Importance of Having Experienced Legal Representation
Having experienced legal representation is essential when it comes to settling your SBA debt. Contact Protect Law Group in Carlsbad, CA today!
Defaulting on a COVID EIDL loan can seriously affect your credit and trigger federal collection actions like the Treasury Offset Program. Learn what happens and how to protect yourself.
Book a Consultation CallThe Economic Injury Disaster Loan (EIDL) program offered essential support to businesses during the COVID-19 pandemic. However, as repayment obligations set in, many borrowers now face the harsh consequences of defaulting on these federal loans. Understanding how EIDL loan defaults impact credit and trigger federal collection efforts is essential for protecting your financial and legal well-being.
An EIDL loan default occurs when a borrower fails to meet their repayment obligations under the loan agreement. This may happen due to business closure, cash flow shortages, or misunderstandings about repayment timelines.
Once in default, the SBA initiates a multi-step collection process that can have long-lasting financial consequences.
While EIDL loans are federal debts, they can still indirectly affect your credit in the following ways:
The Department of the Treasury possesses robust enforcement tools under the Debt Collection Improvement Act of 1996. These include:
These tools can be applied aggressively and often without a traditional court process, making it vital for borrowers to understand their rights and respond promptly.
If you're facing EIDL loan collection actions, here are key steps to take:
An EIDL loan default can lead to serious financial and legal consequences, from damaged credit to enforced federal collection actions. Understanding how the Treasury Offset Program works and taking timely legal action can make a critical difference in protecting your business and personal finances.
If you've received a notice related to your defaulted EIDL loan or are facing wage garnishment or tax refund interception, contact Protect Law Group today. Our experienced SBA loan attorneys can help assess your case, negotiate with federal agencies, and guide you toward the best possible outcome.
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's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection. Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest. We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.
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