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SBA Loan Default and Private Collection Agencies

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SBA Loan Default and Private Collection Agencies

 

The transcript of the video follows below for further review.

The Debt Collection Improvement Act of 1996 requires the the Department of the Treasury (DOT) to maintain a schedule of private collection agencies (PCAs), which are private sector companies with expertise in the area of debt collection, to assist the government in its debt collection efforts. As part of the Cross-Servicing program (wherein debts owed to government agencies such as the SBA are referred to the DOT for collection) the DOT attempts to collect delinquent debt through several means, including demand letters, telephone calls, the Treasury Offset Program (TOP), administrative wage garnishment, and credit bureau reporting. Once the DOT has at the very least sent a demand letter and possibly tried other collection efforts, the DOT refers debt collection to one of four PCAs. The activities of the PCAs are monitored by the personnel of the Receivables Management and Debt Services Division of Debt Management Services (DMS).

What is a private collection agency? A private collection agency (PCA) is a private sector company specializing in the collection of delinquent debt. A PCA will attempt to find and contact a debtor by searching various databases, making telephone calls, and sending collection letters. Once the debtor is located and contacted, the PCA will encourage the debtor to satisfy the debt. A PCA may help the DOT resolve the debts through negotiating payment in full, a payment agreement, utilizing administrative wage garnishment, or finding that the debt may be resolved administratively.  Incredibly, often times dealing with a PCA is more productive than dealing directly with the DOT.

Fiscal Service awards PCA Task Orders. Fiscal Service awards Task Orders to PCAs for debt collection services under a General Services Administration Schedule. Fiscal Services’s current Task Orders to enlist the services of PCA contractors became effective on March 12, 2012. These Task Orders were awarded in order to increase the recovery of and resolve delinquent non-tax federal debts. The Task Orders were awarded for one base year, with four one-year options available. Fiscal Service awarded the following contractors a debt collection Task Order to provide delinquent debt collection services:

The CBE Group, Inc.

ConServe, Inc.

Performant Recovery, Inc.

Pioneer Credit Recovery, Inc.

PCA regulation. The collection efforts of the PCAs are governed by various federal and state laws, including, but not limited to, the Fair Debt Collection Practices Act (FDCPA), the Federal Claims Collection Standards (FCCS), and the Privacy Act.  If the first PCA is unable to successfully resolve or collect a debt, the debt is then referred to a second PCA.  The PCAs are compensated on a performance basis.

If you have defaulted on an SBA loan please contact Protect Law Group at 1-888-756-9969 for a consultation with one of our SBA workout attorneys or contact us online. 

We analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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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

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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

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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.

$488,000 SBA 7A LOAN - SBA OHA LITIGATION

$488,000 SBA 7A LOAN - SBA OHA LITIGATION

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.

$310,000 SBA 7A LOAN - SBA OIC TERM WORKOUT

$310,000 SBA 7A LOAN - SBA OIC TERM WORKOUT

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.

$1,200,000 SBA 7A LOAN - SBA OHA LITIGATION

$1,200,000 SBA 7A LOAN - SBA OHA LITIGATION

Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture.  After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against his monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA).  As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.

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