For Your Business: Should You Consider Small Loans from the SBA?
The SBA can help advance such entrepreneurs small loans to give their firms a chance at thriving again. But you will have to sign a personal guarantee.
Learn how a Cross-Servicing Dispute can help businesses challenge the transfer of their debt to the Treasury, potentially eliminating hefty collection fees and returning the debt to a more favorable agency.
Book a Consultation CallCross-Servicing is a government-wide program managed by the Treasury's Bureau of Fiscal Service (BFS), designed to collect delinquent non-tax debts on behalf of federal agencies. This program fulfills the requirements set out in the Debt Collection Improvement Act of 1996 (DCIA). Under the DCIA, any eligible debt that remains delinquent for more than 180 days must be referred to BFS for cross-servicing.
However, when debts are transferred to the Treasury, personal guarantors often face severe consequences, including steep collection fees. If you have a defaulted SBA loan or another federal debt that has been transferred to Treasury, disputing this transfer could save you from the significant financial burden imposed by the Treasury. This process, known as a Cross-Servicing Dispute, may be your best avenue to reduce fees and work with more favorable terms.
As part of the Cross-Servicing program, the Treasury’s BFS is responsible for taking appropriate actions to collect, compromise, or suspend debt collection, or in some cases, terminate collection efforts. While agencies are encouraged to use available tools to collect debts before the 180-day mark, once the debt is referred, it becomes more difficult to negotiate or compromise, especially since Treasury adds a significant collection fee, ranging from 28% to 30% of the debt amount.
Moreover, the Digital Accountability and Transparency Act (DATA Act) shortened the window for federal agencies to notify the Treasury of past-due debts from 180 days to 120 days, accelerating the process.
A Cross-Servicing Dispute provides an opportunity to challenge the transfer of your debt to the Treasury. In most cases, the Treasury is reluctant to compromise on debts, making it essential to return the debt to the originating agency, such as the SBA. Successfully disputing the debt transfer can provide two key benefits:
To initiate a Cross-Servicing Dispute, you must present evidence, facts, and legal arguments that demonstrate the debt should not have been transferred to the Treasury in the first place. Common grounds for dispute include:
To transfer a federal agency debt (such as a defaulted SBA loan) to the Treasury, the originating agency (e.g., SBA) must certify in writing that the debt is valid and legally enforceable. They must also confirm that all legal prerequisites to collection have been met. If these certifications were incorrect or improperly completed, they can serve as a basis for your dispute.
The first step in disputing your debt is to obtain a copy of the Annual Debt Certification Agreement between the federal agency and the Treasury. This document outlines the conditions for debt transfer and often contains provisions that can be challenged. A successful dispute typically requires an in-depth investigation into whether the debt was legally valid, whether proper procedures were followed, and whether any errors occurred during the transfer process.
If you're considering filing a Cross-Servicing Dispute, it is highly recommended that you seek legal assistance. The process involves gathering evidence, analyzing legal documents, and presenting formal arguments to federal agencies. Attempting to handle this on your own can result in missed opportunities to present the strongest case.
Disputing a debt transferred to Treasury requires expertise in federal debt collection laws and administrative procedures. At Protect Law Group, our attorneys have years of experience in SBA loan workouts, debt resolution, and Cross-Servicing Disputes. We will help:
We understand what evidence to look for, how to build a strong case, and how to navigate the complex bureaucratic system to maximize your chances of success.
If your debt has been transferred to the Treasury's Bureau of Fiscal Service, don't wait until the situation worsens. A Cross-Servicing Dispute could help you avoid excessive collection fees and return your debt to a more manageable agency. Contact Protect Law Group today to schedule a consultation with one of our experienced attorneys.
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 balance of over $150,000. Business failed and eventually shut down. SBA then pursued client for the balance. We intervened and was able to present an SBA OIC that was accepted for $30,000.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) f borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
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