Are you unsure of whether or not you need an SBA offer in compromise? Our team is here to help advise you as to when to seek out an offer in compromise.
Book a Consultation CallCurrently, the world faces unprecedented challenges. For many, these challenges have made it difficult to stay on top of SBA loan payments. In these difficult economic times, your business may not survive. Fortunately, you have options if you fall behind. If you need SBA loan relief, you may find that you qualify for an SBA Offer in Compromise (OIC). An OIC allows you to settle your SBA loan obligation for less than the total balance.
To learn more about when to seek out an Offer in Compromise, keep reading.
Offer in Compromise
The SBA doesn’t approve all requests for a settlement. For this reason, it’s a good idea to seek professional help so that you have the best chance of the agency accepting your request.
With an Offer in Compromise, you can settle your SBA debt for less than the full amount owed.
It’s a viable option if you cannot pay your SBA debt in full. For example, paying your SBA loan guarantee might cause financial hardship.
The SBA will consider several things when deciding whether to accept your settlement. As an example, they’ll assess your ability to pay your obligation.
They’ll also evaluate your current income and expenses. Furthermore, they’ll make a review of your existing assets.
Typically, the SBA will accept an OIC claim when the amount offered is what the agency deems reasonable to collect within a certain amount of time.
However, an Offer in Compromise is not for everyone who’s behind on their SBA loan. For example, if you apply for settlement, it’s important that you’re not filing for bankruptcy
For these reasons and others, it may prove prudent to seek professional help when applying for an Offer in Compromise. However, it’s equally as important to choose an SBA professional that’s skilled and experienced.
The Offer in Compromise program is legitimate and viable. The SBA doesn’t want to wait ten years to collect payments. Still, the agency understands that some people simply cannot afford to pay their full SBA loan obligation.
For this reason, the SBA provides the Offer in Compromise program to give certain individuals and businesses a fresh start. Under the program, the SBA will accept a settlement amount. The agency will then write off the remaining debt.
However, it’s important to understand that an Offer in Compromise is not an exercise in diplomacy. When you apply for an Offer in Compromise, it’s also not an arena to test your negotiating skills.
Some people mistakenly think that they can use negotiation tactics to solicit the best offer from the SBA. For instance, they may plan to start out making a lowball offer.
Alternatively, they may portray themselves as stubborn and walk away from discussing the Offer in Compromise on one or more occasions. By deploying these tactics, they believe that they can arrange a better deal.
However, the SBA determines the viability of a request for a settlement using math and legal factors called "litigative risks". They use a formula to determine the terms of an Offer in Compromise based on your allowable expenses, assets, and income. The same formula applies to every request.
Using the formula, SBA loan specialists determine the amount deemed reasonable to collect. They will not take an amount lower than what they determine using the formula. For this reason, it’s important to work with a legal professional who can help you to apply the formula correctly as well as assert legal defenses in your favor.
An experienced SBA attorney can help you calculate the correct amount when requesting a settlement. They understand the standards used by the SBA. For example, an experienced attorney knows what expenses you can deduct and which ones you cannot.
There are some gray areas in this regard. However, even the gray areas are based on clearly outlined allowed expenses.
When searching for counsel, stay away from any advisor who promises they can secure an Offer in Compromise without reviewing your situation. Nevertheless, an Offer in Compromise is worth considering if you’ve exhausted all other options. If you have minimal assets, live modestly, and have financial trouble, an Offer in Compromise may help you .
Now you know more about the SBA Offer in Compromise program. What you need now is an attorney that can guide you through the process.
Protect Law Group specializes in representing small business owners and federal debtors across the United States. We’ve helped companies resolve millions of dollars in debt.
Find out the best option for resolving your SBA-related debt. Contact a Protect Law Group attorney today at (833) 428-0933 or connect with us online to schedule a case evaluation.
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.
Client personally guaranteed SBA 7(a) loan for $150,000. COVID-19 caused the business to fail, and the loan went into default with a balance of $133,000. Client initially hired a non-attorney consultant to negotiate an OIC. The SBA summarily rejected the ineligible OIC and the debt was referred to Treasury’sBureau of Fiscal Service for enforced collection in the debt amount of $195,000. We were hired to intervene and initiated discovery for SBA and Fiscal Service records. We were able to recall the case from Fiscal Service back to the SBA. We then negotiated a structured workout with favorable terms that saves the client approximately $198,000 over the agreed-upon workout term by waiving contractual and statutory administrative fees, collection costs, penalties, and interest.
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.
Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against his monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
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