If you own a business that has taken out an SBA loan, you’re likely familiar with the personal guarantee you signed, agreeing to be personally liable for the debt in case of default. But what happens if you default? Is there a statute of limitations that limits the government’s ability to collect from you? The answer is yes, but it’s not that simple. The good news is that Protect Law Group, a debt management company that operates nationwide, can help you navigate this complex legal landscape.
The Federal Government is Limited to a 6-Year Statute of Limitations on Defaulted SBA Loans
The law states that every action for money damages brought by the United States or an officer or agency thereof, which is founded upon any contract express or implied in law or fact, shall be barred unless the complaint is filed within six years after the right of action accrues or within one year after final decisions have been rendered. So, if the government fails to bring a lawsuit against you within six years from the date its right to sue for breach of contract starts, it cannot sue you for the debt.
But, this doesn’t mean that the government can’t still collect from you. Federal agencies, including the SBA, can collect their debts through any means, including offset. This is the process where the government takes some or all of the payments you receive from it, such as your tax refund or part of your Social Security, disability, military pension, or other government benefits. Even when the statute of limitations for pursuing a civil action has expired, the United States can still collect via offset.
The Government Can Also Garnish Your Wages
Another way the government can collect on a defaulted SBA loan is through administrative wage garnishment (AWG). This process allows the government to garnish your wages without obtaining a court order. Although you have the opportunity to present evidence at a hearing, there’s no statute of limitations to prohibit the government from garnishing your wages, even if state law provides for such a limitation.
Protect Law Group Can Help You Protect Your Hard-Earned Money
If you’re facing an SBA loan default, don’t let the federal government take your money. Protect Law Group has experienced and aggressive attorneys who can provide you with solutions to your SBA loan default problem. An offer in compromise or a payment plan may provide available options.
Our attorneys are authorized by the Agency Practice Act to represent federal debtors nationwide before the SBA, the SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service. We’ve helped millions of dollars in SBA debts be resolved via an offer in compromise or negotiated repayment agreements without our clients having to file for bankruptcy or face home foreclosure. We’ve also defended millions of dollars in Treasury debts against administrative wage garnishment hearings, Treasury offset program resolution, cross-servicing disputes, private collection agency representation, compromise offers, and negotiated repayment agreements.
Contact Protect Law Group today for a free initial case evaluation, and let us help you protect your hard-earned money from the government’s collection efforts. Our experienced and professional attorneys will guide you through the legal process and provide you with the best possible solutions for your SBA loan default problem.
Defending an SBA Note and Personal Guarantee agreement can be a daunting task for small business owners. When faced with a breach of contract lawsuit, it is important to have a good defense attorney who can challenge the legal enforceability of the agreement. At SolveDebt, we understand the intricacies of the law and are here to help.
When a small business defaults on an SBA loan, the lender or CDC will attempt to liquidate all pledged collateral to reduce the loan balance. If liquidation efforts fall short, the lender or CDC may file a lawsuit against the small business owners and guarantors. This is where a good defense attorney can come in and raise certain affirmative defenses to challenge the legal enforceability of the SBA Note and Personal Guarantee agreement.
At SolveDebt, we understand that emotions run high in these situations. That’s why we approach each case with empathy and professionalism. We use emotionally charged words and compelling language to help our clients understand their options and make informed decisions.
One of the defenses available to challenge the legal enforceability of the SBA Note and Personal Guarantee agreement is the defense of misrepresentation or fraudulent inducement. If the small business debtor can prove that the guarantee agreement was a result of fraudulent inducement by the lender or CDC, the agreement may be voidable by the defrauded party.
Another defense is the defense of public policy. Certain provisions contained in a guarantee agreement may be considered void for public policy, which means they are legally unenforceable because they go against the public good.
At SolveDebt, we also use show don’t tell language to explain the defense of misunderstanding and the defense of mistake. A misunderstanding may prevent the creation of a personal guarantee agreement where the parties do not have the same understanding of the agreement’s material terms. On the other hand, mutual or unilateral mistakes may result in a voidable guarantee agreement.
We also mention the defense of illegality and unconscionability. A guarantee agreement is void if it requires the performance of an act that violates a relevant law, such as a statute or regulation. A guarantee agreement may be unenforceable if it contains unconscionable elements or terms that offend justice.
At SolveDebt, we understand the importance of using professional language to describe complex legal issues. That’s why we also mention the defense of duress and undue influence. Agreements made under duress are voidable by the party against whom certain types of threats are made. Undue influence occurs when one person takes advantage of another’s mental state or personal weaknesses to induce the formation of an unfair agreement.
We also discuss the defense of force majeure, which releases a party from obligation or liability when an unforeseeable circumstance prevents performance of the agreement. This can include events like natural disasters or war.
Lastly, we explain the defense of frustration of purpose. This defense may apply if the purpose or value of the agreement has been destroyed, causing a frustration of purpose of the agreement.
At SolveDebt, we are authorized by the Agency Practice Act to represent federal debtors nationwide before the SBA, the SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service. Our attorneys have resolved millions of dollars in SBA debts via offer in compromise and negotiated repayment agreements without our clients filing for bankruptcy or facing home foreclosure.
If you need help with an SBA debt or have received a Notice of Intent to Initiate Administrative Wage Garnishment proceedings from the Treasury Department’s Bureau of Fiscal Service, contact us today for a case evaluation at 1-888-756-9969. We can help analyze your prospects for an SBA offer in compromise, help neutralize Treasury’s aggressive collection demands, and defend you against an Administrative Wage Garnishment before a Hearing Official.