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What Is A "Charge Off" Of An SBA Loan?

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What Is A "Charge Off" Of An SBA Loan?

If You Owe More than $30,000 Contact us for a Case Evaluation at: (833) 428-0933

You may have learned that your defaulted SBA loan was "charged off".  You are still liable for the loan deficiency, however, and competent legal counsel is highly recommended.

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The transcript of the video follows below for further review.

What is SBA's Policy Regarding Charge Off Accounts? Many times people think that because their defaulted SBA loan has been “charged off” they are not longer liable to the SBA. Unfortunately, this is not the case. “Charge off” is the process by which SBA recognizes a loss and removes the uncollectible loan account from its active receivable accounts. The SBA's policy is to be diligent and thorough in collection of debt and to promptly charge off all uncollectible accounts to more accurately reflect the status of the individual account and the Agency's entire portfolio. It should be noted that a charge off is merely an administrative determination that does NOT affect SBA's rights against any obligor nor reduce the SBA's (or a participant lender's) ability to proceed with any available remedy. A charge off is justified when the third party lender has complied with all requirements of collection and liquidation and further collection of any substantial portion of the debt is doubtful. The determination to justify a charge off may be based on one or more of the following:

a) The third party lender has exhausted all efforts in cost-effective recovery from:

Voluntary payments from the borrower;

Liquidation of collateral;

Compromise with obligor leaving only a deficiency balance; and

Consideration has been given to any legal remedies available so that no further reasonable expectation of recovery remains.

b) Estimated costs of future collection exceed any anticipated recovery;

c) Obligor cannot be located or is judgment proof;

d) The Lender/SBA's rights have expired (e.g., statute of limitations, restrictions of State law, Agency policy);

e) Debt is legally without merit;

f) Adjudication of a Chapter 7 Bankruptcy as a no asset case, or completion of Chap 11/13 case;

g) The inability of the Lender to effect further worthwhile recovery.

If your defaulted SBA loan has been charged off you will still need an experienced attorney to help negotiate a settlement. Contact Protect Law Group today at (888) 756-9969 or at www.sba-attorneys.com and schedule your consultation with an SBA workout attorney.

We analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.

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Helping provide real solutions to individuals who are facing SBA loan problems. Contact one of our experienced SBA Attorneys and Federal Agency Practitioners today for a Case Evaluation - (888) 756-9969. 

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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.



Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection.  Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest.  We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.



Small business sole proprietor obtained an SBA COVID-EIDL loan for $500,000. Client defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for aggressive collection. Treasury added $180,000 in collection fees totaling $680,000+. Client tried to negotiate with Treasury but was only offered a 3-year or 10-year repayment plan. Client hired the Firm to represent before the SBA, Treasury and a Private Collection Agency.  After securing government records through discovery and reviewing them, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury citing a host of purported violations. The Firm was able to negotiate a reinstatement and recall of the loan back to the SBA, participation in the Hardship Accommodation Plan, termination of Treasury's enforced collection and removal of the statutory collection fees.



The client personally guaranteed an SBA 504 loan balance of $375,000.  Debt had been cross-referred to the 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.

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