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Ely, Counselor at Law
Category: Consumer Protection Law
Satisfied Customers: 102145
Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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I defaulted on an SBA loan 12-13 years ago, this year for the

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I defaulted on an SBA loan 12-13 years ago, this year for the first time the feds kept my refund (previous refunds were applied to back taxes I caught up on this year) and just sent me garnishment letter (the first) is there no statute of limitations?
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my replies.

I am very sorry for your situation. On this website, I do not always get to give good news, and I am afraid that this is one of these times.

It sounds like they already have a judgment here (otherwise, they cannot simply intercept the funds). If so, then the judgment statute of limitations is twenty years per N.Y. Civ. Prac. L. & R. §211(b).

As the default took place 12/13 years ago, and they likely received judgment around that time by filing suit, then the judgment may be enforced from 20 years after the date of the judgment.

I am very sorry.

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Customer: replied 4 years ago.

No judgement showed up on my credit reports over this time.

The Dept of Treasury says there is no statute of limitations on this...


Okay, let us attempt to rule this out:

Do you remember being sued (receiving a summons), or, this never happened?

Do you remember signing a "Confession of Judgment," or, not?
Customer: replied 4 years ago.

Definitely not either.



Now, did you have the SBA Loan Guaranty Program?
Customer: replied 4 years ago.

I don't know.

Customer: replied 4 years ago.

I don't know.


I did have a personal guarantee on the business loan.


Thank you.

Now, the statute of limitations to collect a debt by SBA is six years under 28 U.S.C.A. § 2415(a); United States v. Vanornum, 912 F.2d 1023, 1025 (8th Cir.1990); United States v. Rollinson, 866 F.2d 1463 (D.C.Cir.), cert. denied, 493 U.S. 818, 110 S.Ct. 71, 107 L.Ed.2d 37 (1989). The statute of limitations begins to run at the time of demand on the debt. Vanornum, 912 F.2d at 1026-27.

Now, there are several possibilities here:

1) You signed a confession of judgment clause as a condition to get the loan, which in New York allows someone to file for judgment without suit; or
2) You were sued, but were not notified properly and thus were not aware of the suit.

Otherwise, there is simply no way that the government could intercept your refunds - not without a court order. The fact that it did not show up on your credit history does not indicate that now judgment was ever rendered - credit history is not 100% accurate when it comes to judgments.

I am afraid that the logical conclusion is that there was a judgment filed. Now, you can call the SBA and find out and once you do, get back to me and we can proceed from there once we have more information... will this be acceptable?
Customer: replied 4 years ago.

Treasury just said it went through two separate collection agencies and since it is federal debt no judgement or suit is required.


Hello friend,

I am not sure who you spoke with, but, this is simply not true. Even the federal government cannot simply seize private citizen's accounts without a judgment. So this individual may have been exaggerating in an effort to simply get you to pay or justify the action.
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