When I first started house shopping, my dad kept telling me the old adage that the three most important things to consider when searching for real estate is location, location, location. You can change anything you want about the house, but the neighbrhood is something you can’t change.
So what does this have to do with and SBA Offer In Compromise?
To put it simply: whether or not you settle, and how much you settle for, is largely dependent on who is reviewing your offer. And by “who”, I mean which SBA office. In other words, if you had 5 people, all with the same exact financial circumstances, you would probably have 5 different outcomes depending on which SBA office is making the decision. Kind of crazy, right?
If you had a 504 loan, the file will go to Little Rock. They won’t take less than 50% of the loan balance in cash. If you had a 7a, and submit the OIC through the bank, the files will be reviewed by the folks in Herndon, VA. They are very reasonable. If the file is with the Treasury, chances are you can forget about a settlement unless you owe $100K or less. If you had a disaster loan, you can also forget about it. If you end up in Birmingham, you get the Treasury Offset group. They are pretty reasonable.
The scattered and arbitrary nature of settlement standards from office to office is very frustrating for me, as I have to break news to clients about their offering being declined not due to our offer being unreasonable, but rather because we got shipped to one of the offices that has arbitrarily high settlement requirements. It reminds me a lot of playing blackjack at the casino….you have some control over the process, but in some cases you are going to lose no matter how well you play the hand.
So is there anything you can do? YES! Don’t hide from your situation, and stay in constant communication with your bank. If the bank closes the file due to your lack of action, it often ends up at Treasury aka where loan settlements go to die.