Dealing with SBA Bankruptcy? A SBA offer in compromise may help get you out of this difficult situation. Protect Law Group is here to help. Find out more today!
Book a Consultation CallFinancial difficulties can be overwhelming, especially when it comes to dealing with SBA loan debts. However, there is a potential solution that can provide relief for small business owners and guarantors – the SBA Offer in Compromise (OIC). In this blog, our team at Protect Law Group will guide you through the intricacies of the SBA OIC process, outlining the steps you need to take to navigate this challenging situation successfully.
Before you proceed with the SBA OIC, it is crucial to determine if you meet the eligibility criteria. An SBA OIC is usually an option when a small business has ceased operations, and all its assets have been liquidated. Additionally, the borrower or guarantor must demonstrate their inability to pay the full debt amount within a reasonable time frame. It is recommended to consult with an experienced SBA loan attorney to assess your eligibility and understand the potential outcomes.
To initiate the SBA OIC process, you will need to gather the necessary documentation. This includes financial statements, tax returns, bank statements, and any other relevant financial records. These documents support your case by providing a comprehensive overview of your financial situation. An experienced SBA loan attorney can help you organize and present this information effectively.
Cooperation and effective communication play a vital role in maximizing the chances of a successful settlement through the SBA OIC. It is essential to work closely with your SBA loan attorney and the SBA debt attorneys to ensure your unique circumstances are understood and presented accurately. By clearly presenting your financial limitations and actively participating in the process, you can increase the likelihood of a favorable outcome.
When pursuing an SBA OIC, several potential outcomes can arise. One possibility is having your offer accepted, resulting in a reduced repayment amount that is manageable for your financial situation. Another outcome may involve negotiating a repayment plan that suits your circumstances, such as a monthly installment payment plan not exceeding five years. It is crucial to discuss these potential outcomes with your SBA loan attorney to determine the best course of action for your specific situation.
Dealing with SBA loan debts can be challenging, but the SBA Offer in Compromise provides a ray of hope for struggling borrowers and guarantors. By understanding the eligibility criteria, gathering the necessary documentation, and maintaining open lines of communication, you can navigate the SBA OIC process effectively. Remember, the assistance of an experienced SBA loan attorney, such as our team at Protect Law Group, is invaluable during this journey of finding business debt relief and securing SBA loan help. If you are facing financial difficulties, don't hesitate to reach out to our team of SBA debt attorneys for guidance and support.
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 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.
Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral. One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.
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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