What Is a Tax Refund Offset? How Does It Work?
Have you ever asked yourself the question: what is a tax refund offset? Do you want to know how it works? Read on to learn more.
Learn about different bankruptcy options for small business owners. Contact Protect Law Group serving San Diego, Orange, and Los Angeles Counties.
Book a Consultation CallFor small business owners facing overwhelming debt burdens, bankruptcy can be a viable option for gaining financial relief and a fresh start. However, when it comes to dealing with Small Business Administration (SBA) debt, understanding the bankruptcy options available is crucial. In this blog post, Protect Law Group will explore the various bankruptcy options specifically tailored for small business owners with SBA debts.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a common option for small business owners looking to eliminate their SBA debts. Through this process, the business's assets are liquidated, and the proceeds will be used to pay off creditors, including the SBA. Once the debts are discharged, the business owner can start anew without the burden of SBA obligations.
For small business owners who wish to continue operating their businesses while seeking debt relief, Chapter 11 bankruptcy may be the right option. This type of bankruptcy allows for the restructuring of debts, including SBA loans, by developing a repayment plan that is manageable for the business. The plan typically extends the repayment period and may involve negotiating reduced interest rates or lower monthly payments.
In some cases, small business owners may be able to negotiate loan workouts or settlements directly with the SBA. This involves discussing revised repayment terms or exploring the possibility of settling the debt for a reduced amount. Working with an experienced bankruptcy attorney during these negotiations can greatly increase the chances of securing favorable terms.
The SBA offers an option called an Offer in Compromise (OIC), which allows small business owners to settle their SBA debts for less than the amount owed. This option is typically available if the business demonstrates an inability to repay the debt in full and can provide supporting financial documentation. While an OIC can be a viable solution, it's important to note that the decision lies with the SBA.
For small business owners struggling with SBA debts, exploring bankruptcy options can provide a path to financial recovery. Book a consultation call with one of Protect Law Group’s SBA loan attorneys serving San Diego, Orange, and Los Angeles Counties today!
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.
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.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
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.
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