The SBA trying to collect retirement accounts – When will it end?

Thats right, now we see it at the SBA level.  It has been common practice for a lot of banks to lead guarantors to believe that the only way to settle their debts is to liquidate their protected retirement accounts and hand it over to the bank and SBA.  This is one of the many reason that we suggest that debtors do not due their own workouts.  They fall into these traps that are morally questionable and highly discouraged amongst the lending and borrowing communities.  When you hire a third party with experience in debt workout and loss mitigation, you assure that your rights are protected and you do not become a victim of the emotional games your creditors will put you through.

Recently we’ve seen this not only at the bank level, but for the first time we have seen it at the SBA level.  An SBA rep putting in writing that guarantors would NOT receive an offer in compromise unless they liquidated the funds in their IRAs.  This couple was in their 70s and were reaching the end of their working years and were now experiencing failing health.  The SBA agent felt this tactic would spur them to liquidate their IRA and live the rest of their lives poor so that the SBA could receive a higher return on a defaulted loan.

The reality of the situation is this will never happen, not on our watch.  The SBA and bank involved knew the risk of issuing this loan, they took it along with the guarantors.  Now that the business has failed, the SBA is expecting all of the losses to occur on behalf of the borrower and is threatening collection from the Treasury if my clients to do agree to liquidate their protected asset.

However, I would rather take my chances with the Treasury.  The SBA nor the Treasury has the power to forcefully collect against these accounts, they will be forever protected, and therefore a settlement is inevitable. The bench mark for collection is forceful liquidation, and this does not include protected accounts… We will call their bluff and we will settle.

Further, we intend on notifying every state representative , SBA representative, government official, and banker who will listen to this story of the breach of fair collection efforts we experienced.  Some one somewhere must stand up for these people and others like them.  Expecting defaulted guarantors to liquidate their last protected assets, leaving them to face retirement and medical expenses  with insufficient funds just so that the SBA gets a higher return is sinful, immoral, and flat out wrong.

This story is not over…. Stay tuned