Blogs
As many readers of our blog posts are aware, at Shenwick &Associates we have expertise in EIDL loan workouts, bankruptcy filings and offers in compromise, for defaulted EIDL loansRecently we did a post on EIDL loans and bankruptcy, which can be found at http://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html and a post on defaulted EIDL loans and the SBA Offer in Compromise program. That post can be found at http://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html When clients retain us with respect to defaulted EIDL loans, they often ask what documents they need to provide us for our review.We have developed the following checklist of documents after doing workouts and bankruptcy filings for various types of debtors and creditors. Provided below is a list of documents needed for business borrowers and another for individuals, who took out the EIDL loans personally or who guaranteed EIDLloans, which are in default.BUSINESS BORROWER:1. Recent Balance sheet for the business2. Recent Income statement for the business3. Most recent Federal Tax Return 4. EIDL Loan Documents5. Property that was Collateral for EIDL Loan6. Guarantees give for EIDL Loan 7. Check registry and wires going back 90 days for the business8. Bank statements for 90 days and 9. Executive Summary regarding the company’s problems and goals with respect to EIDL Loan
INDIVIDUAL BORROWER OR GUARANTOR:1. List of property you own (assets)2. List of who you owe money or property to (liabilities)3. After Tax Monthly Budget showing after tax income & personal and business expenses4. Most recent tax return5. List of obligations you personally guaranteed6. Taxes owed, if any including the nature of the tax, the tax year and amount7. Brief summary of your problem(s) and your goals
If you provide us with this information, we will be able to do an analysis regarding your best options with respect to the defaulted EIDL Loan, including a Workout, Offer in Compromise, closing of the business or a bankruptcy filing. Additionally, we will advise the guarantor on their options and best course of action.Jim Shenwick, Esq has handled thousands of workouts (out of court settlements) and over 500 bankruptcy filing for individuals and businesses. Jim Shenwick, Esq has an LLM in Taxation from NYU law school and he can also provide advice regarding relief of indebtedness issues. Jim Shenwick, Esq [email protected] 212 541 6224
For those who are owed or paying child support prior to filing for bankruptcy, the idea of discharge can be either terrifying or welcome. Regardless of which one applies to you, though, the truth of the matter might be altogether different than you imagined. Child Support Debt is Non-Dischargeable Child support is a priority debt.+ Read More
The post Everything You Need to Know About Bankruptcy and Child Support appeared first on David M. Siegel.
For those who are owed or paying child support prior to filing for bankruptcy, the idea of discharge can be either terrifying or welcome. Regardless of which one applies to you, though, the truth of the matter might be altogether different than you imagined. Child Support Debt is Non-Dischargeable Child support is a priority debt.+ Read More
The post Everything You Need to Know About Bankruptcy and Child Support appeared first on David M. Siegel.
For those who are owed or paying child support prior to filing for bankruptcy, the idea of discharge can be either terrifying or welcome. Regardless of which one applies to you, though, the truth of the matter might be altogether different than you imagined. Child Support Debt is Non-Dischargeable Child support is a priority debt.+ Click Here For Read More
The post Everything You Need to Know About Bankruptcy and Child Support appeared first on David M. Siegel.
When filing for personal bankruptcy, it can sometimes be difficult to determine which bankruptcy chapter is the right one for you. Many factors are at play when making this decision, but the first priority for anyone considering either is to learn more about bankruptcy itself. While there are technically more than two types of personal+ Read More
The post What are the Differences Between Chapter 7 and Chapter 13 Bankruptcy? appeared first on David M. Siegel.
When filing for personal bankruptcy, it can sometimes be difficult to determine which bankruptcy chapter is the right one for you. Many factors are at play when making this decision, but the first priority for anyone considering either is to learn more about bankruptcy itself. While there are technically more than two types of personal+ Read More
The post What are the Differences Between Chapter 7 and Chapter 13 Bankruptcy? appeared first on David M. Siegel.
