Stage 1: Internal Collection (0-6 months)
Demand letters, contact attempts. Best window for negotiation. Respond to all communications.
Stage 2: Treasury Offset (6-18 months)
Tax refund intercept and private collection agency contact. Administrative fees up to 28% added to balance.
Stage 3: DOJ Referral (18+ months)
Lawsuit for full amount plus interest and fees. Filing bankruptcy before judgment is strategically advantageous.
Frequently Asked Questions
Can I stop the Treasury from taking my refund?
Bankruptcy's automatic stay stops offsets. You can also request a review of the debt or adjust withholding to reduce your refund.
Will the SBA negotiate after Treasury referral?
Yes, but the balance has increased by up to 28%. Having a bankruptcy attorney involved strengthens your position.
Is there a statute of limitations?
The government has a general 10-year litigation SOL, but offset powers have no time limit. Bankruptcy is often the only permanent resolution.
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