How to Compromise an SBA Defaulted Loan that has been transferred to Treasury Offset Program (TOP)

 

How to Compromise an SBA Defaulted Loan that has been transferred to Treasury Offset Program (TOP)

 

In a prior blog post we discussed “How to Recall Defaulted SBA Loan from Treasury Offset Program TOP” which blog post can be found at https://shenwick.blogspot.com/2024/04/how-to-recall-defaulted-sba-loan-from.html

If you have a defaulted SBA loan that has been transferred to the Treasury Offset Program (TOP) and you are unable to recall the loan from TOP to the SBA, your options are: 1. Do nothing, 2. Close the business, 3. Negotiate a Compromise with TOP, or 4. File for bankruptcy and halt the TOP offset with the automatic stay provided by Section 362 of the Bankruptcy Code.

In this blog post we will discuss how to Compromise an SBA Defaulted Loan that has been transferred to TOP.

Please note that the forms required to be submitted to TOP to Compromise the claim are different from the offer in compromise forms submitted to the SBA for an offer in compromise.

Documents Required:

1  Provide a letter on your letterhead explaining the reasons for the default on the SBA loan, why it should be reduced or compromised, the original amount of the defaulted SBA loan, the proposed amount to compromise the defaulted SBA loan, the source of funds for this settlement, and a detailed explanation of the financial hardship involved for you or your business.

2  A Financial Statement for Business or Individual (which can be obtained online from TOP, Department of Treasury Compromise Forms) must be completed and submitted.

3   Submit the last 2 years of the Business or Individual tax returns.

4   The proposed payment should be a lump sum payment.

5   Submit 2 Months of  bank statements for the individual or the business &

6   Submit 2 utility bills for for the individual or the business.

Then  call TOP at 800-676-5737 to determine who the documents should be faxed or emailed to. 

Please note that compromising a claim with TOP is difficult to do!

For those clients or advisors who would like to discuss compromising their  SBA Defaulted Loan (that has been transferred to TOP)  with Jim Shenwick, Esq. please call Jim Shenwick, Esq  at 917 363 3391 or email him at  jshenwick@gmail.com

Or please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

---

How to Recall Defaulted SBA Loan from Treasury Offset Program TOP 

https://shenwick.blogspot.com/2024/04/how-to-recall-defaulted-sba-loan-from.html

Treasury Offset Program (TOP) and SBA EIDL Loans

https://shenwick.blogspot.com/2024/04/treasury-offset-program-top-and-sba.html

U.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loans

https://shenwick.blogspot.com/2024/03/us-seeks-to-collect-on-up-to-20-billion.html

SBA EIDL Loan Charge Offs

https://shenwick.blogspot.com/2024/02/sba-eidl-loan-charge-offs.html

SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILINGS

https://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.html

Defaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loans

https://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.html

SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023

https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.html

SBA EIDL Penalties if an SBA EIDL Loan is Not Repaid

https://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.html

Misuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filings

https://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.html

SBA EIDL HARDSHIP PROGRAM

https://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.html

Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Code

https://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.html

Offers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!

https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.html

EIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html

EIDL Loan Default Questions & Answers

https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html

EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE

https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html

EIDL Defaulted Loans

https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html

New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"

https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html

EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM

https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html

PPP & EIDL Fraud

https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html

Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loans

https://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html

 

How to Recall Defaulted SBA Loan from Treasury Offset Program TOP

 

How to Recall Defaulted SBA Loan from Treasury Offset Program TOP 

Many clients who have defaulted on an outstanding SBA EIDL loan have contacted us regarding how to “Recall” their loan from the U.S. Treasury Department Treasury Offset Program (“TOP”) back to the Small Business Administration (SBA) to avoid the 30% TOP penalty and to void setoff of Government payments to defaulted borrowers.

First, we note that recall is  difficult to do!

Advice and/or  steps on how to recall a defaulted SBA loan or what to do if a defaulted SBA loan cannot be recalled are provided below.

 1. Improper Transfer.  If you did not receive the Official 60-Day Notice from the SBA, that your SBA loan was in default and  would be transferred to TOP for offset, use this error as a reason for recall and contact both TOP and SBA and argue that the loan was transferred to TOP in  error and without proper procedure. 

