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.
Understand the role private collection agencies may play in SBA debt collection and review concerns borrowers should discuss with counsel.
Book a Consultation CallThe 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.
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 client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $212,000 on behalf of an individual guarantor. The borrower’s business experienced a significant downturn in revenue and was unable to sustain operations, ultimately leading to closure and a remaining personal guaranty obligation.
After conducting a thorough financial review and preparing a comprehensive SBA Offer in Compromise (SBA OIC) submission, we negotiated directly with the SBA and lender to achieve a settlement of $50,000—approximately 24% of the outstanding balance. This favorable resolution released the guarantor from further personal liability and provided the opportunity to move forward free from the burden of enforced collection.
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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