Can a SBA Loan be included in Bankruptcy?

[I-got-it-finally]

Hi

I am asking this question for a family member.

Several years ago they opened a business, but had to shutter the doors because of the economy. Prior to that they had EXCELLENT credit (in the 800’s). With no income all of their bills feel fell behind. They have been in a state of anger and denial. (---My opinion is that they have just be stuck and scared)

They are now considering bankruptcy, but have an SBA-backed loan.  Their home is connected to the loan. The amount due on the loan is about 90K. Home value is about 150K- remainder on the loan is about 18K

I recently took a look at their credit report and they have 14 negative- many of which appeared to be scheduled to fall off in 2014.(i.e. a tax lien on a sold property, judgments that they were never served-some are on there twice)

They have heard various answers when it comes to the SBA loan and just feel stuck between a rock and a hard place.

• It can’t be included in the bankruptcy.
• It can’t help to save their home
• No need for file--- just let the negative (that will/can) fall off- then look at their options.

I realize that any information provided here is not legally binding advice and I/they will not take it as such. But any insight will be appreciated.

Thanks

[I-got-it-finally]

Can some PLEASE share their thoughts on this?

Thanks much in advance.

[chasmith]

I don't know of any reason an SBA loan annot be included in personal bankruptcy but the questions you imply are more complex.

It sounds like, as with most small business loans SBA or not, the lender took both a personal guarantee and a lien on their home.  Bankruptcy will discharge the personal guarantee and the debt, but won't remobe the lien.  So it becomes just like a BK on a home with second or third lienholders.

I think they need to consult a skilled BK attorney.

[I-got-it-finally]

Thanks for your input.. Its a start

[Comet21]

Yes an SBA Loan can be included in BK. I know from personal experience. After being served for defaulting on the loan, we filed CH7 because most of our debt was business debt. There is nothing on my CR related to my SBA Loan.