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Common Misconceptions about SBA Offers in Compromise: Debunking the Myths

Discover the truth behind common misconceptions about SBA Offers in Compromise. Get insights into the myths of the OIC. Find out how to navigate these misconceptions effectively.

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Common Misconceptions about SBA Offers in Compromise: Debunking the Myths

Introduction

When it comes to the world of small business finances, one topic that often causes confusion and uncertainty is SBA (Small Business Administration) Offers in Compromise (OIC).  However, along with genuine information, there are several misconceptions floating around that can mislead business owners. In this comprehensive guide, we're here to debunk these myths and provide accurate insights into SBA Offers in Compromise.

Common Misconceptions about SBA Offers in Compromise: Debunking the Myths

Myth: SBA Offers in Compromise are a Guaranteed Solution

Many business owners believe that once they apply for an SBA Offer in Compromise, their SBA debts will automatically be reduced, and their financial burdens will disappear. However, this is far from the truth. SBA Offers in Compromise go through a rigorous evaluation process, and not all offers are accepted. The success of your offer depends on various factors, including your ability to demonstrate genuine financial distress.

Myth: Applying for an Offer in Compromise is a Simple Process

Some people think that applying for an SBA Offer in Compromise is as easy as filling out a basic form. In reality, the application process is complex and requires meticulous attention to detail. It involves submitting detailed financial information, tax documents, and a compelling case for your financial hardship. Working with an attorney experienced in SBA OICs can significantly improve your chances of success.

Myth: SBA Offers in Compromise are Only for People on the Brink of Bankruptcy

It's a common misconception that only people on the verge of bankruptcy qualify for an SBA Offer in Compromise. While financial hardship is a key criterion, it doesn't mean you need to be on the brink of collapse. As long as you can prove that paying the full amount would cause significant financial strain, you may be eligible.

Myth: Applying for an SBA Offer in Compromise Guarantees a Temporary Halt in Collections

Another misconception is that applying for an SBA Offer in Compromise puts an immediate stop to all collections activities by the SBA or Treasury. While the application is being evaluated collections can continue.

Myth: SBA Offers in Compromise are a "One-Size-Fits-All" Solution

Every person's financial situation is unique, and SBA Offers in Compromise are not a standardized solution. The SBA takes into account various factors, including your assets, income, expenses, and future earning potential, when evaluating your application. There is no one-size-fits-all approach, and outcomes can vary widely.

Myth: Acceptance of an SBA Offer in Compromise Automatically Restores Good Credit

While successfully settling your debt through an SBA Offer in Compromise is a positive step, it doesn't automatically repair your credit score overnight. The process of rebuilding your credit takes time and consistent financial responsibility.

FAQs

Can I Apply for an SBA Offer in Compromise if I'm Still Operating My Business?

The SBA's standard operating procedures state that such an offer is permissible, but in practice the SBA usually requires that the business has been closed with the secretary of state.

Are There Any Upfront Fees for Applying for an SBA Offer in Compromise?

No, there are no upfront fees required to submit an application for an SBA Offer in Compromise. However, qualified legal counsel will request payment for their services. Furthermore, most accepted OICs must be paid in a lump sum within 60 days of acceptance.

Can I Negotiate the Terms of an Accepted Offer in Compromise?

Once the SBA accepts your Offer in Compromise, you are bound by the terms. Negotiation is not possible after acceptance.

How Long Does the SBA Offer in Compromise Process Usually Take?

The processing time for an SBA Offer in Compromise can vary widely, often taking several months. Patience is crucial during this period.

Conclusion

Separating fact from fiction is vital when it comes to SBA Offers in Compromise. By dispelling these common misconceptions, we hope to provide clarity and guidance for business owners seeking solutions to their SBA debt challenges. Remember, seeking professional advice and thoroughly understanding the process can significantly increase your chances of a successful outcome. Please contact us for more information.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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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

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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

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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.

$383,000 SBA 7A LOAN - NEGOTIATED RELEASE OF LIEN FOR CONSIDERATION

$383,000 SBA 7A LOAN - NEGOTIATED RELEASE OF LIEN FOR CONSIDERATION

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.

$58,000 SBA 7A LOAN - AWG HEARING DEFENSE

$58,000 SBA 7A LOAN - AWG HEARING DEFENSE

Client personally guaranteed SBA 7(a) loan balance of $58,000.  The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings.  We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.

$488,000 SBA 7A LOAN - SBA OHA LITIGATION

$488,000 SBA 7A LOAN - SBA OHA LITIGATION

The clients are personally guaranteed an SBA 7(a) loan.  The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients.  We initially filed a Cross-Servicing Dispute, which was denied.  As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services.  Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.

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