The Debt Collection Improvement Act
We will analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.
Small businesses could face serious financial issues that could lead to a SBA loan default. If this occurs, the lender is within their rights to file for a foreclosure. Once this begins, the business owner could face difficulty stopping it. A SBA Offer in Compromise could provide an opportunity to prevent the serious impact on the business owner's credit rating.
These offers are a settlement offered to the lender that is lower than the total outstanding balance. An attorney provides the borrower with an appropriate percentage to offer to the lender. They prepare the documentation of the settlement and submit to the lender. By representing the borrower, they help the business owner protect their business against further negative actions.
The first step for the business owner is to approach an attorney as soon as they receive the SBA demand letter. Once they receive the letter, they have a deadline assigned. The borrower must take action before this deadline or face immediate foreclosure. This could shut down their company entirely. It could also prevent them from acquiring a new business location in the future. Once the foreclosure occurs, the business owner is still responsible for the debt.
The attorney presents the settlement offer to the lender. They negotiate the settlement and may increase the percentage required. These loans are guaranteed by the Small Business Administration and require the business owner to submit a portion of the outstanding balance. The attorney works with the lender to determine a fair value and presents this value to the business owner.
Once the lender accepts the settlement, the remaining balance is written off. The attorney could help the business owner offset any additional taxes or fees. This could present the business owner with the most appropriate solution to stop the SBA loan foreclosure now.
Small business owners should take action when they receive a notification of default. A default gives their lender the right to file for a foreclosure and seize their property. For most small business owners, seizure could lead to a total shutdown of their business. Owners who need to acquire a settlement or Tax Offset Program should contact an attorney 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.
The clients are personally guaranteed an SBA 7(a) loan. The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients. We initially filed a Cross-Servicing Dispute, which was denied. As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services. Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.
Client personally guaranteed an SBA 7(a) loan for $100,000 from the lender. The SBA loan went into early default in 2006 less than 12 months from disbursement. The SBA paid the 7(a) guaranty monies to the lender and subsequently acquired the deficiency balance of about $96,000, including the right to collect against the guarantor. However, the SBA sent the Official 60-Day Due Process Notice to the Client's defunct business address instead of his personal residence, which he never received. As a result, the debt was transferred to Treasury's Bureau of Fiscal Service where substantial collection fees were assessed, including accrued interest per the promissory note. Treasury eventually referred the debt to a Private Collection Agency (PCA) - Pioneer Credit Recovery, Inc. Pioneer sent a demand letter claiming a debt balance of almost $310,000 - a shocking 223% increase from the original loan amount assigned to the SBA. Client's social security disability benefits were seized through the Treasury Offset Program (TOP). Client hired the Firm to represent him as the debt continued to snowball despite seizure of his social security benefits and federal tax refunds as the involuntary payments were first applied to Treasury's collection fees, then to accrued interest with minimal allocation to the SBA principal balance.
We initially submitted a Cross-Servicing Dispute (CSD) challenging the referral of the debt to Treasury based on the defective notice sent to the defunct business address. Despite overwhelming evidence proving a violation of the Client's Due Process rights, the SBA still rejected the CSD. As a result, an Appeals Petition was filed with the SBA Office of Hearings & Appeals (OHA) Court challenging the SBA decision and its certification the debt was legally enforceable in the amount claimed. After several months of litigation before the SBA OHA Court, our Firm Attorney successfully negotiated an Offer in Compromise (OIC) Term Workout with the SBA Supervising Trial Attorney for $82,000 spread over a term of 74 months at a significantly reduced interest rate saving the Client an estimated $241,000 in Treasury collection fees, accrued interest (contract interest rate and Current Value of Funds Rate (CVFR)), and the PCA contingency fee.
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.
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