How Deep Can Debt Forgiveness Go when Working Out a Defaulted SBA Guaranted Loan (or a Non Guaranteed Bank Loan)?

This is a very complicated issue with many contributing factors:

Some of the issues are net worth, income, spousal income, protected retirement investments, family, basic overhead, secured debt, other assets, other business interests, medical issues, education, age, where you love, what the assets in your business are worth, structure of the offer, and previous income history to name a few. There are just as many more not listed as each case is unique and each case requires a unique evaluation and presentation. Each case requires its own special evaluation.

However, if done appropriately and within SBA guidelines and as dictated by much experience seeing what works and what does not work, if done correctly and presented effectively and if a trust relationship has been established between the bank and us as third party representatives of a defaulted borrower, we have typically experienced forgiveness debt between 90% and 95%! That works.

We have seen attempts to execute an effective Offer in Compromise with the SBA on a defaulted loan directly by the borrower, refused with a significant 50% cash offer. Why? Not presented or evaluated correctly and the borrower is the last person to effectively create a trust relationship with the bank as he already broke his word and defaulted on the contract, the borrower is the least credible and the least likely to get the best possible result.

Of course there is the issue of what to offer and how to offer it, that only experience will reveal and if doing it for the first time, as a borrower would be doing, it is impossible to know what to do. Even your lawyer, unless he specializes in Bank workouts and SBA workouts with massive debt forgiveness, he too will be clueless as to how it really works.

Most Offers in Compromise are rejected. Some do eventually get worked out but at much higher amounts than if handled by experts who know the path.

When properly done, our clients pay between 3 - 10 cents on the dollar, with some paying in a lump sum while others we arrange term payoffs over time, a few years up to 5 if necessary.

This is affordable. This truly allows the borrower the opportunity to get on with his life again and move into a new income producing venture be it employment or entrepreneurship. He has his life back and has not lost his home.

While most homes are upside down and, thus, offer no value from foreclosure liquidation, some are not upside down and have equity and these must be handled in a few specific ways to prevent the loss of one's home. We know how to do this and most borrowers do not. So we can easily say not one of our clients has ever lost their home to a bank or SBA liquidation process if they were represented by us prior to the foreclosure and liquidation.

Debt forgiveness and no loss of one's home are possible, if you know what you are doing.