When filing for personal bankruptcy, it can sometimes be difficult to determine which bankruptcy chapter is the right one for you. Many factors are at play when making this decision, but the first priority for anyone considering either is to learn more about bankruptcy itself. While there are technically more than two types of personal+ Click Here For Read More
The post What are the Differences Between Chapter 7 and Chapter 13 Bankruptcy? appeared first on David M. Siegel.
In a recent blog post we discussed EIDL LOAN WORKOUTS AND BANKRUPTCY http://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html In this post we will discuss EIDL Loans and the SBA Offer in Compromise program (“OIC”). An offer in compromise is an offer by the borrower to pay less than the amount that is owed on the SBA loan, in consideration for the SBA considering the loan satisfied. The “compromise amount” must bear a reasonable relationship to the amount that could be recovered through “enforced collection proceedings”. Enforced collection proceedings are litigation or the lien and levying on collateralized assets by the SBA including bank account levies, wage garnishments, and liens on houses pledged as collateral.Generally in an OIC, the business has closed and all business assets have been sold or abandoned. In rare cases, an OIC can be filed while the business is open and operating.The compromise amount should be paid in one lump-sum payment on a specified date, usually within 60 calendar days of the approval date. Rarely the OIC can be paid in installments.Similar to an OIC for a tax obligation, the SBA Offer-In-Compromise is required when a borrower or guarantor is seeking to have their obligation released for less than the balance due after the business has closed.What are the Requirements for an Offer in Compromise?(1) The loan must be classified in liquidation status by the Lender or SBA;(2) The borrower has not filed for bankruptcy;(3) The full amount owed on the loan cannot be paid or recovered (4) Collection of the loan is not barred by a discharge in bankruptcy or the statute of limitations;(5) The borrower has not engaged in fraud, misrepresentation, or other financial misconduct; and(6) The compromise amount bears a reasonable relationship to the amount that could be recovered in a reasonable amount of time through enforced collection proceedings. After defaulting on the EIDL loan, when the loan is classified in liquidation status by the Lender or the SBA, the borrower will receive a 60 day demand notice from the SBA.It is during this 60 day demand notice that a borrower typically files the OIC.If a borrower takes no action the SBA can commence litigation, seize IRS tax refunds, take Social Security benefits or an individual's wages can be garnished. The OIC package is sent to the lender who will review it and forward it to the SBA for further review and action.What Documentation Must the Borrower Submit with the OIC?(1) SBA Form 1150 (Offer in Compromise).(2) SBA Form 770 (Financial Statement of Debtor) showing the borrower’s assets, liabilities, income, and expenses. (3) Statement of Personal History(4) Borrower Consent to Verify Information(5) IRS Form 4506-T (Request for Transcript of Tax Return);(6) The borrower’s federal tax returns for the past two years(7) If the loan involved personally guarantees, then 2 years of federal tax returns for the guarantor(8) If a house was collateral for the loan, then a recent appraisal of the house and a mortgage statement showing the mortgage balance on the house, if applicable.(9) A statement or explanation from the borrower stating why the loan cannot be repaid in full.
Timing:The OIC process takes six months to one year.Will the SBA accept a payment plan for an OIC?The SBA prefers a lump sum payment, but they will also consider monthly payments from an individual. Note however, that the SBA will not issue a release, terminate a guaranty or release a lien on a house until all payments under the OIC are made. If your house is collateral for the loan, then the OIC offer must equal the equity in the house, which is determined by the fair market value of the house (based on a recent appraisal) less outstanding mortgages, less brokerage fees (if the house were sold), less your States homestead exemption and state and local transfer taxes.Bankruptcy filing vs OICClients will often ask us is it better to do an OIC or a bankruptcy filing? There is no correct answer and at Shenwick & Associates we do that analysis for clients.At Shenwick & Associates we have done hundreds of workouts for clients and many bankruptcy filings for individuals and businesses. Clients having questions about the OIC process or bankruptcy should consult with Jim Shenwick, Esq. [email protected] 212 541 6224
Want to avoid dishonest debt collectors? Watch this video from FTC’s Consumer Advice
By Joseph Ferrari,July 22, 2022 (reprint from FTC, Consumer Alerts)
During Military Consumer Month 2022, the FTC is highlighting resources to help veterans and their families navigate tricky situations they may find themselves in.
