• I guaranteed my brother’s SBA loan and he defaulted. Can I still get an SBA loan of my own?

    4 October 2015
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    The answer depends on whether or not you satisfied your obligations to the federal government. If you signed an Unconditional Personal Guaranty for a commercial loan backed by the Small Business Administration (SBA), then you are responsible for the payment of the debt in the event your brother does not or cannot pay. In due course, the SBA will send you a notice letter that is effectively a demand for payment. If you do not pay the debt or make suitable arrangements agreeable to the SBA, then the debt will be referred to the U.S. Treasury Department for further collection activity.

    Apart from being placed into the Treasury Offset Program (TOP) and being exposed to tax refund intercept, administrative wage garnishment and the offset of other federal benefit payments like social security, you will be placed into the Credit Alert Interactive Voice Response System (CAIVRS).

    CAIVRS receives inputs from DOJ, Education, SBA, HUD, USDA and the VA. CAIVRS Reporting System is a system maintained by the federal government that lists persons who have defaulted or had a loan foreclosed within the last three years on a debt owed to the Federal government or are currently delinquent on a debt owed to the Federal government. When you apply for an SBA Loan, participating lenders are required to check the CAIVRS database to determine whether the individuals or businesses identified in applying for the loan have either a delinquent federal debt or a prior loss which bar them from SBA financial assistance.

    The government has a long memory and there is no statue of limitations on the collection of an unpaid non-tax treasury debt under the TOP program. So, before you sign on the dotted line, think hard. if the government takes a loss, you will be barred from the SBA loan program.

    If you would like more information on this subject, you may contact the Perliski Law Group at (214) 446-3934 for a free initial consultation.

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  • How can I still be liable to the SBA when my ex-wife assumed this debt in the divorce?

    29 January 2015
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    There’s no way around it: divorce is stressful. During this often ugly process the soon to be ex-spouses battle it out and in the end arrive at a division of property and debt that they both agree upon. It is on the assumption that this hard-won agreement represents the last word on their personal liability for martial debts that most people depend. Sadly, these agreements are not worth very much when the obligor’s finances deteriorate.

    Joint and Several Liability

    Whether or not your ex-spouse agreed to be solely responsible for an SBA Debt, if both spouses were guarantors on the SBA loan, then the SBA has a right to pursue either spouse for the full amount of the outstanding debt; this sad fact is a result of what is referred to as joint and several liability. And, although the SBA can only collect the full amount of the debt once, both ex-spouses remain guarantors on the original debt — that is, unless one of them settles with the SBA first.

    That Hard-Won Agreement with your Ex-Spouse is Not Binding on your Creditors

    The simple fact is that you divorced your husband/wife, not your creditors; they were not parties to your divorce and had no say in your agreement. Therefore, agree all you like with your ex-spouse, if he or she fails to pay off the full balance of the remaining SBA debt, you will be asked to do so. In many instances, years can pass before the SBA gets around to sending a 60-day Notice Letter making the event all the more traumatic with many a person prone to ignore it. But, it would be a grave mistake to ignore this notice — it may well be the only opportunity for you to settle the debt on reasonable terms before it is transferred to the U.S. Treasury where settlement terms are harsh and deals few and far between.

    The financial collapse of a family business can often lead to divorce. Work out a realistic plan to address the SBA debt or the U.S. Treasury will ultimately work one out fore you.

    Forewarned is forearmed.

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