The Elephant In Your Room
If you are the guarantor of an SBA guaranteed business loan, or if you have taken any federally based ‘disaster’ loan, then the elephant in your room is the United States Treasury Department.
This elephant’s pulse is actuarial; time is money. This elephant –like rust- never sleeps.The elephant is proverbial for never forgetting. He will not forget about you.
If you are in default on any of the above loans, or in danger of falling into default, you need to act now –immediately- while you can remain in some control of your future.When the elephant comes and sits down ON –not at- the table…well it will not bepleasant, and you will have no recourse but to open a vein.
If you do not act now to maintain control of this situation, this will be your future:
With a 7A business loan:
The lending bank is required to pursue all of its legal options for collection of thedebt. The bank needs to substantiate its pursuit of you to the SBA in order to receiveits ‘guarantee’ on the loan, typically 70 – 80% of the amount of the loan. This is the guarantee –the insurance policy if you like- that you paid a fee for when you signed the loan documents.
The bank is taking you to court for a: ‘Judgment.’
As terrible as this may sound it is really a ‘pro-forma’ act. Unless the bank held a gun to your head, drugged you, or kidnapped your dog you have no ‘legal’ defense to make. You signed a document and received the money.
You are in default on the loan and the bank wants to force you to legally acknowledgethe debt, and pay it. The bank itself may now pursue your assets, or they can opt to substantiate their guarantee request and turn the matter over to the federal government to deal with. Your ‘urgency meter’ should be on ‘yellow alert’.
The bank said they had: ‘Written off the loan’, they certainly did, by passing itoff to the elephant. They received their guarantee, and now you will be hearing from the SBA directly; you would do well to contact the SBA yourself immediately. You have amatter of perhaps two weeks left to get on top of this situation.
The SBA will make written contact with you via the ‘business address’ used on the loan.If you ‘miss’ the mailing, or ignore it they will forward your delinquent account to one of their ‘running dog’ collection agencies. You options for dealing with the situation justdiminished considerably. The SBA will now deal with you ONLY through the agencyholding your account. Your ‘urgency meter’ should be on ‘red alert’ at this point.
It gets better:
If you are foolish enough to ignore the collection agency working for the SBA –their patience is short- the SBA will take a treasury ‘off-set’ and presto! You’re now dealingwith the Treasury Department, first through a collection agency -but ultimately with their ‘running dog’ the IRS. Liens, levies, and Garnishments on tax refunds, wages, and bank accounts. Tranquility base, the elephant has landed.
With a Disaster Loan:
Unfortunately there is little or no wriggle room with a direct FEMA or Small BusinessAdministration ‘disaster’ loan, regardless whether the loan was made for a business orresidence damaged by hurricane, flood, tornado, or alien invasion. You have a direct debt to your federal government and they want their money.
Unlike standard business loans guaranteed by the SBA, which have the Incorporation of the borrowing business, and the lending bank involved, in effect standing between the ‘guarantor(s) and your federal government, Disaster Loans are made directly from the government and they have all the teeth of the U. S. Treasury department standing ready to collect. If you go into default they will foreclose on liens, and intercept any and all tax refunds, and will garnish wages; they can do all this with a phone call.
There is no bank centered ‘Offer In Compromise’ settlement available; there is onlya ‘Liquidation Resolution’. In plain words: After the liquidation of all of the collateralinvolved in the loan, a compromised offer on the balance due can be accepted. The current guideline for such a settlement is 50% of the balance due, in cash.
Cash is King!
If you have not yet heard from one of the SBA collection agencies I recommend that youcontact the SBA directly, and immediately, in order to start work on a payment plan that you can accomplish.
If you have already been contacted by one of the hired gun collection agencies, you will need to deal with them, the SBA (or Treasury Department) will ‘cut you off, and you willhave to deal with the agency that contacted you. Remember that the collection agencieshave no ‘power’ except to settle within the prescribed guidelines given to them; however you can send the agency an offer (a prescribed format that we can help you with) viaemail or certified mail that will be forwarded by them to the SBA or Treasury for review.
If the matter has gone so far as to your being contacted by collection agents working forthe U.S. Treasury Department then there is little to be done except to cut the best dealyou can and settle immediately.
The Treasury Department can and will:
* Foreclose and liquidate all of the collateral assets of the loan.
* Intercept all tax refunds of all signatories to the loan.
* Garnish the wages of all signatories to the loan.
* Lien and levy all bank accounts.
