Prepare and File the SBA Loan Offer In Compromise
Defaulted SBA Loan Offer in Compromise? Answers to questions by borrowers in SBA default considering submitting a fully compliant Offer in Compromise.
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 Call
If 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:
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 SBA 504 loan balance of $375,000. Debt had been cross-referred to Treasury at the time we got involved with the case. We successfully had debt recalled to the SBA where we then presented an SBA OIC that was accepted for $58,000.
Clients 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.
Clients personally guaranteed SBA 7(a) loan balance of over $300,000. Clients also pledged their home as additional collateral. SBA OIC accepted for $87,000 with full release of lien against home.