How to Request Waiver of Treasury's Collection Fees
Submit a waiver of Treasury's Collection Fees
As many as 80 percent of new small businesses fail within 18 months of opening their doors. By year 10, the number climbs to 96 percent. These are not poorly operated companies being run by unprepared entrepreneurs. Many of them fall victim to a weak local economy, uncontrollable circumstances and too much competition in their area. All of these business will have debt they default on, and many will have SBA loans they are unable to pay back as expected.
An SBA loan default can result in the loss of business property, business accounts being seized and personal property may be seized as well. The result can be financially devastating for the business owner who is already struggling. It can lead to wage garnishments for the borrower and prevent them from receiving any future loans from the SBA. If the amount collected is insufficient, the U.S. Treasury can take the reins and collect through the Tax Offset Program. This can result in additional fees and interest charges being added to the debt and any tax refunds will be seized or garnished until the amount is repaid in full.
To reduce the impact to the borrower, an SBA Offer in Compromise is an option that may make it easier for the borrower to satisfy their end of the agreement without losing all of their property. This method is not allowed if the borrower already has the means to repay the loan. Borrowers who are able to pay a lump sum or a repayment plan that will not exceed 5 years are more likely to get their offer approved.
It will benefit the borrower to contact the SBA or an attorney before they reach the point of forcing an SBA loan foreclosure. The collection methods with the SBA are similar to other debts. Missed payments will traditionally result in collections calls and letters. If an SBA demand letter is received, it is important to respond to it, but to do so correctly. Contacting an attorney familiar with this type of legal matter will make it much easier to avoid making common mistakes that could have serious financial consequences. SBA collection processes can be aggressive, so do not ignore the warnings. Take action immediately to reduce the potential impact.
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 obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
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.
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.
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