HomeSBA Loan Default: Filing Bankruptcy May Not Prevent An Offset

SBA Loan Default: Filing Bankruptcy May Not Prevent An Offset

We Reduce Business Debt

Lawscape is dedicated to helping business owners successfully resolve their business debt without headaches, or long term consequences.

We Provide Nationwide Business Debt Relief

Lawscape provides nationwide business debt relief services. We work a wide array of lenders, service providers, and types of business debt. We are able to restructure and reduce, all types of secured and unsecured business debt. 

Millions of Dollars in Debts

Our team has experience handling 10’s of millions in debt, ranging from SBA debt, to Merchant Cash Advance and more. 

All Types Of Debt

Regardless of the type of business debt you have, we can help. We have experience handling all types of secured and unsecured business debt. 


Our company is led by experienced business debt relief experts who have experience handling secured and unsecured debt nationwide. 

Failing To Repay Business Debt Isn’t The End

Many business owners think failing to repay business debt means: your business is over.

This simply isn’t true. Business debt is a problem which CAN be handled, just like everything else; but only if you take pro-active steps. Lawscape helps you understand the law, and works with you to make sure that business debt isn’t the end of your business. 

What Are Some Ways We Can Help With Business Debt Relief?

Our experienced business debt relief consultants are here to help you through this stressful time. 

What Bankruptcy Actually Means for Your SBA Loan Default

Imagine you’re up to your neck in hot water because you can’t pay off your SBA loan. As a last result, you might consider filing bankruptcy as your ticket to financial freedom. But, hold your horses! Filing bankruptcy might not be the magic eraser you think it is.

Here’s the kicker: the government can still offset against your assets even after you’ve filed bankruptcy. I know it sounds a bit rough, but it’s just the way the system works.

But hey, don’t stress it. Lawscape and the Lawscape are here to help you navigate this twisted maze, and we’ll explain all those big-fancy legal terms as well.

The Bankruptcy Code and Creditors’ Right to ‘Setoff’

Section 553(a) of the Bankruptcy Code is a sneaky prop in this financial drama. You see, it preserves a creditor’s right to setoff. In layman’s terms, it basically allows a lender to offset a mutual debt owed by the lender to the borrower against the borrower’s debt, as long as both those financial obligations came up before the bankruptcy case began.

For instance, consider it like an old Western standoff, both parties need to be present before the gunfire starts, right? In the same vein, the debts must be between the same parties and fall within the same timeline marked by the filing of the bankruptcy petition.

Setoff Rights and Federal Agencies

The cherry on the cake is the fact that federal agencies like the IRS have the power to intercept certain federal payments to collect pending debt owed to Uncle Sam. This includes the authority to offset tax overpayments for debts owed to the United States. Can you believe it?

This offset only applies to tax refunds for years before the debtor filed for bankruptcy protection. Unfortunately, despite filing for bankruptcy, the debtor isn’t off the hook if they owe postpetition debts to the United States. Simply put, if you owe the government money after filing, they still have a claim on it.

Federal Payments and Setoff Rights

It’s a no-brainer that if a creditor has to exercise setoff rights, both the creditor’s as well as the debtor’s obligations should arise prior to the petition date. To better explain this, let’s think about a situation when a debtor has made overpayments of federal tax in the year preceding its bankruptcy filing – that’s a classic example for when both obligations would kick-in prepetition in the federal debt collection context. It’s a bit complicated, I know, but that’s what we’re here for.

Getting Legal Help for your SBA Loan Default

SBA loan default can almost feel like you’re stuck between a rock and a hard place, especially if you’re staring down the barrel of federal offsets. But, you don’t have to do this alone.

Lawscape and the Lawscape are just a phone call away if you’re struggling with these issues. You can reach us at or by dialing 1-212-460-5004 to schedule your initial consultation.

A Spot Light on Why We’re Your Best Bet for your Treasury or SBA Debt Problems

In our line of service, we’ve aided clients to resolve millions of dollars in SBA debts through Offer in Compromise and Negotiated Repayment Agreements without forcing our clients to file for bankruptcy or face home foreclosures. Impressive right!

Additionally, we’ve also helped clients defend against millions of dollars in Treasury debts through AWG Hearings, Treasury Offset Program Resolutions, Cross-servicing Disputes, and other corresponding negotiations.

And guess what? Our results-driven attorneys are authorized by the Agency Practice Act to fight for federal debtors nationwide in the face of SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service. Quite a repertoire, don’t you agree?

What are you waiting for? Contact the Lawscape pronto, and let’s find a resolution for your SBA loan default.

Lawscape Can Help You Manage Your Business Debt

If you’re struggling with business debt, we can help you understand your situation. During the initial consultation, we’ll go over the contract, and other legal documents you signed. After that, our firm will work with you to get a better understanding of your situation, and help you come up with a game plan that keeps your business alive. 

We Handle It All


Merchant Cash Advance


SBA Debt Relief


Secured Business Debt


Unsecured Business Debt

Everyone has different types of business debt. What matters is that you take it seriously. Regardless of whether it’s secured, or unsecured, you need to work with a firm that understands how to negotiate, reduce, settle, and manage, this business debt. 

Discuss your situation today

We are here to help you, and want nothing more than to help you save your business. Speak to our business debt relief specialists today.

Contact information

Call us today for a risk free consultation.

Copyright: © 2023 Lawscape. All Rights Reserved.

This is a staging enviroment