2. Hardship Grounds. Documenting a hardship making it impossible for further payment of the SBA EIDL loan such as disability, a disaster or the closing or bankruptcy of a business if Government payments are offset (not paid) to the SBA loan borrower. 

3. Intent to Cure Default.  If the borrower pays off delinquent amounts and late fees and intends to stay current on future payments, SBA may be willing to call the loan back to give another chance.

4. Loan Payoff. Payoff the amount of the outstanding SBA loan balance to stop the offset. 

5. Loan Compromise/Offer in Compromise. Contact the SBA or TOP and request a compromise involving negotiating a lump sum reduced payment or a reduced payment over a short period of time (Installment Payment)  for less than the full amount owed. The reduced amount to be paid  is based on “facts & circumstances” of the case, will require many forms to be completed and submitted to TOP and SBA, will require negotiations with Government officials and is at the discretion of the Government. 

For those readers wishing more information on offer in compromise please see

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

6. File for Bankruptcy. When the borrower files for bankruptcy, section 362 of the Bankruptcy Code provides for an automatic stay, which stops the Offset and the business depending on the Bankruptcy filed can attempt to reorganize or liquidate. 

For information or guidance on Recall please contact Jim Shenwick, Esq.

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

----

To review Jim Shenwick’s other SBA EIDL Posts go to: 

Treasury Offset Program (TOP) and SBA EIDL Loans

https://shenwick.blogspot.com/2024/04/treasury-offset-program-top-and-sba.html

U.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loans

https://shenwick.blogspot.com/2024/03/us-seeks-to-collect-on-up-to-20-billion.html

SBA EIDL Loan Charge Offs

https://shenwick.blogspot.com/2024/02/sba-eidl-loan-charge-offs.html

SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILINGS

https://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.html

Defaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loans

https://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.html

SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023

https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.html

SBA EIDL Penalties if an SBA EIDL Loan is Not Repaid

https://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.html

Misuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filings

https://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.html

SBA EIDL HARDSHIP PROGRAM

https://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.html

Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Code

https://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.html

Offers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!

https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.html

EIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html

EIDL Loan Default Questions & Answers

https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html

EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE

https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html

EIDL Defaulted Loans

https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html

New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"

https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html

EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM

https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html

PPP & EIDL Fraud

https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html

Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loans

https://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html

Treasury Offset Program (TOP) and SBA EIDL Loans

Treasury Offset Program (TOP) and SBA EIDL Loans

Many clients have contacted our office to report that their delinquent SBA EIDL loans have been transferred to the Treasury Offset Program (TOP), and a 30% penalty has been added to their loan balance.

The purpose of this Blog post is to discuss the Treasury Offset Program (TOP).   

The Treasury Offset Program (TOP)  is operated by the Department of the Treasury’s Bureau of the Fiscal Service and it is a federal agency that was created to help the Government collect debts from individuals and businesses that owe money to the Government. 

When a debt owed to the Government is past due, TOP assists in collecting the debt by withholding funds due from the Government to the delinquent borrower. This process is known as "offsetting the payment" or "administrative offset."

Examples of offset include the government withholding a tax refund due to a taxpayer who owes money to the government, garnishing 15% of a taxpayer's Social Security payment, or not paying money owed to a government vendor who defaulted on an SBA loan.

When a defaulted SBA loan is transferred from the SBA to TOP, a 30% penalty is added to the loan balance and TOP will notify credit reporting agencies of the referral. 

A borrower may try and have the Defaulted SBA loan “recalled” from TOP to the SBA, but in our experience that is hard to do

What are a borrower's options when a loan has been referred to TOP?

They can pay the full amount owed (including the 30% penalty). 

They can submit an Offer in Compromise to TOP

They can file for Bankruptcy to stay TOP’s collection efforts and discharge the loan balance or

Do nothing

The basis for filing an offer in compromise is Federal Regulation 31 CFR § 902.2 - Bases for compromise. That regulation provides that (a) Agencies may compromise a debt if the Government cannot collect the full amount because:  (1) The debtor is unable to pay the full amount in a reasonable time, as verified through credit reports or other financial information; (2) The Government is unable to collect the debt in full within a reasonable time by enforced collection proceedings; (3) The cost of collecting the debt does not justify the enforced collection of the full amount; or (4) There is significant doubt concerning the Government's ability to prove its case in court.

