What Happens If You Default on SBA Loans.
It reaches a point in life when you find the need for a quick loan. The loan comes in handy at a time when a medical emergency faces you or when you want to pay your landlord rent to avoid forceful eviction. Due to the financial thirst, you have no other choice other than to request for a loan from a lender. With The SBA loan, you can have access to financial assistance that is not only reliable but also customer friendly.
Although spending money obtained from a loan is always sweet and fulfilling, there is always a disturbing thought that lingers at the back of your mind, that of repaying the loan in due time. 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. Because SBA loans get issued by the banks on behalf of the Federal Government; your default case becomes a priority that requires immediate pursuing.
When you default, the lender which is usually a bank directly contacts you via direct mail or through a phone call. When you get contacted but fail to respond, the lender uses rights enshrined in the SBA loan agreement to collect the arrears from you. The SBA loan agreement forces you to sell some of your items to raise enough funds to pay your bank debt.
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.
In other circumstances, IRS steps in to come and save ship. Usually, you get an Offer in Compromise with the lender and in the presence of an advocate to come with an -pay-after plan. Before the Offer in Compromise can take effect, the IRS determines your financial worth to ascertain as to whether or not you fit the bill. Based on the type of arrangement, the IRS pays the lender on your behalf. When the SBA lender rejects your Offer in Compromise request, the only option you get left with is to use the United States Treasury Department as leverage.
If you decide not to repay a loan, be willing to lose a lot financially. As a piece of advice, only take a loan when you are a hundred percent sure that you will be able to settle the bank debt in a timely manner.
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