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The Aftermath of Defaulting on SBA Loans.

It reaches a point in life when you find the need for a quick loan. With no other source of emergency income, a quick loan proves to be the only option you have to fetch money for medical purposes or to settle your rent arrears. Due to the financial thirst, you have no other choice other than to request for a loan from a lender. After doing some window shopping here and there, you settle for the SBA loan that has highly accommodating interest rates.

After spending all that you got given by the financial provider, you face a constant fear of just how you will be able to repay your loan. With time, you have no other option other than to default on a loan because of the many financial burdens you bear. Below is an extract of what will happen to you if you default on the SBA loan. As a defaulter, your case gets scrutinized in great detail since the loans get usually funded by the Federal Government.

When you default, the lender which is usually a bank directly contacts you via direct mail or through a phone call. If you fail to respond to either form of communication, the bank then moves to collect their loan through the provisions made under the SBA loan agreement. In such an agreement, the law compels you as the borrower to sell any item you put as collateral, to raise enough funds to repay the loan.

If you fail to honor the rights in the SBA loan agreement, the lender moves swiftly to foreclose your business or property for that matter. When you default, you are not only compelled to repay the loan in full but also settle any other additional expenses that might have come about.

If it so happens that you have failed to honor any of the above processes, the IRS comes to the aid of the lender. Through an Offer in Compromise agreement, you, the IRS, and bank enter into an arrangement on how you will repay the loan arrears. Before such an arrangement takes effect, the IRS analyses all your previous tax and financial reports to assess your worth. Based on the type of arrangement, the IRS pays the lender on your behalf. If your proposal happens to get declined by SBA; you have no other option other than to seek assistance from the United States Treasury Department.

If you decide not to repay a loan, be willing to lose a lot financially. Before seeking an SBA loan, always take the time to do some background research and assessment and evaluate yourself to ascertain whether or not your financial sources will enable you to repay the loan in real time.
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