Bankers are demanding defaulting borrowers liquidate their IRA’s and 401K’s to pay down debt?? Outrageous!
Are there no limits at all? Is it really only all about collecting… no matter what, no matter how? Is it ok for a bank to demand that a borrower empty his protected IRA or 401K to pay down the debt owed to a bank? NO it is not OK. It is dead wrong!
I am hearing this more and more, bankers making demands that borrowers do just that empty their protected retirement accounts to pay down bank debt with the bank demanding this occur or will not support an offer in compromise for SBA guaranteed loans.
Does the SBA know this is happening?
Are they supporting this outrageous over reaching? I say they must know as the bank is their agent and the banks disclose most every collection effort they make to the SBA and thus I believe the SBA is quietly condoning this excessive practice all in the name of collecting a few more dollars.
Congress put these accounts out of reach of the collection agencies and the legal process. They cannot be penetrated for debt collection. Congress deemed these account more important to protect then the creditors claims for repayment are and thus these accounts are PROTECTED.
Or are they?
If banks are permitted to demand that borrowers liquidate these accounts for the benefit of the bank and refuse to cooperate with restructuring, modifying or refuse to process an SBA Offer in Compromise unless the borrower unloads the protected retirement account, I say this is outrageous and tantamount to breaking the law Congress prescribed to protect these accounts. The bankers have too much power for borrowers to resist their demands. It is not fair or right.
DEMANDING LIQUIDATION OF PROTECTED RETIREMENT ACCOUNTS, WHILE NOT ENFORCEABLE, CARRIES SO MUCH WEIGHT WITH THE DEFAULTING BORROWER THAT IT MUST BE CONSIDERED AN ILLEGAL TAKING OF PROTECTED PROPERTY.
Denying the borrower access to an Offer in Compromise procedure unless the borrower first empties his IRA is not a requirement of the SBA and is an example of unacceptable behavior of a banker gone amok…but it happens and I see it more and more as bankers get more and more desperate to collect from defaulting borrowers.
Does a banker believe his defaulting borrowers IRA is exempt from this congressional protection? Jut because a borrower has the right to say No yet succumbs to the bank pressure and “voluntarily” liquidates his or her retirement account in order to satisfy a bank demand is a reasonable interpretation of protected property?
This is wrong wrong wrong. People are intimidated by their banks demands. They are powerless to resist such orders, and bankers must not use their power to circumvent the law and pretend it was a voluntary act by the borrower. No where does it say it is OK for a banker to demand liquidation of an IRA before he will permit a submission to the SBA for consideration.
What ever happened to the banks fiduciary responsibility to the borrower? Did that go out the window when the loan was defaulted?
Shame on the SBA for allowing this to happen
Shame on the baker for being such a scoundrel.
Stop this bad behavior. There are limits as to what is acceptable standards, or do banks simply have no standards at all.
