Federal Student Loan Default: Innocent Spouse
Dealing with a federal student loan default is hard. Allow our lawyers to resolve your federal student loan administrative wage garnishment or tax offset.
One of the consequences of a failing small business is SBA loan default. The owner ends up with the debt of the small business association (SBA) loan. There are a few avenues to take, once a SBA demand letter has been received. The first thing a failed business owner needs to do is hire a federally licensed SBA attorney and Treasury debt practitioner. That specialization means the attorney can handle a case once it has been referred to the Treasury. Non-legal entities cannot provide negotiation services from that point forward.
An SBA Offer in Compromise is one way to settle the debt without foreclosure or filing bankruptcy. A case evaluation by the attorney will determine if owners are eligible for this option. The Offer in Compromise (OIC) is available when a business has failed due to mismanagement of finances. The basic requirements are that the business is no longer operational, and assets have already been liquidated. A negotiation can reduce the debt by as much as eighty percent. Lenders prefer to settle for a one lump sum, but payments can be made in installments under certain circumstances.
Another avenue is a Tax Offset Program in which the lender seizes the tax returns of the failed business owner every year, until the balance of the loan is paid off. That seems extreme, but can save the owner from a SBA loan foreclosure. In a foreclosure, the lender seizes any property listed on the loan documentation. If the value of the property does not cover the debt, the borrower's home could be seized, if it was purchased with company funds. That is a substantial risk to to take.
Negotiations cannot begin until a letter is received, which is usually ninety days after the last loan payment was made. From that point, collection efforts will be fast and aggressive. Business assets, including bank accounts and property, can be seized immediately. It is wise not to wait that long to contact an attorney. Getting help as soon as the business fails allows time for the attorney to review the case, explain possible options, answer any questions, and let the owner know what to expect.
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.
Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral. One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.
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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