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.
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.
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.
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.
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.
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.
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