Sure thing, let’s break down this situation together. Imagine you’re knee-deep in SBA debt, and you feel like you’re wading upstream. Well, there’s good news. You don’t have to carry that weight alone. Our able hands at Lawscape can help lift this burden off your shoulders. We’re well versed in handling SBA OIC claims – and frankly, it’s our bread and butter.

Contemplating Bankruptcy? Think Twice

I see how you might be considering bankruptcy when dealing with an SBA loan default. Although, might I add, taking SBA OIC route to settle SBA debt can sometimes work out better, saving you some serious headaches.

The Downside of Chapter 7 – It Stings More Than a Bee

Chapter 7 bankruptcy comes with its fair share of drawbacks:

1. It can do a serious number on your credit report and could dampen your prospects of securing attractive credit terms.
2. A bankruptcy trustee will seize control of your finances and debts, maintaining a tight grip from the moment of filing until the case is discharged. You’re at their mercy, unfortunately.
3. If you’re a Sole Proprietor or a Partnership, bankruptcy could drive you out of business due to associated costs and continual pressure.
4. If you count sizeable nonexempt personal property or equity in secured assets, you might see your wealth shrink noticeably.

The Dark Side of Chapter 11 – It’s Not Always The Answer

Chapter 11 has its own set of disadvantages:

1. A seal of approval on your reorganization plan does not come quickly or cheaply.
2. You could find yourself on the receiving end of assertive and aggressive creditors. The ensuing flurry of lawsuits in the bankruptcy proceeding makes it agonizingly long and costly. These cases typically start at $50,000 and upfront fees can amount to $20,000 or more.

Final Musings on Bankruptcy

The “Invisible” Price Tag

But, hold up a second, there’s more. Bankruptcy carries an often overlooked cost. Remember, your business’s operating landscape will change once you file for bankruptcy. It gets messy, and these disruptions can end up costing quite a bit over the 10 years that bankruptcy is reported on a credit report. A ballpark figure is around the $75,000 – $125,000 mark.

To put it in simpler terms, if an SBA debtor can square away an OIC settlement for less, they should definitely consider going down that path, aiming for an SBA OIC or DOT compromise. However, if the costs of the compromise settlement run higher than the “invisible” bankruptcy costs, then sheltering under the umbrella of a bankruptcy might be a better bet.

Here’s a handy link to a video that expands on SBA loan default and bankruptcy.

Why Us? Straight From The Lawscape Kitchen

Well, our track record does speak volumes. Over the years, we’ve managed to resolve millions of dollars in SBA debts through Offer in Compromise and Negotiated Repayment Agreements. The cherry on top? Our clients didn’t have to resort to bankruptcy or risk losing their homes.

On top of that, we’ve defended millions of dollars in Treasury Debts through AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers, and Negotiated Repayment Agreements.

Backed by the Agency Practice Act, the adept attorneys at the Lawscape are authorized to represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service. So, rest assured, you’re in good hands.