Factors considered in an SBA Offer in Compromise review
We help people who need to avoid SBA loan default by teaching them about SBA offer in compromise and about various SBA loan problems
If you've been served an administrative wage garnishment notice, you need to know how to defend yourself. Read on to learn the best defenses.
Book a Consultation CallBeing in debt is never a fun experience, but it is one that most Americans are familiar with. Almost all adult Americans have some form of debt. Moreover, the type and severity of this debt vary from person to person, but it is a situation that bonds us whether we like it or not.
Administrative Wage Garnishment Notice
If you owe a debt to a government agency, such as the Small Business Administration, you might have an administrative wage garnishment notice sent to you. Garnishment is a legal remedy pursued by the government. If successful, they will be able to take a percentage of your paycheck each week before it gets to you.
How do you defend yourself against this type of scenario? Read on and we'll walk you through what you need to know about administrative wage garnishment cases.
You might owe money to a government agency for a number of reasons. For instance, you might've taken a government backed loan out, obtained federal aid, or used government backed school loans. However, the good news is that the government cannot garnish your wages without providing you with a hearing.
In the most basic terms, garnishment is the legal process in which the government requires a third party to turn over money or property that would otherwise be owed to a debtor. In this case, the government has a portion of your wages turned over to them instead of you.
Some people believe the only way to fight wage garnishment is to declare bankruptcy but this isn't true. The law affords you defenses and tactics you can employ to fight the administrative wage garnishment process.
The moment you get a garnishment notice in the mail you should move to hire an experienced attorney for your case. It can be difficult to defend yourself against this disruptive legal process, but it isn't impossible with the right help on your side.
An attorney will be able to look at the facts of your case and develop the best possible strategy. As experienced attorneys, they will know the ins and outs of the law and ensure your paperwork is filed correctly and on time.
However, you only have a very limited amount of time after you receive the notice to request a hearing.
What grounds can you object to wage garnishment?
If you've already paid all the money you owe the government via other means, you should certainly mention it when writing when your objection. The last thing you want is for the government to get more money than they are actually owed.
Also, you can argue that you don't owe the debt. You and your attorney will have to prove this fact.
A garnishment can be challenged because the amount claimed you owe is incorrect.
Further, you may also object to a garnishment based on the fact that it would cause a financial hardship.
If you file an object formally, you should hear from a government hearing officer within a few weeks about an official hearing. If you fail to timely file a hearing request, a garnishment order will be issued to your employer.
The hearing is a chance for you to present your evidence and arguments in favor of your defenses.
The hearing is usually done by "paper", that is, you do not have to personally appear. Your attorney submits a legal brief supported by documentation.
It's never fun to receive a garnishment notice in your mailbox.
If you do receive one, it's of the utmost importance that you respond quickly. The above information can help you to determine how to properly defend yourself against a garnishment notice and what next steps you need to take.
Need immediate help with your case? Give us a call anytime or chat with us online for assistance. We'll be able to provide a free case evaluation.
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.
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.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
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