Last Updated on: 15th March 2023, 06:08 pm

SBA loan default? Bankruptcy is not the only way out – let us help you find a better solution

Are you currently struggling with an SBA loan default and don’t know what to do? Dealing with an SBA default can be an emotionally charged experience for many entrepreneurs. The prospect of losing your business and having your assets seized and liquidated can be overwhelming. However, things can get worse when you realize that you also pledged your personal assets to the SBA.

Many borrowers make the mistake of thinking that because their loan is backed by the government, the government will step in to pay off the lender and relieve them of their remaining obligation on the note. Unfortunately, the SBA Loan Guarantee only protects the lender when an SBA loan default occurs and provides no protection to the borrower. In other words, the federal government will want its money back.

The SBA Collection Process

Lenders, anxious to satisfy the SBA’s conditions for invoking the loan guaranty, may quickly demand that the borrower make good on the Personal Guaranty provided when the loan was originated. In many cases, an SBA default can completely wipe out an unprotected borrower. With few remaining liquid assets, many borrowers have depleted them trying to save their business.

Faced with the threat of litigation and the loss of their homes, cars, and any other remaining assets, borrowers often mistakenly resort to bankruptcy under the notion that SBA loans are dischargeable. While they are, the SBA’s lien is not necessarily extinguished by a bankruptcy, and in some jurisdictions, not all personal property is protected from creditors in bankruptcy. As a result, bankruptcy may not always be the best solution. Fortunately, there are other options to resolve an SBA loan default.

SBA Offer in Compromise

Similar in concept to the program offered by the IRS, the SBA Offer in Compromise (OIC) program allows lenders and the SBA, in some circumstances, to accept less than what is owed in full satisfaction of the remaining SBA debt. SBA OICs may result in SBA debt forgiveness in many cases, but each case is unique, and the success of an SBA OIC depends, in part, on how early in the SBA default process the debtor retains counsel.

Doing Nothing is a Bad Idea

Doing nothing is not a viable option when it comes to dealing with an SBA loan default. The consequences of inaction can be severe, and the borrower’s personal assets and future income may be at risk. The SBA itself is not bound by any state’s statute of limitations and may file suit to collect for up to six (6) years. Suits to foreclose on real property securing an SBA loan may be filed at any time. Moreover, separate and apart from filing a lawsuit to collect from a guarantor on the loan, the SBA may refer an SBA loan default to the U.S. Treasury for action, where the collection process continues indefinitely.

While settling with the government at this stage is still possible, the Treasury Offset Program (TOP) tries to collect about 50% of the remaining loan balance and has the tools to do it. Before even starting to collect, TOP employs private collection agencies, and fees can easily add 30% or more to the remaining balance of the loan. Many other federal benefits are vulnerable to the collection methods employed by the Treasury, and presently there is no statute of limitations to stop collection through offset.

As a result, borrowers facing an SBA loan default must act fast to avoid these consequences. They must explore their options and seek legal counsel from experienced attorneys who can help them navigate the complex and often overwhelming process.

That’s where Spodek Law Group comes in. Our founder, Todd Spodek, has built a reputation as one of the country’s most prominent and respected attorneys. With over a decade of experience in complex commercial litigation, he has helped numerous clients navigate the legal system and achieve their goals.

At Spodek Law Group, we understand that an SBA loan default can be a stressful and emotional time, and we are committed to providing our clients with the highest level of service and support. We believe that communication is key, and we will keep you informed every step of the way. We will explain the legal process and what to expect, and we will answer any questions you may have.

Our team of attorneys has extensive experience in dealing with SBA loan defaults and can help you explore all of your options, including the SBA Offer in Compromise program. We understand that every case is unique and requires a personalized approach. That’s why we take the time to understand your specific circumstances and goals and work with you to find the best possible solution.

When you work with Spodek Law Group, you can be confident that you are working with an experienced and knowledgeable team that is committed to protecting your rights and interests. We will use our expertise to help you navigate the legal system and achieve the best possible outcome for your case.

If you are struggling with an SBA loan default or have questions about SBA debt relief options, contact Spodek Law Group today. We are here to help and look forward to working with you.

Why Choose Spodek Law Group?

Choosing the right attorney to represent you in an SBA loan default case is critical. You need someone who understands the complexities of the legal system and has the expertise to navigate it successfully. Here are some of the reasons why Spodek Law Group is the right choice for your SBA loan default case:

Experience

At Spodek Law Group, we have over a decade of experience in complex commercial litigation. We have handled numerous SBA loan default cases and understand the intricacies of the legal system. Our founder, Todd Spodek, has built a reputation as one of the most prominent and respected attorneys in the country.

Personalized Service

We understand that every case is unique and requires a personalized approach. That’s why we take the time to understand your specific circumstances and goals and work with you to find the best possible solution.

Communication

Communication is key, and we will keep you informed every step of the way. We will explain the legal process and what to expect, and we will answer any questions you may have.

Expertise

Our team of attorneys has extensive experience in dealing with SBA loan defaults and can help you explore all of your options, including the SBA Offer in Compromise program. We understand the complexities of the legal system and have the expertise to navigate it successfully.

Results

At Spodek Law Group, we are committed to achieving the best possible outcome for your case. We will use our expertise to help you navigate the legal system and protect your rights and interests.

Contact Spodek Law Group Today

If you need help with an SBA loan default or have questions about SBA debt relief options, contact Spodek Law Group today. We are here to help and look forward to working with you. We understand that dealing with an SBA loan default can be a stressful and emotional time, and we are committed to providing you with the highest level of service and support.