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

UPDATE! Another victory!

In a previous post I discussed a client who was receiving pressure directly from an SBA agent to liquidate their protected retirement accounts in order to offer a higher settlement amount or that they would pass the file on to Treasury and not honor an offer in compromise.  Luckily we were representing these people and knew better.  We knew that asking for protected assets was an act of negotiating in bad faith.  We told our clients to not touch their retirement accounts and to hold their position.  They were in their late 60s and early 70s and were going to need those retirement funds to live in the upcoming years.

Two weeks later we have come to an agreement that does not require a liquidation of the retirement accounts.  Something our clients can afford through their resources and cash flow.  How did we do it?  How did we turn the SBA around from liquidation of IRAs and full payments to over 1.5 million in debt forgiveness? Simple, through knowledge, disclosure, and exposure.

From our experience I had the knowledge to know which of my clients assets were protected from collection and which ones were not.  From there I took the approach of disclosing our knowledge of true collectable value of the guarantors and then exposing the inappropriate collection efforts of the SBA through a certified letter to the Bank, SBA officials, and State officials.  We simply cannot allow creditors to collect in such a manor.  With their actions being exposed to the appropriate people, the SBA agent was now forced to deal with the reality of the situation.

However, I would not suggest this approach unless absolutely necessary.  Most bankers and SBA agents are professionals who do not cross the line of bad faith.  Most are reasonable and with continued communication a successful conclusion can  be reached.  In this case those normal tactics were ineffective and therefore I felt our actions were justified.

While this allows this family to finally put this issue to rest, this experience makes me wonder about all of the defaulted guarantors without representation.  Had we not been there to stop it, our clients may have liquidated their IRAs due to fear or belief that there was no other option.  This would have left them with insufficient funds to ever retire and would have severely affected the rest of their lives.  How many other face this scenario due to these predatory collecting efforts?

At least this case ending honorably.  It was not a clean victory – part of the negotiation was an increase in the offer in the form of monthly payments that my clients could afford within their cash flow. We too had to compromise but did so in a manor that was reasonable, affordable, and honorable