What to Expect From the Loan Debt Collection Process
If you're struggling with loan debt, the last thing you need is to be blindsided by collectors. Here's what to expect during the debt collection process.
Learn about reviewing a credit report after an SBA loan default, identifying disputed entries, and documenting concerns about reported debt.
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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 SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. The client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but our SBA lawyers also saved him approximately $227,945 over the term of the workout.
The client personally guaranteed an SBA 504 loan balance of $375,000. Debt had been cross-referred to the Treasury at the time we got involved with the case. We successfully had debt recalled to the SBA where we then presented an SBA OIC that was accepted for $58,000.
Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency. After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.
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