I got a call from a guy who was looking for an attorney. When I told him that I am not an attorney, but rather an SBA Workout Consultant, his response was “Oh, well thanks, but we really need an attorney.” I went on to question him about his situation, and he told me that he was 3 months late on him SBA loan and the bank had not granted him a modification.
“So, why do you feel that you need an attorney to help with a modification?” I asked.
“The bank has threatened foreclosure!” he responded.
For the record, pretty much every bank threatens legal action when you don’t make payments for 3+ months. Until it actually happens, it’s all talk and an attorney can’t do anything more than I can when it comes to rectifying a default. I knew from this guy’s tone that he had his mind made up, and no amount of explanation was going to sway him. He truly seemed to think that the bank would be intimidated if an attorney called them. As a former banker, I can tell you that his assumption is not correct. Bankers deal with attorneys all the time.
So the question remains: When do you need an attorney?
You need an attorney when:
- You need to be represented in court.
- You want to file for bankruptcy.
- You need to answer a legal summons and complaint.
- You are asked to sign a legal document.
You’ll notice that the above list does not include loan modifications or debt settlement. Why? Because negotiating SBA debt settlements and loan modifications doesn’t require a law degree. It requires the following attributes:
- Experience analyzing financial statements and cash flow analysis.
- A strong understanding of the rules of SBA settlements and loan modification protocol.
- Experience negotiating SBA settlements and loan modifications.
While there may be attorneys who do possess the above attributes, my point here is that not all do, so to assume that you need an attorney in all workout situations is a false assumption.
I know what you are thinking: The guy writing this article clearly has an interest in convincing me not to use an attorney because he wants me to hire him! True, but it doesn’t mean my points are not valid. I see it as a similar situation to when borrowers are trying to consider whether to hire me, or to hire a bankruptcy attorney. The bankruptcy attorney usually recommends filing for bankruptcy regardless of the situation. It doesn’t mean it’s not a legitimate option, it’s just one perspective.
I always tell prospective clients to simply evaluate all their options, then make an informed decision. And that’s really the point of this article. In some cases it makes a lot of sense to engage an attorney, but in some cases it doesn’t. But to assume that an attorney is always a better option than an SBA workout consulting just isn’t true.