Handling SBA Loan Defaults: Pledged Personal Residences and Ensuing Challenges

SBA Loan Default Concerns? We’ve Got Your Back!

So, feeling a tad bit uneasy about a potential SBA loan default? Before you hit the panic button, I’d like you to know that my team and I at Lawscape are here to help navigate these treacherous waters. We will rummage through your SBA loan concerns, lay them out to you in layman’s terms, and recommend suitable solutions, one of which could be an SBA offer in compromise.

This loan default behemoth should not be tackled solo – having a seasoned attorney by your side through this ordeal is crucial. So, consider this an open invitation from us at Lawscape for a chat about your predicament.

Risks Involved When Pledging Personal Residences as Collateral

Let’s say you pledge your home as collateral for an SBA loan. This isn’t as uncommon as you’d think; many borrowers do. But what happens when a loan default happens? In compliance with the SBA standard operating procedures, the collateral, in this case, your home, has to be liquidated to retrieve the loan amount in the quickest time feasible. We are talking potential foreclosure – the same outcome that ensues if you halt your mortgage payments.

The SBA’s Olive Branch in the Form of Relief Options

But here’s the good news: SBA guidelines do throw borrowers a lifeline. What course does this lifeline take? Let’s consider a scenario in which your personal residence is your lone valuable asset, and there’s no other recovery avenue. The SBA could release the lien for consideration. The prerequisite here is the earnest effort to raise not only a sum equal to the home’s Recoverable Value for relinquishing the lien but also an extra amount ample enough to compromise the borrower’s remaining liability. Therefore, there’s a chance for you to buy out the lien, and the SBA is obliged to negotiate in an honest-to-goodness manner.

Prioritizing Compromise Offers Post Collateral Liquidation

As per SBA rules, a compromise offer should be sought from each borrower once it’s clear that there’ll be a deficiency after collateral has been liquidated. However, there are a few conditions to be met:

• No legal defenses such as bankruptcy discharge or the statute of limitations should bar deficiency’s collection.
• The borrower hasn’t indulged in fraudulent practices, misrepresentation, or financial misconduct.
• The borrower either refuses to pay the deficiency in full, finds it impossible to pay within a sensible timeframe, or cannot have the full amount recovered through affordable enforced collection proceedings within a sensible timeframe.

Here’s an example to better illustrate this point. If you owe $200,000 on your loan, the worth of your house is $100,000, you have an $80,000 mortgage, and the SBA is the second lien holder – you can release your home for $20,000 and negotiate the outstanding $180,000 based on your payment capability. Though having your house as collateral isn’t ideal, exploring alternatives can be beneficial.

Seeking Guidance on SBA Loan Defaults? We are a Call Away!

So, how about a little tête-à-tête about your SBA loan default? Reach out to us at 1-212-460-5004 or complete the form below. Rest assured, a qualified attorney from Lawscape will get in touch with you.

Why Should You Entrust Us With Your SBA or Treasury Debt Concerns?

Impressive Record of SBA Debts Resolution

Clients of Lawscape have seen millions of dollars in SBA debts resolved via offer in compromise and negotiated repayment agreements without filing for bankruptcy or facing home foreclosure.

Thorough Defense Against Treasury Debts

We have successfully contested millions of dollars in Treasury debts through AWG Hearings, Treasury Offset Program resolutions, Cross-servicing disputes, Private Collection Agency representation, Compromise Offers, and Negotiated Repayment Agreements.

SBA, Treasury Department, and Bureau of Fiscal Service Authorization

Due to our authorization under the Agency Practice Act, we are equipped to represent Federal Debtors nationwide before the SBA, the SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.