How Do I Stop an Administrative Wage Garnishment?
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Often times, SBA debtors who have signed personal guarantees associated with an SBA Loan Agreement think that simply filing for Chapter 7 Bankruptcy is the proverbial “golden ticket” to fix the SBA loan problems and get out of personal liability with an SBA loan default. However, just because an SBA debtor files for Chapter 7 Bankruptcy versus an SBA Offer in Compromise, does not mean that the debtor is “out of the woods.”
Banks and lenders try to find ways to create or maintain superior leverage even though an SBA debtor threatens to file for bankruptcy protection after an SBA loan default. However, the story does not end with a mere electronic or paper filing. Lenders and their attorneys do scrutinize the Chapter 7 petition pre-filing actions of SBA debtors to discover if distressed SBA debtors have improperly disposed of collateral, transferred property or other reachable assets through "quitclaim" or other suspicious "gift" transactions to family, friends or other third parties to keep them from their reaches.
Chapter 7 bankruptcy debtors, in their filings, are required to disclose to the United States Trustee all of their assets, liabilities, income, and any anticipated increase in income. Any intentional failure to do so, can not only expose the SBA debtors to the adversarial complaint process and disqualify their discharge of certain debts, but can also also initiate possible referrals to the United States Department of Justice for criminal fraud and may even result in a filing of federal indictment with multiple counts of bankruptcy fraud for concealing and knowingly making false oaths and declarations.
Additionally, SBA debtors may have made misrepresentations in the origination of the SBA loan and during the servicing and work out stages with the Lender or SBA in their financial statements and written submissions to them. Lenders review these materials as part of their due diligence to protect their rights to collect on the SBA Guaranty and mitigate further damage to its and the SBA's recovery efforts.
In such instances, there may also be grounds by the Lenders (and even the SBA) to object to a Chapter 7 bankruptcy discharge or otherwise contest the bankruptcy in its entirety when borrowers or SBA loan guarantors engage in any such malfeasance. In these cases, adversarial proceedings in bankruptcy can be the forum through which lenders can resolve any guaranty affecting deficiencies contained within their files.
Dealing with the idea that you might be facing SBA loan default can be terrifying. The SBA attorneys in our office are skilled at helping clients understand all facets of their situations. If, for instance, you need to know what an SBA offer in compromise is, you can simply ask your lawyer. You should never face SBA loan problems alone. It is important to retain the services of an attorney who can help you through this difficult time in your life. We urge you to read about the services that we have available and to contact us if you believe that we can be of assistance to you right now.
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.
Clients personally guaranteed SBA 7(a) loan balance of over $300,000. Clients also pledged their homes as additional collateral. SBA OIC accepted $87,000 with the full lien release against the home.
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.
Client’s small business obtained an SBA 7(a) loan for $750,000. She and her husband signed personal guarantees exposing all of their non-exempt income and assets. With just 18 months left on the maturity date and payment on the remaining balance, the Great Recession of 2008 hit, which ultimately caused the business to fail and default on the loan terms. The 7(a) lender accelerated and sent a demand for full payment of the remaining loan balance. The SBA lender’s note allowed for a default interest rate of about 7% per year. In response to the lender's aggressive collection action, Client's husband filed for Chapter 7 bankruptcy in an attempt to protect against their personal assets. However, his bankruptcy discharge did not relieve the Client's personal guarantee liability for the SBA debt. The SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection against the Client to the SBA. The Client then received the SBA Official 60-Day Notice. After conducting a Case Evaluation with her, she then hired the Firm to respond and negotiate on her behalf with just 34 days left before the impending referral to Treasury. The Client wanted to dispute the SBA’s alleged debt balance as stated in the 60-Day Notice by claiming the 7(a) lender failed to liquidate business collateral in a commercially reasonable manner - which if done properly - proceeds would have paid back the entire debt balance. However, due to time constraints, waivers contained in the SBA loan instruments, including the fact the Client was not able to inspect the SBA's records for investigation purposes before the remaining deadline, Client agreed to submit a Structured Workout for the alleged balance in response to the Official 60-Day Notice as she was not eligible for an Offer in Compromise (OIC) because of equity in non-exempt income and assets. After back and forth negotiations, the SBA Loan Specialist approved the Workout proposal, reducing the Client's purported liability by nearly $142,142.27 in accrued interest, and statutory collection fees. Without the Firm's intervention and subsequent approval of the Workout proposal, the Client's debt amount (with accrued interest, Treasury's statutory collection fee and Treasury's interest based on the Current Value of Funds Rate (CVFR) would have been nearly $291,030.
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