Factors that will be considered in accepting an offer in compromise are 

Ability to Pay: TOP assesses the taxpayer's income, expenses, asset equity, and overall financial situation to determine their ability to pay the full amount owed.

Income and Expense Analysis: A detailed analysis of the taxpayer's income sources, monthly living expenses, and discretionary spending is conducted to evaluate their financial circumstances.

Asset Equity: TOP reviews the taxpayer's equity in assets, such as real estate, vehicles, investments, and other valuable items, as potential sources of payment.

Future Income Potential: The borrowers earning potential are taken into account to estimate their ability to pay the debt in the future.

History: The borrower's  attempts to pay or resolve the debt, are evaluated.

Special Circumstances: Exceptional circumstances or other hardships, may be considered when evaluating an OIC.

Collectability: TOP reviews the likelihood of collecting the full amount owed.

Tax Administration: An OIC may be accepted if it would promote future compliance or resolving economic hardship.

Client’s or advisors who have defaulted SBA loans that have been transferred to TOP should contact Jim Shenwick, Esq.

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

----

Prior Blog Posts about SBA EIDL Loans by Jim Shenwick, Esq

U.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loans

https://shenwick.blogspot.com/2024/03/us-seeks-to-collect-on-up-to-20-billion.html

SBA EIDL Loan Charge Offs

https://shenwick.blogspot.com/2024/02/sba-eidl-loan-charge-offs.html

SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILINGS

https://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.html

Defaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loans

https://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.html

SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023

https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.html

SBA EIDL Penalties if an SBA EIDL Loan is Not Repaid

https://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.html

Misuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filings

https://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.html

SBA EIDL HARDSHIP PROGRAM

https://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.html

Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Code

https://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.html

Offers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!

https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.html

EIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html

EIDL Loan Default Questions & Answers

https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html

EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE

https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html

EIDL Defaulted Loans

https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html

New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"

https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html

EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM

https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html

PPP & EIDL Fraud

https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html

Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loans

https://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html

Lambos. Jewels. How ‘easy money’ from Uncle Sam made Miami a feast for PPP fraudsters

The Miami Herald reported on PPP fraud in South Florida, which is currently being prosecuted by the government. The article can be found at  https://www.msn.com/en-us/news/crime/ar-BB1ktBVX?utm_source=pocket_mylist

Rather than spending the money on employee wages and other overhead costs, much of it was defrauded or spent on luxury goods purchases. The government is now prosecuting the individuals and attempting to recover the money or property.

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

HOW TO USE ARTIFICIAL INTELLIGENCE IN YOUR LAW PRACTICE (“BE AN IMPLEMENTER) CLE OUTLINE DELIBERATE SOLOS PRESENTED ON 03-2008-2024

 

HOW TO USE ARTIFICIAL INTELLIGENCE IN YOUR LAW PRACTICE (“BE AN IMPLEMENTER) CLE OUTLINE  DELIBERATE  SOLOS PRESENTED ON  03-2008-2024

Why You Should You Use Artificial Intelligence in your Law Practice:

1. Effectively using technology can make the practice of law easier, more enjoyable and more profitable!

2. Failing to use technology in your law practice may be considered "malpractice" by many State Bar associations.

3. Artificial Intelligence is the most significant development in Legal Technology in the last 50 years: It will turn out to be more impactful to lawyers than the personal computer, email, smartphones, the Internet or Google Search

4. It is also a “Disruptive Technology”-it will sneak up on and displace existing technology at a quick pace

5. One argument against using Artificial Intelligence in law practice concerns confidentiality. Similar issues were raised years ago regarding email, but many State Bar associations ruled that email did not violate confidentiality.

-My thoughts about Hallucinations are discussed below

6. Google Search has become less reliable, according to reports from many users and a study by researchers in Germany.

I have a Pixel phone, I use Google Docs, Google Drive  & many Google products, but I am dissatisfied with many Google Search results.

