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SBA debt transferred to Treasury Department?

In many cases clients find out all too late that a long forgotten SBA debt was transferred to the U.S. Treasury for collections. In some cases, the transfer to Treasury happens almost immediately, and without much warning, after an SBA offer in compromise is declined.  In still other cases, if you have moved, a written notice may not reach you until years later.

Treasury Debt Settlement

If your loan has been referred to the U.S. Treasury for collection, this means the SBA is no longer involved with the collection of your loan balance. The Treasury Offset Program (TOP) is a centralized offset program, administered by the Bureau of the Fiscal Service’s Debt Management Services (DMS), to collect delinquent debts owed to federal agencies, including the Small Business Administration. If this sounds bad, it is.

TOP means business and the extra-judicial collection tools available to the government include wage garnishment, tax refund offset, offset of federal retirement and military benefits, as well as social security payments. TOP can even seize your IRS tax refund before you ever see the check.

For some readers familiar with garnishment law, you may be thinking that wage garnishment is illegal in your state. This is true, unless you are the federal government. The government only has to give you 30-days notice prior to initiating garnishment of your wages, at which point 15% of your disposable pay is at risk.

While there may be a statute of limitations on how long the SBA can wait before they sue, the U.S. Treasury can continue its collection actions against you until they are paid in full — even if that takes the rest of your life.

We provide the following legal services as part of our Treasury Settlement Package:

1. Review your Case for Settlement though the Department of Treasury
2. Review your original SBA loan documents
3. Review current TOP collection actions, if any.
4. Work with Treasury to suspend TOP collection actions
5. Collect financial documentation, including a complete lists of assets and liabilities
6. Notify the Treasury of your intent to Settle
7. Negotiate with the Treasury Department
8. Prepare and file a Settlement Package with the Treasury Department

 What are my chances?

It is impossible to say and our firm cannot guarantee success. But, doing nothing at this late stage will result in the Treasury Department  aggressively attempting to collect the debt.

TOP can garnish wages, seize IRS Refunds and even offset Social Security and Retirement benefits. In some cases, borrowers may feel forced to file bankruptcy. But, despite the harsh collection efforts, borrowers can and do regularly settle with the Treasury Department.

What can I do to help?

Apart from providing us your full cooperation and patience, if you are reading this and have not yet received your 60-day demand notice from the SBA, contact us at once before your file is transferred to the Treasury. This will save you collection fees added by TOP that can increase your loan balance by up to 30%!