SBA Has Stopped Auto-Enrollment In The Hardship Accommodation Plan for COVID EIDL Loans
SBA COVID EIDL Loan Default? Learn about HAP, OIC, Workout or Bankruptcy
The federal government can garnish up to 15% of your paycheck without first obtaining a civil court judgment. This can strike at the heart of your finances.
Book a Consultation CallThis percentage may seem modest, but it can accumulate quickly, especially for those living paycheck to paycheck. The administrative wage garnishment process allows the government to take a portion of your paycheck without first obtaining a civil court judgment. As such, the SBA or other creditor agencies must give you notice thirty days in advance and an opportunity to request a hearing or negotiate a payment plan. Courts have interpreted the six-year statute of limitations for actions for monetary damages as applicable only to lawsuits filed in court. It does not apply to non-judicial collection methods, such as administrative wage garnishment.
Administrative wage garnishment can hamper your finances. Unless you agree in writing to a higher amount, the government can garnish your disposable pay up to 15%. It's crucial to understand that “disposable pay” is calculated after mandatory deductions, so knowing your deductions can help you estimate the true impact of garnishment. Federal law also limits total garnishments to 25% of disposable pay. Therefore, if you have other garnishments, the total of all garnishments, including the federal government, cannot exceed 25%.
"Disposable pay" means your pay after the deduction of health insurance premiums and any amount required by law to be withheld. Such amounts include Social Security taxes, withholding taxes, Medicare, etc. Therefore, if you had a previous garnishment of 15% in place and then the government obtained an administrative wage garnishment order against you, the administrative wage garnishment would be limited to an additional 10% of your income. Taking 15% of your paycheck can really affect your ability to pay your bills, raise your kids, and save for retirement. Many individuals do not realize that even small garnishments can drastically impact your budgeting and future financial goals, making it imperative to take action if you receive notice of garnishment.
As soon as you receive the notice of intended administrative wage garnishment, you must request a hearing. Alternatively, you can contact the Treasury and arrange for a payment plan. If you request a hearing timely, an administrative wage garnishment cannot start until you've had a chance to present your case. Be proactive; it’s essential to keep records of all communications and ensure prompt submission of your hearing request to avoid complications. If you fail to submit a hearing request promptly, the administrative wage garnishment will start.
Going forward, you may present evidence that you don't owe the debt, the debt is not enforceable, or the amount of the debt is incorrect. Also, you may present evidence that an administrative wage garnishment would cause financial hardship if implemented. Lastly, if you were involuntarily terminated from your previous job and have been currently employed for less than 12 months, a wage garnishment cannot proceed. It’s advised to gather any documentation that supports your claims, as this information will be crucial for your defense.
You will need to file a brief with facts, evidence, and legal support for your position, as well as financials if you claim financial hardship. To that end, our assertive attorneys have represented clients all over the country in administrative wage garnishment hearings. Protect Law Group has the experience obtaining the necessary evidence and presenting your defenses. With the right legal representation, you can navigate this challenging situation more effectively and work toward a favorable resolution.
Contact our office today and one of our attorneys will discuss your matter with you at no cost.
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’s small business obtained an SBA 7(a) loan for $150,000. He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made. The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.
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.
Small business sole proprietor obtained an SBA COVID-EIDL loan for $500,000. Client defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for aggressive collection. Treasury added $180,000 in collection fees totaling $680,000+. Client tried to negotiate with Treasury but was only offered a 3-year or 10-year repayment plan. Client hired the Firm to represent before the SBA, Treasury and a Private Collection Agency. After securing government records through discovery and reviewing them, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury citing a host of purported violations. The Firm was able to negotiate a reinstatement and recall of the loan back to the SBA, participation in the Hardship Accommodation Plan, termination of Treasury's enforced collection and removal of the statutory collection fees.
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