Advertising, Spam & Artificial Intelligence have corrupted Google searches

Paid placement ads have negatively impacted Google Search results

***When you do a Google Search you get 10 blue squiggly lines, not answers to questions!

Artificial Intelligence is an “Answer Genie”-you do not get 10 Squiggly Lines, you get answers to your questions in real time!

Artificial Intelligence searches allow you to refine your search prompts after each search rather than having to do new searches in Google.

7. On an average day I use Artificial Intelligence 20 times a day

II. HOW I USE ARTIFICIAL INTELLIGENCE PRODUCTS ON A DAILY BASIS:

a. Flawlessly AI - Free AI Writing Checker-will review text up to 1000 characters long.

It is free. You copy & paste text into the app to have it review or edit your writing

I do not send out a lengthy email or blog post without using it

It is the best grammer checker program I have used 

b. Wordtune: Free AI Writing Assistant | Write Better Today https://www.wordtune.com/

 c. chatLAW Q&A with AI Trained on Bankruptcy Law for Bankruptcy Research

1. Free chatbot dealing with Bankruptcy law, created by a PHD in Computer Science with no Bankruptcy law experience

2. Best Bankruptcy law research program I have ever used-in my opinion better than Lexis, Westlaw or Google Scholar

3. You type in a question, it provides an Answer, citation to cases and a “SHOW AUDIT” link that directs you to the cited cases

d.   Image Creator  from Microsoft & Google-these products are free, easy to use, you enter text and they produce an image that you can use for Blog posts, emails or social media.

Microsoft Designer

https://designer.microsoft.com/image-creator

Google ImageFX

https://aitestkitchen.withgoogle.com/tools/image-fx

e. CLAUDE & PERPLEXITY

i. In my opinion these are the 2 best free Artificial Intelligence search bots

ii. Claude by Antrop/c

-incredibly easy to use & very accurate search results

-it also has a “paper clip” icon that allows you to upload & search documents

-Real life example: I uploaded a 65 page Bankruptcy Petition and asked  Claude how many secured creditors and how many unsecured creditors were referenced in the Bankruptcy Petition and the average dollar amount of the claims: the results came back in 13 seconds

iii Perplexity

-results include footnotes

-very accurate results

-Jeff Bezos Amazon founder recently invested $250 million dollars into the company

iv. How  I use Claude & Perplexity on a Daily Basis:

-Legal Research

-Document Drafting

-Learning new areas of the law

-Developing or implementing legal strategies in cases

-As “Co-Counsel to bounce questions or strategies off

-Suggesting documents to request in Discovery & Questions to ask at a deposition

-Troubleshooting technology problems or issues

-Recommendations for new tech apps to use

-Training Tips: I am training for a half marathon. How do I train for that event?

-Food recipes 

-General Searches in place of Google Search

f. Craft document Creator Artificial Intelligence 

i. Get a personalized document in seconds

g. Podcast Search thru Artificial Intelligence Dexa & Listen Notes 

Dexa:

https://dexa.ai/?utm_source=substack&utm_medium=email

Listen Notes:

https://www.listennotes.com/search/?q=Israel%20AND%20Gaza&sort_by_date=0&scope=episode&offset=0&language=Any%20language&len_min=0

h. Canva

https://www.canva.com/

“Canva is a free graphic design platform that allows you to easily create invitations, business cards, flyers, lesson plans, Zoom backgrounds, and more using professionally designed templates”

I used it recently to create a Zoom and Google Meet Background-easy to use & free

III. How to Learn to Use Artificial Intelligence in your Law Practice:

1. Use “Kaizen” Japanese approach of continuous gradual improvement

2. Spend 15 minutes each day learning Artificial Intelligence-google alert web searches on Artificial Intelligence topics, read articles & youtube videos

3. Sign up & read Dr Jeremy Caplan Wonder Tools Professor of Journalism at CUNY

Wonder Tools  Tools helps you discover the most useful sites and apps

https://wondertools.substack.com/

4. Sign up & read The Rundown  Learn AI in 5 Minutes

https://www.therundown.ai/subscribe?utm_source=www.therundown.ai&utm_medium=newsletter&utm_campaign=openai-changes-the-ai-video-world

5. Learn the difference between “Prompt Engineering vs Search Queries”

HOW TO WRITE AN EFFECTIVE PROMPT:

-A Prompt needs background information and context to be useful!

