When a business enters into payment default and ultimately into a debt workout with its SBA lender, the SBA and the bank often take legal action against both the borrower and guarantor on the loan. The lender will sue for breach of contract and pursue a judgement as the initial steps in foreclosure of the business and its assets. Judgements are awarded to creditors once they have sued a business and proven to the court that money was owed to them ...Continue Reading →
Running a business requires a business owner to wear many hats and display many skills. They must be involved in areas such as sales, marketing, managing their workforce, managing customer relationships, and leading their business to success through astute financial practices. As described in our book Successfully Navigating the Downturn, there are four pillars to success that all business owners must be sufficient in. They are Management by the Numbers, Reinvention, Sales & Marketing, and Continue Reading →
So you’ve settled all of your debts, paid off your creditors (some for pennies on the dollar) and now you’re able to walk away and completely put your debt issues behind you, right? Not so fast! Debt cancellation income, or income from debt forgiveness is something that must be analyzed early on before you begin a debt settlement negotiation.
Many people don’t realize when they settle an outstanding debt and the creditor discharges $600 or more; they will receive a 1099-C ...Continue Reading →
In every workout that I’ve been involved with, there is no issue that elicits a stronger emotional reaction more than the threat of losing one’s home.
Let’s face it, if you are a small business owner that has received SBA guaranteed financing, chances are that the lending bank, in conjunction with the SBA, required you to voluntarily provide them a “deed of trust” or a mortgage filing against your personal residence. The terminology and exact type of document filed varies state ...Continue Reading →
How much can I settle for?
This is the question clients ask us every day. Almost every borrower wants to pay their bills, but when financial disaster strikes, it is not always possible to fully repay your debts when you are forced to close your business and walk away. Luckily the SBA has a specific program, designed for borrowers looking to avoid bankruptcy and make a good faith settlement with their lender.
Clients in strained financial positions always want to ...Continue Reading →
The SBA debt settlement process is not ever very easy or straightforward. We guide clients through this maze all the time, but many borrowers in default try and settle their debt on their own when it is relatively straight forward. The required documentation for submitting an SBA Offer in Compromise is quite simple. An SBA 770 form (the personal financial statement and monthly cash-flow statement), an SBA 1150 form (the document used to put forth the settlement offer and justification ...Continue Reading →
Many clients ask us “Can bank accounts be garnished in an SBA loan default?” Simply put, yes they can. So here is what you need to know if you are at risk of being garnished in an SBA loan default.
When your business enters into default with your creditors and begins settlement or workout discussions, it is important that you take steps to protect your bank accounts. Creditors have a variety of ways to attach and garnish both business and personal ...Continue Reading →
Negotiating a SBA loan modification or a deferment is an art – not a science. It is a delicate dance between the borrowing business, the guarantors, and the lender. The business needs to prove it is in need of assistance but it also needs to demonstrate that it is still a viable business capable of repayment. Show too much distress and the lenders deny the request and will likely elect to liquidate the business. If you demonstrate too much cash ...Continue Reading →
So you’ve defaulted on your business loan and the SBA lien on your house is making you feel uneasy. Are you going to lose your home via foreclosure?
The simple answer is this: it depends on the numbers.
Let’s face it, if you are a small business owner that has received SBA guaranteed financing, chances are that the lending bank, in conjunction with the SBA, required you to voluntarily give them a “deed of trust” or a mortgage filing against your personal residence. ...Continue Reading →
While most debt forgiveness experienced in workouts that we focus on are on the secured bank debt, the big loan, the bank being with high value and a well secured creditor, as it is secured by your assets and your personal guaranty in most instances and thus is the primary focus for resolution.
However this is not always the case, that this secured loan is the most damaging, as the reality is such debt is usually serviced monthly over a ...