Watch this video to see how Bryan, a U.S. Army veteran, was able to get debt collectors to stop contacting him about a debt he didn’t think he owed.
Fraud Affects Every Community: Debt Collection from Federal Trade Commission on Vimeo.
Bryan asked the collectors for proof of his debt, which they didn’t have. A collector has to give you “validation information” about the debt, either during their first phone call with you or in writing within five days after first contacting you. The collector must tell you four pieces of information:
- how much money you owe
- the name of the creditor you owe it to
- how to get the name of the original creditor
- what to do if you don’t think it’s your debt
If a debt collector won’t give you this information, report them to the FTC at ReportFraud.ftc.gov. To learn more about your rights, visit consumer.gov/debt. Please share this video with friends and family so they’ll know what to do if they get a call about a debt they don’t think they owe.
.fusion-body .fusion-builder-column-0{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-0 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 20 !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 20 !important;margin-left : 1.92%;}@media only screen and (max-width:1024px) {.fusion-body .fusion-builder-column-0{width:100% !important;order : 0;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-0{width:100% !important;order : 0;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-1{ padding-top : 20px;margin-top : 20px;padding-right : 20px;padding-bottom : 20px;margin-bottom : 0px;padding-left : 20px;}@media only screen and (max-width:1024px) {.fusion-title.fusion-title-1{margin-top:15px!important; margin-right:0px!important;margin-bottom:0px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important; margin-right:0px!important;margin-bottom:10px!important; margin-left:0px!important;}}MUSINGS BY DIANE:There must be a special place in hell for those who prey on others. Hopefully, that place is made additional hard for those to seek to harm seniors, military, first responders, single parents, or anyone who is vulnerable. Every day I hear about a new scheme to steal someone’s money and undermine their sense of peace and security. Not to mention the damage this does to someone’s psyche (the human soul, mind, or spirit).
For almost three years my challenge has been to put a spotlight on Scott Michael Forrester, a young Arizona attorney, because of his failure to appreciate common decency and respect for his clients, the courts and our profession. The Arizona Supreme Court published its order disbarring Scott Forrester: “factors: dishonest or selfish motive, bad faith obstruction of the disciplinary process, submission of false evidence, refusal to acknowledge the wrongful nature of the conduct, substantial experience in the practice of law, and indifference to making restitution.” Unfortunately, Forrester is not the only attorney who treats his clients with such disrespect, but one step at a time,
As with most criminals, Forrester blames others for his failures. In his pleadings and testimonies, he repeatedly blamed his shortcomings on his clients, his own staff, the courts, the Arizona State Bar, the United States Trustee’s Office, and, of course, me. To punish me he is carrying out a campaign of filing fake reviews (with fictitious names), purporting to be my clients. There is little I can do to stop him, other than respond to each with the truth. How sad that Forrester finds himself in his current hell. I can only hope that he wakes one morning, looks at his family, and sees his life as a choice, and that a new choice is always out there.
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- The nightmare of hiring the wrong attorney based on price
- Have you been a victim of a financial scam, and is bankruptcy an option?
- 10 Things You Need to Know Before Filing Bankruptcy
- Rebuilding Your Credit Score After Bankruptcy
- Do Student Loans Debts Die With You?
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The post How to Avoid Dishonest Debt Collectors – video appeared first on Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer.
