If you have recently received the 60-Day Official Notice from the SBA offering you the opportunity to petition for an administrative review of the debt, make an SBA offer in compromise or enter into a repayment agreement for an SBA loan default you may not know which way to turn. Not only has your SBA debt come back to haunt you but if you fail to respond to the 60-Day Official Notice within the stated time frame, your case will be cross-referred to the Department of Treasury’s Bureau of Fiscal Service, where the Government will add an amount up to 30% of the original SBA debt balance as “administrative fees and costs.”
Sometimes, based on your financial status, an SBA offer in compromise won’t be an option. Some SBA debtors have too much in liquid assets and/or their monthly income is too high such that the SBA will not be amenable to an SBA offer in compromise.
If your financial profile and net worth disqualifies you for an SBA offer in compromise, one of your options is to negotiate a repayment agreement with the SBA. After carefully reviewing your financial situation, an SBA Attorney can negotiate a reasonable repayment agreement with the SBA prior to the cross-referral of your case to Treasury’s Bureau of Fiscal Service.
A repayment agreement with the SBA is used to pay the claimed debt over a reasonable period of time. However, the SBA unilaterally defines a “reasonable period of time” as no more than 3 years. It, however, will not take into consideration certain factors as noted in the SBA Standard Operating Procedures (SOPs), the Code of Federal Regulations (CFR) or the Federal Claims Collection Standards (FCCS) to derive the monthly amount unless you assert your rights. Instead, the SBA will just calculate the monthly amount by dividing the unverified amount of the SBA debt by 36 months.
It is a one-sided negotiation that favors that SBA. Don’t fall into the trap by trying to negotiate the repayment agreement terms by yourself. Instead, let an SBA Attorney analyze your financial profile and compare it against the FCCS to derive a “reasonable” amount that you can afford and present the terms to the SBA to arrive at a “win-win” negotiation that works for both parties.
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