-Tell the Chatbot what you want it to do (give it Instructions) 

Example of a Prompt: I am a Bankruptcy attorney. I have a client, a Debtor, that    wants to file a chapter 13 Bankruptcy Petition in the SDNY. The Plan will be a 5 year plan, if all creditors, including a creditor who got a judgment for an intentional tort, are not paid in full over 5 years, will the Debtor get a discharge?

-The more prompts you write and use, the better you will  become at Prompt Engineering!

6. Go cold turkey: do not use Google Search for one day. Instead, only conduct searches on Claude, Perplexity, or ChatGPT and compare the results.

7. How to Prevent Hallucinations-BE ESPECIALLY CAREFUL & CHECK CITES TO LEGAL CASES WHEN USING ARTIFICIAL INTELLIGENCE FOR LEGAL RESEARCH!

A. Use Perplexity which provides footnotes to its answers & is considered the most accurate chatbot

B. Copy & paste your prompt into Claude, Perplexity, ChatGPT & Google and review the results from all searches to determine if the results are accurate or correct. 

If you are using Artificial Intelligence for legal research or to write a Motion or Brief check & shepardize the cited cases

Do not let Hallucinations be a crutch to prevent you from using or learning Artificial Intelligence.

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

https://calendly.com/james-shenwick/15min

Personal & Business Bankruptcy, Bankruptcy Litigation, Workouts, Asset Protection Planning & Defaulted SBA EIDL Loans.

We held individuals & businesses with too much debt!

U.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loans

U.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loans

The Wall Street Journal is reporting in an article dated March 7, 2024 that the U.S. is seeking to collect $20 Billion in  delinquent SBA EIDL Covid loans from small businesses and not for profit entities. The article can be found at https://www.wsj.com/business/u-s-seeks-to-collect-on-up-to-20-billion-in-delinquent-covid-loans-96dd36c6?mod=business_lead_story

The SBA announced that  delinquent Covid EIDL loans with balances of $100,000 or less will be sent to the Treasury Department for collection.

The referral is sent to Treasury Direct, which can seize government benefits such as portions of Social Security payments and tax refunds.

Additionally, in our experience Treasury Direct can and will assess a 30% penalty on the unpaid balance of defaulted SBA EIDL loans (a point not covered in the article).

Moreover, borrowers who default may have to recognize Cancellation of Debt income, which is ordinary income under section 108 of the Internal Revenue Code (another point not covered in the article).

Many small businesses never intended to repay the loans, hoping they would be forgiven like PPP loans; however, this is not the case.

Borrowers with questions about defaulted SBA EIDL loans should contact Jim Shenwick, Esq. Jim has an LLM in Taxation from NYU law school and he is familiar with the Cancellation of Debt tax issues. 

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

---

Jim Shenwick, Esq Blog SBA EIDL Posts:

SBA EIDL Loan Charge Offs

https://shenwick.blogspot.com/2024/02/sba-eidl-loan-charge-offs.html

SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILINGS

https://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.html

Defaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loans

https://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.html

SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023

https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.html

SBA EIDL Penalties if an SBA EIDL Loan is Not Repaid

https://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.html

Misuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filings

https://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.html

SBA EIDL HARDSHIP PROGRAM

https://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.html

Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Code

https://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.html

Offers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!

https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.html

EIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html

EIDL Loan Default Questions & Answers

https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html

EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE

https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html

EIDL Defaulted Loans

https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html

New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"

https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html

EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM

https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html

PPP & EIDL Fraud

https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html

Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loans

https://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html

Small-business owners carry bigger debt loads than they did pre-pandemic

Small-business owners carry bigger debt loads than they did pre-pandemic  

 Biz Journals is reporting that Small Business owners are now carrying bigger debt loads that they did pre-pandemic. 

