Federal Government Agency suspends its federal debt collection efforts
We help people who need to avoid SBA loan default by teaching them about SBA offer in compromise and about various SBA loan problems
Dealing with an SBA OIC case can be hard. You should allow one of our lawyers to settle SBA debt on for you. Talk to us about your SBA loan default today.
Book a Consultation CallIf you have an SBA loan default you may be thinking about bankruptcy. However, filing for bankruptcy instead of pursuing an SBA OIC to settle SBA debt may not always be the best way.
Disadvantages Of Chapter 7
o Taking bankruptcy can weaken your ability to get credit, especially at a low interest rate. Also, your bankruptcy may haunt you when a prospective employer looks up your credit report as part of reference check.
o The trustee takes over complete control of your debts and finances from the day you file until the judge discharges your case. You can't spend anything without the trustee's approval.
o For Sole Proprietors and Partnerships: The costs, hassles and surrendering of your property could cause you to close your business.
o You may lose a large amount of wealth if you have a large amount of nonexempt personal property or a large amount of equity in secured assets such as one or more of your cars.
Disadvantages Of Chapter 11
o The process of obtaining approval of your reorganization plan is long and expensive.
Chapter 11 cases are subject to much more assertive and aggressive creditor action, including adversary actions (lawsuits filed within the context of the bankruptcy proceeding). Active creditors make Chapter 11 cases more expensive and more drawn out for long periods of time. As a general rule of thumb, Chapter 11 cases will cost $50,000 at a minimum and most attorneys will ask for $20,000 or more up front.
Final Thoughts on Filing Bankruptcy:
o Filing for bankruptcy does have a “hidden” cost. Operating in the business world is complicated when the borrower files for bankruptcy, and these complications can cost real money over the 10 years that a bankruptcy is reported on a credit report. It has been estimated that the cost of filing bankruptcy is between $75,000 – $125,000. Stated another way, if an SBA debtor can afford an OIC settlement for less, it is probably a good idea to try and obtain an SBA OIC or DOT compromise. However, if the SBA OIC or DOT compromise settlement cost is higher than the “hidden” bankruptcy cost, then the SBA debtor should probably seek protection through a bankruptcy.
This video also covers SBA loan default and bankruptcy:
https://www.youtube.com/watch?v=nrVUWHGKvbw
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.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency. After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.
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