What Does The New Chapter 11 Subchapter V Mean For Your SBA Loan?
Struggling small business or personal guarantors of an SBA loan can take advantage of the new Chapter 11 Subchapter V bankruptcy procedures.
Small business owners review possible outcomes when they are informed of an impending foreclosure. This legal action allows their lender to take possession of their property. Once the lender acquires the property, it is sold to the highest bidder. This presents the borrower with the outstanding balance. However, an SBA Offer in Compromise may prevent these circumstances.
The adverse impact of the foreclosure starts with a negative listing on the owner's credit. Foreclosure prevents them from acquiring a more beneficial loan for a new business location. It also leads to an outstanding balance listed on all three credit reports. This leads to more difficulties for the business owner. The offer in compromise reduces the impact of foreclosure.
An SBA loan foreclosure begins when the government lender issues the SBA demand letter. These loans are backed by the government and require the borrow to pay at specific value to settle the loan. This value is based on the percentage listed in the loan contract.
Tax liens present more issues and could lead to further seizure of assets. The attorney helps the business owner through a Tax Offset Program. The program provides the owner with a reduced value acquired through a settlement. The value is under fifty percent of the total value owed in most cases. Select circumstances may provide a payment plan for these tax requirements.
Owners that avoid traditional foreclosure eliminate credit issues. This helps them acquire further funding in the future when their venture becomes profitable. They may also start a new company in a new location after the settlement is paid in full. The attorney provides them with advice for restructuring their credit.
Small business owners avoid negative outcomes when they are facing foreclosure. Owners who acquire government-secured loans identify benefits of these programs through an attorney. This helps them to avoid severe damage to their credit. Small business owners who need help after an SBA loan default should contact an attorney to schedule a consultation now.
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.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) default in the amount of $150,000 on behalf of Illinois-based client. After the business permanently closed due to the economic impacts of the pandemic, the owners faced potential personal liability if the business collateral was not liquidated properly under the SBA Security Agreement.
We guided the client through the SBA’s Business Closure Review process, prepared a comprehensive financial submission, and negotiated directly with the SBA to release the collateral securing the loan. The borrower satisfied their collateral obligations with a payment of $2,075, resolving the SBA’s security interest.
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.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
.jpg)
