7 Essential Tips for Finding the Best SBA Protection Law Group
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If you've defaulted on an SBA guaranteed loan, you'll be hearing from one of four private collection agencies contracted by the Treasury.
Book a Consultation CallDebt is a complicated process, whether you're a small or large business or even an individual.
For operations making use of Small Business Association (SBA) loans, it's important to understand how your debt works.
It's easier than you might expect to fall behind on your payments
When that happens, you'll find yourself in the unfortunate position of having to deal with private collection agencies. The Department of Treasury contracts with four private collection agencies: Performant, CBE Group, Conserve and Pioneer.
In this article, we're putting these agencies under the microscope. From who they are, to where they're registered, to how to deal with them when they contact you.
Read on to learn everything you need to know, and more.
Being contacted by a debt collector can be an intimidating experience.
If you have defaulted on your SBA guaranteed loan, the SBA will refer the debt to the Department of Treasury. The Department of Treasury will then refer the debt to a private collection agency to aid with the collection process.
When you're in this situation, you have a lot of questions. Unfortunately, private collection agencies (or PCAs) aren't always forthcoming with their information.
Perhaps you haven't even been contacted by a PCA yet.
Maybe you're just aware of your small business loan and the payments you've defaulted on. If you're in this position, now is the perfect time to start researching the process, so you'll be prepared when they do reach out.
Whatever your reasons for looking into the process, the first step is to become more informed.
Private collection agencies are private sector companies who collect on delinquent debts.
The Treasury will contact them after they've tried to coordinate the payments internally and come up short.
They do their job in different ways.
In some cases, PCAs will make contact with small business debtors from information on various databases. They'll make phone calls, send collection letters, and use other means to make it clear they are trying to get in contact.
Depending on how long it takes to track down the debtor, PCAs will eventually request that the remainder of the debt is paid.
Depending on what arrangement they have with the Treasury, and the nature of your debt, the PCA might suggest one of a few payment options
As with any agency dealing with your money, it's important to know who your PCA reports to.
Depending on the state you live or work in, private collection agencies will be governed by relevant local and federal laws.
These include:
The Bureau of Fiscal Service has specific Task Orders for PCAs that enforce various controls and they work to promote fair treatment and accountability.
From there, Debt Management Services (DMS) monitor PCAs in their various daily activities.
Complaints directed at specific private collection agencies are sent to the DMS for review.
Once considered, further documentation will be gathered, and, if necessary, steps will be taken to correct the situation.
The question on many people's minds when they are contacted by a PCA is: "What are my rights?"
Let's take a look.
Legally, PCAs are not allowed to:
Having to deal with a debt collector is difficult and stressful enough. Make sure you know your rights when they call.
PCAs are brought in to help facilitate the debt process. Their job is to inform you of how much money you owe, how you can pay it, and what the consequences are if you let it go delinquent.
Looking at them in this light helps to dilute the fear somewhat.
That said, defaulting on a debt isn't something most people have on their "bucket" list.
That's what makes receiving that dreaded phone call from a debt collector so terrifying.
Whatever your reasons for falling behind, private collection agencies have to handle your case according to the rules.
There's a framework they have to adhere to, and now that you know what that is, you are in a much better position to handle that unexpected call or letter.
Do not be afraid.
Ask questions. Find out what kind of payment plans are available.
And, above all else, make sure you assert your rights.
Are you struggling with your small business debt? You don't have to.
Reach out and talk to us today and let's start putting your debt to rest.
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 $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.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
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.
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