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Divorce Attorneys Need to Avoid This 1 SBA Loan Pitfall

A settlement or judgement in a divorce does not absolve your client of liability on a defaulted SBA loan. Don't leave your client on the hook.

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Divorce Attorneys Need to Avoid This 1 SBA Loan Pitfall

A settlement or judgement in a divorce does not absolve your client of liability on a defaulted SBA loan.

1. The Split

The common situation exists where a husband and wife co-own a business and obtain an SBA backed loan.  Both parties sign a personal guarantee.  Some time later the marriage fails and the parties split.  However, as part of a settlement or judgement, one party takes over the business and remains responsible for the SBA loan.

2. Mistake: The One Spouse is No Longer Responsible for the Debt in the Eyes of the Federal Government

The common mistake is assuming that because the marital settlement or divorce judgement states that one party is responsible for the SBA loan that the other spouse is absolved from liability.  However, unless you have obtained a release from the personal guarantee, the personal guarantee remains in effect as to your client.

More importantly, the federal government does not care what the settlement or judgement says.  Your client can seek indemnity form his or her former spouse as far as the SBA cares.  This means, for example, if your client and his or her spouse obtained a $500,000 SBA loan, and your client's ex-spouse thereafter takes over the business and responsibility for the loan and defaults - your client remains on the hook for the $500,000 loan because he or she signed a personal guarantee.

3. Now Your Client is Subject to Collection by the Federal Government

Your client can either pay the debt or risk submission to collection actions by the federal government.  Collection can include a myriad of tools including filing a law suit, foreclosure, administrative wage garnishment, federal benefit or salary offset and tax refund offset.  Your client may seek indemnity from his or her ex-spouse as a remedy, but while that process proceeds ... the government commences collection.

4. Your Client May be Able to Settle the Debt

Protect Law Group provides assertive representation of clients fighting the SBA and collection by the federal government.  Your client may settle his or her SBA debt with experienced legal representation.  Better yet, move in front of the problem and contact Protect Law Group to help release your client from the personal guarantee.

5. Download Your Free White Paper

Click here to download your free white paper from Protect Law Group:

SBA Loan Guarantees and Divorce – Don’t Leave Your Client On the Hook

Please contact us for a consultation at: 1-888-756-9969.

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.

$350,000 SBA 7A LOAN - NEGOTIATED STRUCTURED WORKOUT AGREEMENT

$350,000 SBA 7A LOAN - NEGOTIATED STRUCTURED WORKOUT AGREEMENT

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. 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 we also save him approximately $227,945 over the term of the workout.

$1,200,000 SBA 7A LOAN - SBA OHA LITIGATION

$1,200,000 SBA 7A LOAN - SBA OHA LITIGATION

Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture.  After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against our client’s monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars.  We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA).  As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy), but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.

$300,000 SBA 7A LOAN - SBA OIC TERM SETTLEMENT

$300,000 SBA 7A LOAN - SBA OIC TERM SETTLEMENT

Clients personally guaranteed SBA 7(a) loan balance of over $300,000.  Clients also pledged their home as additional collateral.  SBA OIC accepted for $87,000 with full release of lien against home.

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