EIDL LOAN WORKOUTS AND BANKRUPTCY Recently we have received many telephone calls and emails from clients regarding their default under EIDL Loans and EIDL Grants, from the SBA or related banks and their options with respect to those defaults.In the way of background, EIDL (Economic Injury Disaster Loans) and EIDL Grants were provided to small businesses to help them recover from the COVID-19 pandemic. EIDL loans were supposed to used for working capital and operating expenses. EIDL loans are not forgivable and must be repaid.EIDL Grants do not need to be repaid.The maximum for EIDL Loans was $2 million. The interest rate on those loans was not to exceed 4%.The term was up to 30 years, with no prepayment penalty or feesIn SBA nomenclature, if a borrower does not make payment on an EIDL Loan, the loan can be Delinquent or go into Default. SBA regulations provide that “Delinquent” means you’re behind on your SBA loan repayments, but your lender still believes you will be able to repay some, or all, of the loan amountIf a lender determines that you will be unable to repay your loan, then you will be classified as a “Default”.Delinquent on EIDL Loan:In the typical EIDL loan, the lender will assess a late fee for failure to pay, contact you for repayment, restructure the loan, extend your loan over a longer length of time (to reduce monthly repayments), allow you to repay only the interest portion of your loan, or some blend of the above (typical loan workout strategies).Lender’s will push for a payment within 30 days of contacting you.Default On EIDL LoansIf you repeatedly fail to make repayments and cannot reach an agreeable plan with your bank or the SBA, then your loan will go into default. Consequences of Default:
- Any collateral (property) you pledged for the loan is at risk. Depending on applicable state law the lender has the right to take the property and sell those assets to repay the loan.
- Any parties or entities that guaranteed the loan can be required or sued to repay the loan balance.
- The SBA will send you a demand letter, demanding that the loan be repaid.
- The SBA can sue you or the guarantor of the EIDL Loans.
- Your business and personal credit reports will show the default and your credit score will decline.
- The SBA can lien and levy on federally held assets such as tax refunds
- The loan default will be reported to the IRS and you may have to recognize income equal to the amount of the loan default, which is not repaid to the lender.
REMEDIES FOR AN EIDL LOAN DEFAULT:1. Offer to pay some money towards settling the loan.2. You can fill out an “Offer in Compromise” form and send it to an SBA Loan Officer, which provides financial information and the amount that you can pay as a final and full payment to satisfy the loan.3. Prepare for litigation.4. Consider a bankruptcy filing
GUARANTIES AND COLLATERAL FOR EIDL LOANS
- EIDL loans of $25,000 or less do not require collateral or personal guarantees.
- EIDL loans between $25,000 and $200,000, require collateral (UCC-1 and a Security Agreement) but generally do not require personal guarantees. In case of a default with respect to loans of this size, collateral such as accounts receivable, inventory or equipment could be seized and sold to satisfy the debt.
- EIDL loans greater than $200,000 require collateral and personal guarantees.
EIDL and BankruptcyBankruptcy is a last resort for an individual or a business. However, an individual with an EIDL loan or a company that guaranted an EIDL loan can file for chapter 7, 13 or 11 bankruptcy. Chapter 7 is a liquidation (the business closes), chapter 13 is a 3 to 5 year payment plan for individuals (not businesses) and chapter 11 is a reorganization or a liquidation for an individual or a business.
A business that has an EIDL loan can file for chapter 7 or 11 bankruptcy or chapter 11, Subchapter V bankruptcy (a form of chapter 11 bankruptcy for small businesses). EIDL loans can be discharged in a chapter 7 bankruptcy filing. Assets that were collateralized for an EIDL loan, such as equipment or accounts receivable would become the property of the Lender. Parties who guaranteed EIDL loans can be sued by the EIDL lender and they would need to do a workout (an out of court workout) or a bankruptcy filing.
Clients or professionals with questions about EIDL loan workouts or bankruptcy filing should contact Jim Shenwick, Esq [email protected] 212 541 6224
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.