The increased debt load combined with higher interest rates is proving to be a "toxic mix." At Shenwick & Associates, we are witnessing a significant rise in business bankruptcies, personal bankruptcy filings, and workouts.

The Biz Journal article can be found athttps://www.bizjournals.com/orlando/news/2024/03/07/small-business-debt-loans-federal-reserve-interest.html

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

Charge Off of SBA EIDL Loans

Many clients who have defaulted on SBA loans receive a letter from the SBA indicating that their loan has been charged off. They ask us if this means the loan has been forgiven and does not need to be paid back.

“Charging off” is an accounting concept that  allows the SBA to remove the loan from its books and records  as an asset, but the SBA can still try to collect the debt.

Simply stated, charging off or charged off does not mean that a loan is forgiven!

Even though the loan is charged off, the borrower still owes the money and the SBA can continue collection efforts.

Collection methods include lawsuits, foreclosure on assets, garnishing wages, reporting the default to Treasury Direct (so that the Government can seize tax refunds) and reporting the default to credit bureaus. 

So in summary, a charge off is an accounting procedure but does not relieve the borrower of repayment responsibility. 

The SBA treats the charge off as a default and it will pursue further collection even after charge off.

Clients or their advisors with questions about defaulted SBA loans should contact Jim Shenwick, Esq.  917 363 3391  jshenwick@gmail.com

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15min

We held individuals & businesses with too much debt!

Can I Get a Personal Loan After Bankruptcy? Marketwatch

MarketWatch offers a helpful article on obtaining credit after filing for personal bankruptcy. The article can be found at  https://www.marketwatch.com/guides/personal-loans/personal-loan-after-bankruptcy/

In our experience, representing hundreds of individuals who have filed for personal bankruptcy, clients are generally able to obtain loans or credit 1.5 to 2 years after receiving their Bankruptcy Discharge.
After a bankruptcy filing, we advise clients to save as much money as possible, obtain a secured credit card, and lease a reasonably priced car.

The goal is to demonstrate responsible credit usage, which will then enable you to obtain credit.

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com 

Please click the link below to schedule a telephone call with me.

 https://calendly.com/james-shenwick/15min
We held individuals & businesses with too much debt! 

SBA EIDL Loan Charge Offs

The debanked website is reporting that Covid SBA EIDL loan charge offs increased by $52 Billion in 2023.   

Those charge offs equal 17.2% of the unpaid principal balance of SBA outstanding EIDL loans. 

The story can be found at https://debanked.com/2024/02/covid-eidl-charge-offs-explode-increase-by-more-than-51-billion-in-fy-2023/

This report is unsurprising, as a rough estimate indicates that 75 to 80% of our clients have defaulted or are considering defaulting on their SBA EIDL loans.

SBA EIDL loan defaults raise Debtor/Creditor, Bankruptcy, Tax and Personal guaranty issues. 

SBA EIDL loan defaults are also reported to Treasury Direct (IRS) and a 30% penalty is added to the balance due.

The worst action a borrower in default on an SBA loan can take is to ignore the situation.

As one famous lawyer said, prayer is not a legal strategy!

At Shenwick & Associates, we have developed techniques & strategies to minimize tax and debtor/creditor issues involving an SBA EIDL default.

To speak to Jim Shenwick, Esq about an SBA EIDL loan default you can call him at 917-363-3391 or email him at jshenwick@gmail.com

Please click the link to schedule a telephone call with Jim

https://calendly.com/james-shenwick/15min

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James Shenwick, Esq SBA EIDL Blog Posts:

SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILINGS

https://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.html

Defaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loans

https://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.html

SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023

https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.html

SBA EIDL Penalties if an SBA EIDL Loan is Not Repaid

https://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.html

Misuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filings

https://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.html

SBA EIDL HARDSHIP PROGRAM

https://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.html

Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Code

https://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.html

Offers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!

https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.html

EIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html

EIDL Loan Default Questions & Answers

https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html

EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE

https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html

EIDL Defaulted Loans

https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html

New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"

https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html

EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM

https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html

PPP & EIDL Fraud

https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html