ECOA May Provide A Defense To The Personal Guarantee Of A Spouse
We help people avoid an SBA loan default by advising them about the SBA offer in compromise and solutions to other SBA loan problems.
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.
Book a Consultation CallDealing with the idea that you might be facing an SBA loan default can be terrifying. The SBA attorneys in our office are skilled at helping clients understand all the facets of their situation. We will advise you as to the potential for an SBA offer in compromise. You should never face your SBA loan problems alone. It is important to retain the services of an attorney who can help you through this difficult time in your life. Please contact us for a consultation.
When it comes to SBA loans many situations dictate that a borrower pledge their personal residence as collateral. Unfortunately, once there is an SBA loan default, the house is now at risk. Pursuant to the SBA standard operating procedures, real property collateral must be liquidated in a manner that will maximize recovery on the loan in the shortest amount of time. This could mean a foreclosure just like if you stopped paying your mortgage.
Fortunately, the SBA procedures do offer some relief. When a personal residence is the borrower's only worthwhile asset and there is no other prospect for recovery (e.g., from income in excess of that needed to meet living expenses), the lien may be released for consideration. In such cases, a good faith effort must be made to obtain not only an amount equal to the Recoverable Value of the residence as consideration for release of the lien, but also an additional amount sufficient to compromise the borrower's remaining liability. This means you have the opportunity to buy out the lien and the SBA must negotiate in good faith
A compromise offer should be solicited from each borrower as soon as it becomes apparent that there will be a deficiency after the collateral has been liquidated, provided that:
a. Collection of the deficiency is not barred by a valid legal defense such as discharge in bankruptcy or the statute of limitations;
b. The borrower has not engaged in fraud, misrepresentation or other financial misconduct; and
c. The borrower does not appear to have the ability to pay the deficiency in full within a reasonable amount of time; or the borrower refuses to pay the deficiency in full, and the full amount cannot be recovered through cost-effective enforced collection proceedings within a reasonable amount of time.
This means, for instance, if you owe $200,000 on your loan, if your house is worth $100,000, if you have a $80,000 mortgage and the SBA is in second position you could free your house for $20,000 and negotiate the remaining $180,000 based on your ability to pay. Having your house held hostage is not a great position to be in, but there are alternative.
If you would like a consultation about your SBA loan default, contact us at 1-888-756-9969 or fill out the form below and a qualified SBA attorney will contact you.
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.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
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.
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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