Small Business Bankruptcy: A Guide to Chapter 11, Subchapter 5
Chapter 11, Subchapter 5 went into effect in February. Discover what the new law means for you, and how it affects small business bankruptcy.
https://youtu.be/YBHYGakMwIk
If you have defaulted on your SBA loan, a private collection agency may start contacting you to collect the SBA loan. Who and what are private collection agencies (PCAs)?
The Department of Treasury contracts with four private collection agencies, known by their common names: Performant, Pioneer Credit, CBE Group and Conserve. If you have been contacted by one of these four PCAs, your defaulted SBA loan has been referred to the Department of Treasury for collection who has contracted with one of the PCAs to collect for the Department of Treasury. The PCAs, of course, have a financial incentive to collect on the defaulted SBA loan.
The Claims Collection Act authorizes the Department of Treasury to contract with private collection agencies. However, the Department of Treasury must retain the authority to resolve disputes, compromise claims, end collection actions and refer claims to the Department of Justice.
The PCAs are bound by the Privacy Act and the Fair Debt Collection Practices Act and all other applicable federal and state laws and regulations relating to debt collection practices.
The PCAs are not only tasked with sending letters and making phone calls demanding payment, but they may also send notices of administrative wage garnishments. Therefore, any letters sent by a PCA should be opened and read immediately because if a notice of administrative wage garnishment is sent, you only have a short amount of time to file a request for hearing and challenge the administrative wage garnishment.
Furthermore, the Department of Treasury may use multiple PCAs to try to collect on the defaulted SBA loan; that is, by way of example, although Performant may have the first opportunity to collect, the debt may later be transferred to Pioneer for collection. As such, if a PCA contacted you regarding your SBA loan default, do not ignore the PCA, it is time to take action and deal with the debt.
If you are facing an SBA loan default, contact Protect Law Group today at www.sba-attorneys.com or 1-888-756-9969 to schedule your FREE initial consultation.
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 $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 personally guaranteed SBA 7(a) loan balance of over $150,000. Business failed and eventually shut down. SBA then pursued client for the balance. We intervened and was able to present an SBA OIC that was accepted for $30,000.
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