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SBA Loan Default - The 60 Day Letter

Dealing with an SBA OIC case is hard. Allow one of our lawyers to settle SBA debt on your behalf. Talk to us about your SBA loan default situation.

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SBA Loan Default - The 60 Day Letter

You should not have to struggle to settle your SBA debt on your own. Instead, turn to one of our attorneys who specializes in SBA OIC claims. We are dedicated to helping you settle your SBA loan default.

If you are in default on your SBA loan, you will get what is termed a "60 day letter".  The following information should be included in a Federal agency's written communication with a debtor at least 60-days prior to referring a delinquent debt to the U.S. Department of the Treasury's Financial Management Service for debt collection (cross-servicing).  The information may be included in one letter or a series of letters.  The letter should include the following:

  • Nature and amount of the debt, including the basis for the debt.
  • Explanation of how interest, penalties, and administrative costs are added to the debt.
  • Date by which payment should be made to avoid late charges and enforced collection (generally, 30 days from the date the demand letter is mailed).
  • Name, address, and phone number of a contact person or office within the creditor agency.

Explain the agency's intent to enforce collection if debtor fails to pay by taking one or more of the following actions:

  • Offset the debtor's Federal payments, including income tax refunds, salary, certain benefit payments (such as Social Security), retirement, vendor, and travel reimbursements and advances.
  • Refer the debt to a private collection agency.
  • Report the debt to a credit bureau.
  • Garnish the debtor's wages through administrative wage garnishment (no court order required).
  • Refer the debt to the Department of Justice for litigation (comply with Executive Order 12988).
  • Refer the debt to the U.S. Department of the Treasury for any of the above-described collection actions (advise debtor that agencies are required to refer when debt is 180 days delinquent).

Explain how debtor exercises the opportunity to:

  • Inspect and copy agency's records related to the debt.
  • Request a review of agency's determination of the debt.
  • If applicable, request a waiver.
  • For purposes of salary offset or administrative wage garnishment, request a hearing.Enter into a reasonable written repayment agreement.

Advise the debtor of the following:

  • Notify agency if bankruptcy filed.
  • Penalties for knowingly making false or frivolous statements.
  • Excess collections will be refunded to the debtor, unless prohibited by law.
  • For Federal salary offset, up to 15% of current net disposable pay may be deducted every pay period until the debt is paid.
  • For joint income tax filers, spouse should file Form 8379 with the IRS to claim his/her share of tax refund.

The failure to include the above information may violate your rights and provide a basis for relief.  If you are struggling with circumstances that involve SBA loan default, you deserve professional aid! Our attorneys all know how to win SBA OIC cases.  Contact us and we will help you settle SBA debt once and for all.  After you schedule an appointment, you will consult with a devoted SBA OIC lawyer who will help you through your legal battle.  After your debt problem is resolved, you will never again have to worry about your SBA loan default problem haunting you.  Our team of lawyers has assisted many clients through the years settle SBA debt, stop administrative wage garnishment and tax offset.  Now it is your turn! You truly can settle SBA debt for good!

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.

$150,000 SBA COVID EIDL - OFFER IN COMPROMISE & RELEASE OF COLLATERAL

$150,000 SBA COVID EIDL - OFFER IN COMPROMISE & RELEASE OF COLLATERAL

Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) where borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.

Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.

This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.

$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.

$383,000 SBA 7A LOAN - NEGOTIATED RELEASE OF LIEN FOR CONSIDERATION

$383,000 SBA 7A LOAN - NEGOTIATED RELEASE OF LIEN FOR CONSIDERATION

Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate  and collect all pledged collateral pursuant to the trust deed instruments.

The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery  to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.

After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.

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