SBA Offers in Compromise: The rules are changing for debt forgiveness!

It used to be that it would take about  year to get a return response from the SBA after an offer in compromise was submitted. The response would come directly from the SBA,  via letter, either a rejection, or a counter proposal, or an acceptance. You would never be allowed to talk  directly with a decision maker but you could attempt to negotiate through an intermediary message carrier. It worked a little although very time consuming and  very cumbersome.

Now the SBA is relying far more heavily on the participating lending bank to handle most of the burden and certainly all of the contact with the borrower. This is working out better.

Recently, we have observed the return time from when an offer is submitted is down to 3-4 months and in some instances much much less, weeks even, and we actually get to discuss and negotiate with the lending banker a resolution which if he/she supports has a very good chance of being accepted.

The banker negotiates what he/she believes is an acceptable deal and then it is submitted and the SBA fairly quickly responds back to the banker who then relays the response back to us.

While this may sound even more cumbersome, it is far better as we are really able to negotiate with the banker and his agreement is now very important ankoutd now seemingly almost always the  final result. The SBA is now heavily swayed by the banks decision and almost always accepts it with few exceptions.

Unfortunately we have also seen some abuse here, as the banker is now the point man in the process, and we have experienced him changing the deal when he presented it to through SBA or perhaps the SBA moved the banker to change the deal, but we are seeing accepted deals being twisted and changed upon return from the SBA at the hands of the banker who just ‘did as he chose’ changing the deal he agreed to as he saw fit. However we still get to negotiate although then on the bankers terms not ours…So be it, it is still working far better, if not perfect.

The fact is we are getting it done faster and far more effectively, recently getting a $354,000 defaulted loan reduced to a $12,000 payoff. Nice. The facts supported this conclusion and we were able to demonstrate this to the banker adequately for him to support the offer to compromise, which he did.

Call us for help: Call Norm at 413-584-2581. He will arrange a no obligation tele-conference for us to discuss your options and a strategy that will work.