Tales From the Crypt

Debt Relief Services.  Tales from the Crypt (or Mom & Pop meet Godzilla)

In addition to my regular responsibilities as the ‘triage nurse’ at Second Wind Consultants, Inc., I have the pleasure of serving as the ‘program director’ for our non-profit division, ‘Debt Relief Services, Inc’. As such I get to work with -and for- clients who fall outside of Second Wind Consultants’ profit based business workout and turnaround focus.

These clients are not ‘movers and shakers’, they don’t have million dollar business problems.  They are nurses, teachers, convenience store managers, and crafts people who had a small dream.  They have 50 to 150 thousand dollar problems that are threatening their families’ homes and futures.  They and their businesses were NOT classified as being “too big to fail.”

The loans involved are either standard business loans taken through a bank and guaranteed by the SBA, or ‘disaster’ based loans taken directly from the SBA for a business, or residence, that was damaged by natural catastrophe.

Our clients are the remnants of what might be called a ‘mom & pop’ small business dream.  An SBA guaranteed loan was taken out in good faith but now the business involved has ‘gone south’ despite their best efforts -and usually after they have poured most, if not all, of their personal resources into it.  After the dissolution of the business the guarantors on the SBA loan are left individually under the gun for a business-sized debt that they are simply not able to manage.  The family home is inevitably aliened as collateral.

We also deal with direct ‘disaster’ based loans from the SBA, and with these loans there is a very heavy hand demanding liquidation of ALL collateral before any compromised settlement is contemplated; demand is strong for full repayment of the loan, and these loans have a bad record for winding up in the hands of the Treasury Department, where the guarantors’ tax refunds are intercepted, and wage garnishments are applied.

The following clients and the lessons they learned are typical.

Ms. M. D. of Michigan.

Opened a craft centered business and learned that Debt Relief Services can deliver the goods!

Through the efforts of Debt Relief Services, the lending bank accepted a $2,500.00 one-time payoff on an SBA guaranteed loan with an outstanding balance of  $53,000.00.  The SBA accepted our offer based upon the bank’s approval of our prima facie case.

We were able to clearly show both the bank and the SBA that Ms. D was utterly insolvent after her craft based business was forced to close, and the assets of the business were liquidated to the benefit of the bank.  She, like most of our clients, had exhausted her personal resources, and entered into significant credit card debt in the attempt to keep the business solvent.

She also learned that her bank didn’t feel constrained to inform her that they had already made a loan for the opening of a directly competing craft store in the same small community.

Apparently fiduciary responsibility is a ONE WAY STREET.

Mrs. E. R. of Arkansas.

Opened a day care/education center and learned that:

A ‘contract’ is not REALLY a Contract until there is an exchange of value.  It doesn’t take much; a one-dollar exchange at the signing of the contract will satisfy ‘for consideration received’.  The lack of this knowledge prior to her ‘selling’ the business and assets to an unscrupulous party, allowed that party to abscond out of state with the business assets -and funds- leaving Ms. E. R. ‘holding the bag’.  Mrs. R’s lawyer never informed her of this important fact in contract law.

Mrs. E.R. never received any help from either the Arkansas courts or law enforcement agencies, she being told it was a ‘civil matter’ because of the ‘contract’ -which of course was NO contract- and that she would have to proceed unilaterally at her own expense.

Apparently simple fraud is not illegal south of Tennessee.

Mr. & Mrs. Q. W. of Missouri.

Opened a coin operated Laundromat and learned that:

Any ‘creditor’ can file an objection to a chapter 13 bankruptcy, and you can be in bankruptcy and still owe every cent of the SBA loan.

Mrs. J. G. of Florida.

A ‘dutiful wife’ reluctantly co-signed an SBA ‘disaster loan’ based on her husband’s business and learned that: The SBA insists upon liquidation of ALL collateral prior to any resolution of an direct SBA disaster based loan.

Homestead laws only protect the homeowner against unsecured creditors but NOT against mortgage holders; and that with the disaster loan that Mrs. G signed came the mortgage holder from hell.

Her husband’s bankruptcy lawyer never informed the couple that ‘his’ bankruptcy would leave his wife completely responsible for payment of the full amount of the loan.  Her wages will be garnisheed and her tax refunds will be intercepted until the loan is paid in full.  Only their being upside down on their first mortgage saved their home from foreclosure by the SBA. 

Mr. A. B. of Utah.

Took out an SBA guaranteed loan with a business partner and learned that:

A successful bankruptcy filing by one ‘guarantor’ simply sets the ‘dogs’ onto the remaining guarantor.  All ‘guarantors’ on an SBA loan are held individually responsible for the full amount of the loan.