SBA Loan Default & Treasury's Aggressive Collection Tactics
Dealing with an SBA OIC case can be hard on anyone. This is why you should allow one of our lawyers to settle SBA debt on your behalf. Talk to us about your SBA loan default situation.
If you have a SBA loan default problem and you're working with your lender to wind down the business and settle the deficiency with an SBA Offer In Compromise (SBA OIC), time is of the essence. Lenders, banks, the CDC and the SBA generally do not wait much longer than 60-90 days after the defaulted borrower has been liquidated or shut down to tender an SBA OIC for consideration which, if accepted, could potentially release the guarantors from the deficiency for a lesser amount.
As part of the process, the bank, the lender, CDC or SBA should send you what is called the “60-day letter - click here to view: Sample 60 Day Referral Letter" where you'll be given only 60 days from the date of the letter to file an SBA OIC Package for SBA consideration. If you fail to timely submit an SBA OIC Package within the administrative time frame as noted in the letter you received, the bank or SBA will probably submit the file to the United States Department of Treasury for enforced collection, and thus, you will probably lose your one (1) time opportunity to settle for less than what is purportedly owed on the SBA loan debt through this special administrative process.
The United States Treasury Department rarely collects on these bad loans directly – rather they hire third-party collection agencies to handle them. These collection agencies don’t know anything about the history behind the loans – their job is to be ruthless in their collection efforts as they generally receive a generous percent of the collected amount or actually bought the so-called junk federal debt for pennies on the dollar.
Several of these federally approved third-party collection agencies or junk debt buyers are particularly nasty and rarely settle for less than 50% of the outstanding amount as the incentives for collection, litigation, and judgment pursuit are very high. Contrast that with the results that we have reviewed and settled and it’s easy to see the importance of addressing your outstanding SBA loan debt sooner rather than later, whether you’re working with a non-attorney consultant, an SBA Workout Attorney or the United States Treasury Department Circular 230 Practitioner, or attempting to do it yourself. If you think your banker is nasty or difficult to work with, you don’t want to experience the tactics of these collection agencies or junk debt buyers.
If you have an SBA loan default problem and received the 60-day referral letter to the Treasury Department, call us at 888-756-9969 to speak to one of our SBA Workout Attorneys and figure out your options. It's a complimentary Case Evaluation, or, simply a complete form to see if you pre-qualify for an SBA OIC.
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
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
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.
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.
Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.
The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.
After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
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