Elements of a Successful SBA Offer in Compromise
SBA loan settlements require specific knowledge of current policies and changes. Here are the elements of a successful SBA offer in compromise.
Many businesses of all sizes are struggling with debt. Both new and older troubled businesses have found that government legal action resulting from an SBA loan default magnifies their financial difficulties. An SBA loan foreclosure can also result in the loss of the owner's home and other personal assets.
The Inspector General of the SBA (OIG) has criticized the SBA's oversight of lenders and called for tighter controls. To date, the OIG's aggressive pursuit of lenders, brokers and others has resulted in numerous indictments, convictions and hefty fines. OIG audits of lenders found that 44% of the reviewed loans had inadequate documentation.
A qualified attorney from the Protect Law Group is able to conduct a comprehensive audit of an SBA loan in order to determine if the lender committed fraud or if any regulatory deficiencies or other SOP violations took place. If this audit reveals regulatory mishaps, a petition can be submitted to the SBA (or any other federal agency holding the debt) that will disclose the findings of the audit and ask that any and all collection actions be terminated.
The goal is to show that the SBA debt is not "legally enforceable" so that the government will seek recovery from the fraudulent bank or lender. Because of the Federal Statute of Limitations, the sooner this audit is performed and action is taken, the better.
At some point, a business owner with a past-due loan will receive an SBA demand letter. This letter will state that the loan will be referred to the Department of the Treasury unless an SBA Offer in Compromise is received within 60 days from the date of the letter. This is a one-time opportunity to settle the SBA loan for less than the amount that they say is owed.
The Tax Offset Program is employed by the Treasury to collect a defaulted loan balance. They will take any tax refunds, 15% of any federal benefits such as social security and garnish 15% of your net wages.
The attorneys at Protect Law Group have the knowledge and experience necessary to erase or settle your SBA debt. Don't delay. As a personal guarantor of this debt, your home is in jeopardy. Contact them today for a free case evaluation.
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.
Client personally guaranteed an SBA 7(a) loan for $100,000 from the lender. The SBA loan went into early default in 2006 less than 12 months from disbursement. The SBA paid the 7(a) guaranty monies to the lender and subsequently acquired the deficiency balance of about $96,000, including the right to collect against the guarantor. However, the SBA sent the Official 60-Day Due Process Notice to the Client's defunct business address instead of his personal residence, which he never received. As a result, the debt was transferred to Treasury's Bureau of Fiscal Service where substantial collection fees were assessed, including accrued interest per the promissory note. Treasury eventually referred the debt to a Private Collection Agency (PCA) - Pioneer Credit Recovery, Inc. Pioneer sent a demand letter claiming a debt balance of almost $310,000 - a shocking 223% increase from the original loan amount assigned to the SBA. Client's social security disability benefits were seized through the Treasury Offset Program (TOP). Client hired the Firm to represent him as the debt continued to snowball despite seizure of his social security benefits and federal tax refunds as the involuntary payments were first applied to Treasury's collection fees, then to accrued interest with minimal allocation to the SBA principal balance.
We initially submitted a Cross-Servicing Dispute (CSD) challenging the referral of the debt to Treasury based on the defective notice sent to the defunct business address. Despite overwhelming evidence proving a violation of the Client's Due Process rights, the SBA still rejected the CSD. As a result, an Appeals Petition was filed with the SBA Office of Hearings & Appeals (OHA) Court challenging the SBA decision and its certification the debt was legally enforceable in the amount claimed. After several months of litigation before the SBA OHA Court, our Firm Attorney successfully negotiated an Offer in Compromise (OIC) Term Workout with the SBA Supervising Trial Attorney for $82,000 spread over a term of 74 months at a significantly reduced interest rate saving the Client an estimated $241,000 in Treasury collection fees, accrued interest (contract interest rate and Current Value of Funds Rate (CVFR)), and the PCA contingency fee.
Clients personally guaranteed an SBA 504 loan balance of $337,000. The Third Party Lender had obtained a Judgment against the clients. We represented clients before the SBA and negotiated an SBA OIC that was accepted for $30,000.
Clients borrowed and personally guaranteed an SBA 7(a) 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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