Chapter 11 Subchapter V Bankruptcy: Explained in Plain English
Chapter 11 Subchapter V has redefined the process of small business bankruptcies. Learn what's changed (and how Protect Law Group can help) in this guide.
Dispute Credit Report
As part of your annual to do list, obtain a copy of your credit report to check for negative credit marks. If you obtained an SBA loan or signed as a personal guarantor on an SBA loan and the loan went into default, the SBA may report the default on your credit report. To that end, federal law authorizes the SBA to report such defaulted debt to credit reporting agencies. Experian, TransUnion and Equifax comprise the three main credit reporting agencies.
A defaulted loan will negatively affect your credit score, make lenders unlikely to lend to you for purchases such as a car or house or it will make those purchases much more expensive in the form of a higher interest rate.
In certain circumstances, you can force the removal of a negative credit mark. However, you need to prove that the defaulted debt must be removed. For instance, common reasons for removal of a negative credit reporting include the following:
In any case, you must obtain and provide evidence that shows why the negative credit reporting should be removed. Simply writing a letter asking the credit reporting agencies to re-investigate fails in accomplishing your goal more often than not.
Again, simply writing a letter to the credit reporting agencies is not likely to accomplish much. An effective letter includes evidence and explains why the evidence exonerates you and dictates removal of the debt on your credit report.
Unfortunately, telephone disputes fail to create an adequate record for future use. Moreover, although federal law requires the nationwide credit reporting agencies to maintain a toll-free number for consumers, telephone access is not always consistent. Equifax, TransUnion and Experian paid a total of $2.5 million to settle charges by the FTC that they failed to meet legal requirements for telephone access.
Moreover, internet disputes make a dubious remedy as well. When a consumer makes a dispute through a nationwide credit reporting agency website, the website confides consumers to a "check-box" dispute form. This provides the credit reporting agencies with defenses premised on the lack of detail in a dispute. Furthermore, online disputes make documentation of your disputed file difficult.
In addition to including your evidence, your written dispute needs to be clear, complete and unambiguous. Furthermore, suggest steps for the re-investigation. Lastly, your steps should be aligned with federal law and federal regulations.
If the SBA or the credit reporting agencies refuse to remove the debt, you may still have rights under the Fair Credit Reporting Act and other laws and may be able to pursue litigation. Contact a local attorney familiar with this type of law. You have the ability to file a complaint with the government and ask the Consumer Financial Protection Bureau to investigate on your behalf, as well.
Our experienced, federally authorized attorneys will aggressively pursue your rights. Protect Law Group takes a systematic, proven approach to your credit report issues regarding SBA loans. Protect Law Group first investigates your claim and determines whether grounds exist to dispute your credit report. If our investigation reveals evidence that exonerates you from the debt or requires removal of the negative credit mark, our skilled attorneys will draft your re-investigation letter with applicable documentation and evidence. Lastly, if the credit reporting agencies, SBA or other federal agency refuse to remove the negative credit mark in light of the evidence, our attorneys will draft a complaint to be filed with the Consumer Financial Protection Bureau on your behalf.
Call our office today at 833-428-0937 and schedule your free initial case evaluation. Feel free to contact us via our website as well - www.sba-attorneys.com.
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 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.
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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