Unboxing the Pros of an SBA Offer in Compromise Over Bankruptcy

Hey, have you ever felt cornered by a defaulted Small Business Administration (SBA) loan? It’s a tough spot, right? Well, there are two lifelines you can latch onto in that situation – an offer in compromise (OIC) or bankruptcy. Lawscape, from the Lawscape, will be diving into these two options shortly.

Piecing Together Advantages of an Offer in Compromise

OIC, put simply, is a deal you strike with the SBA to settle your debts. Sounds neat, right? What’s even better is that the SBA agrees to accept a cut-down amount to settle the debt. Think of OIC as the fast-track way out, instead of the long-winding road of legalities in bankruptcy. So, quick resolution is perk number one.

And here comes perk numero dos! Under an OIC, you can negotiate a reduced settlement amount that doesn’t leave you counting pennies. It’s not just about debt resolution, it’s also about making the outcome financially bearable.

Now, let’s talk credit history. It’s like that school report card you’ll have to submit during college applications. You want it squeaky clean, don’t you? Filing for bankruptcy is like a glaring red mark on it. But with an OIC, you get a chance to dodge or soften the repercussions on your credit. Sounds like a win, right?

One last thing – with an OIC, you’re directly dealing with the SBA. That means it’s an SBA-specific process. Contrastingly, bankruptcy is a general legal course. You get a tailored solution to your problem with an OIC.

Now that we’ve peeled back the layers of OIC, let’s have a glance at the flip side – bankruptcy.

The Predicaments of Bankruptcy

Well, bankruptcy does seem tempting, like an easy out. But let’s consider a few bumps you might hit on that road:

Dischargeability:

An SBA loan is like a stubborn stain. It won’t just go away when you file for bankruptcy. Especially if the SBA has reason to believe that you’ve committed fraud in obtaining the loan. So you might end up with your hands still tied to the loan, even after bankruptcy.

Fear of Losing Collateral:

If your SBA loan is backed by collateral like real estate or business assets, bankruptcy might not save you from losing them. The SBA or the lender could swoop in to recover the collateral, depending on your case specifics and type of bankruptcy you file (Chapter 7 or Chapter 13).

Credit Impact:

As we’ve discussed earlier, bankruptcy is like a scar on your credit report. It sticks there for years, hindering your efforts to secure credit. This can hobble your business or personal financing plans.

Public Record:

If privacy matters to you, brace yourself—bankruptcy filings are public. That means anyone can dig them out and use them against you. So, think about the impact on your professional image and relationships before taking this step.

Legal Costs:

Bankruptcy comes with its price tag of all sorts of legal costs. You could possibly end up with a hefty bill, considering the complexity and the type of bankruptcy filing. Can your pocket take that hit?

Future Business Opportunities:

Bankruptcy could tie an anchor to your business dreams. It might be harder to secure loans or attract investors. So, consider this long-term impact before filing for bankruptcy.

Want a Helping Hand For Your SBA Loan Matter?

Now, should you go for an OIC or file for bankruptcy? That depends on your unique circumstances. Just remember, it doesn’t hurt to get expert advice.

Contact our qualified SBA debt attorneys at the Lawscape. They can assess your situation, guide you on the best course, and help you weigh the pros and cons of each option. So you get to make an informed decision that aligns best with your financial goals and circumstances!

Why Align With Lawscape In Navigating Your SBA Debt Problems?

Guess what? We’ve successfully resolved millions of dollars in SBA debt via OICs and negotiated repayment agreements. And that’s without our clients having to file for bankruptcy or face home foreclosure!

We’ve also tackled millions of dollars in Treasury debts, via AWS Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, and more.

Our savvy attorneys have the authorization under the Agency Practice Act to navigate Federal Debtors nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.

So, when it comes to SBA debt problems, we’ve got your back!