of federal agencies. As required by the DCIA, an agency must refer any eligible debt more than 180 days delinquent to Fiscal Service for cross-servicing.

As part of the Cross-Servicing program, BFS must take appropriate action to service, collect, compromise, or suspend or terminate collection action on the debt. BFS encourages federal creditor agencies (agencies to whom debt is owed) to transfer all eligible delinquent debts for debt collection services before they are delinquent 180 days. Agencies are strongly encouraged to use all available debt collection tools.

The DATA Act changed the notice requirement for federal agencies to notify the Treasury Secretary of past due, nontax debts for the purposes of administrative offset from 180 days to 120 days.

In order to transfer a federal agency debt (such as a defaulted SBA loan) to BFS, the parties must execute and comply with the applicable Annual Debt Certification Agreement between the federal agencies.

The Cross-Servicing Dispute presents an avenue to release your debt from the clutches of the Treasury Department’s blackhole and back to the SBA or originating federal agency.  In most cases, it is necessary to return the debt to the SBA or other originating federal agency given the Treasury’s extreme reluctance to compromise debts referred to it.

The Cross-Servicing Dispute must present facts, evidence and legal arguments establishing that your debt should have never been transferred to the Treasury.  If successful, this strategy accomplishes two (2) goals: 1. It can eliminate the 28% to 30% “collection fee” that Treasury adds to your debt; and 2. It can transfer the debt back to the SBA or other originating agency, which potentially means a more realistic offer in compromise.

In order for the SBA or other federal agency to transfer your debt to the Department of Treasury, an employee of the SBA must certify, in writing, that the debt being transferred is valid, legally enforceable, and that there are no legal bars to collection. Creditor agencies, such as the SBA, must also certify that they have complied with all prerequisites to a particular collection action under the laws, regulations or policies applicable to the agency unless the creditor agency has requested, and the Department of Treasury has agreed, to do so on the creditor agency's behalf.

Thus, it is important to obtain a copy of the applicable Annual Debt Certification Agreement, as the provisions contained in this Agreement, often form the basis upon which to file or submit a formal petition for a Cross-Servicing Dispute.  Generally, you would want to investigate whether you can challenge the cross-servicing of the debt from the federal creditor agency to the Treasury Department’s BFS.  Some of these challenges could be based on arguments and evidence that the debt is not valid or legally enforceable, that your due process rights were violated and/or that the administrative fees, interest and/or penalties are inequitable.

You can view a Cross-Servicing Dispute Form by clicking: CSD Form

The Cross-Servicing Dispute is not as simple as asking Treasury to return the debt. We do not recommend that you simply try disputing your debt by yourself.  Instead, it would be better if you hire us to investigate the grounds for a possible cross-servicing dispute, and where applicable, formally prepare a Petition for Cross-Servicing Dispute on your behalf and process your case through the federal agency’s administrative appeals channels.  You need an experienced attorney to gather and analyze documents, evidence and apply legal arguments.  Our aggressive attorneys know what evidence and facts to look for and how to apply legal theories to support your Cross-Servicing Dispute.

Contact us today for a Case Evaluation.

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Cross-Servicing Dispute


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.



The client personally guaranteed an SBA 504 loan balance of $375,000.  Debt had been cross-referred to the Treasury at the time we got involved with the case.  We successfully had debt recalled to the SBA where we then presented an SBA OIC that was accepted for $58,000.



The client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.

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