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    0 Replies Latest reply on Dec 21, 2009 12:07 AM by JasonTees.com

    SBA Loan Default:  Banks Are NOT Required To Settle

    JasonTees.com Scout
      (Distressed Loan Advisors offers expert advice about SBA loan
      modifications and the Offer In Compromise process, and can be reached
      at JasonTees.com)

      So your business is closed, all the business assets have been
      liquidated, and all that remains is a fairly substantial pile of debt.
      Now what? One would think that the next logical step would be to submit
      an Offer In Compromise package (something this writer specializes in
      for clients) so the debt can be settled once and for all.

      Not so fast. Here's the thing:

      For those not familiar with the process, the Offer In Compromise
      (OIC) must be submitted through the lender. When the lender submits
      the OIC to the SBA, the bank is asked whether they recommend that the
      offer be approved. In many cases, banks don't want to settle, which
      means the OIC is dead in the water before it even makes it over to the
      SBA.

      Why would a bank not want to settle? Perhaps they think a borrower
      was fraudulent. Or they think a borrower isn't making a strong enough
      offer. Or they don't want to bother with the paperwork necessary to
      submit the OIC to the SBA (this alone is great reason to have a workout
      professional prepare an OIC package, and deliver it on a silver platter
      to the bank). Some lenders simply have a "no settlement" policy for
      certain loan types or loan amounts. No matter that the reason, the
      bottom line is that the OIC is not something lenders are required to
      consider.

      So how can a borrower improve their chances of their lender supporting an OIC?

      It sounds simple, but many borrowers are elusive and hard to track
      down because they don't want to deal with the stresses of talking to
      collections people. If you are intimidated by collections people, then
      find someone (like us) to represent you. Not only will a workout
      professional deal with the wrath of the collections people, they'll
      make sure you don't get steamrolled with unreasonable demands.

      If you submit an OIC, make sure you are offering full disclosure in
      terms of your assets and your income. If you get caught leaving a
      major asset off your PFS (yes, there are ways to check), your chances
      of having a settlement accepted will fall dramatically.

      Another way to help your chances of having an OIC accepted is to
      fully cooperate in the liquidation of your business assets. Simple
      things like providing access for appraisers and returning phone calls
      to schedule appraisals can help you tremendously in the long run. In
      short, when you make your lenders life easy, there's a chance they'll
      return the favor when its OIC time.