SBA 7(a) Loan Default and Business Credit Cards

Anonymous · ‎09-22-2020

Hi All,

I am going to default on an SBA 7(a) loan by the end of 2020. Our payments are starting back up next month, and we simply are not a viable company anymore. I had a couple questions about filing for Personal Chapter 7 ti discharge the debts vs doing an Offer In Compromise.

The company is an S-corp, me and one partner own 45% each, and another investor owns 10%. The 10% investor is NOT on the SBA docs, so me and my partner are fully personally liable for the debt.

SBA has a lien on our homes.

We have 100k in credit cards, 80k between two uinsecured lines of credit. And I had taken out a personal loan, and have gone into credit card debt totally around 55k.

SBA loan, adding EIDL, after they sell the assets of the company will be around $500k owed.

1. The OIC is somewhat alluring, but we still owe a ton of debt that the OIC won't get rid of. One question I had is, my partner is the primary on the business credit cards, I am listed as having an employee card. When he filled them out, he listed us as 50/50 owners in the company. I assume they would still come after me even if I am not the primary? Also, if I do an OIC, and he files bankruptcy for the lines of credit and credit card debt, will they still come after me? I assume so.

2. I am resigned to losing my home, as it is the only real asset I have that they can liquidate. My question is, would anything stop my wife from purchasing the home in foreclosure? Her finances are separate from mine, so she won't be affected by my bankrutpcy. We don't have any joint assets, she earns a good living, and she doesn;t even have the same last name.

3. How far back will the trustee usually go for bank statements? I am only concerned about a distribution that was taken in July by my partner, as we are an S corp some of out pay is by distributions. The sum of 2020 distributions is under $15k.

Any advice would be appreciated.

despritfreya · ‎09-22-2020

@Anonymous

I am going to suggest that your questions are way too complex for anyone on the Internet to give you any real assistance. I recommend that you seek out the advice of a well qualified attorney.

Des.

sccredit · ‎09-24-2020

@despritfreya wrote:
@Anonymous
I am going to suggest that your questions are way too complex for anyone on the Internet to give you any real assistance. I recommend that you seek out the advice of a well qualified attorney.

Des.

Agree here. I was in a very similar situation except I had the personal guarantees and the credit, along with substantial equity in my home. Do not use the cheap paper mill, you will regret it.

Anonymous · ‎09-30-2020

Thanks for the reply.

The sba loan is personally guaranteed, so I'm on the hook for that no matter what. And like you I also have a good amount of equity in my home.

the reason I asked about the cards is because I can probably come up with enough money to do an offer in compromise with sba for them to rid the lien on my home. However, unless my biz partner (who won't be able to do an offer in compromise) to file bankruptcy to clear the remaining credit card debt, then if he gambling that the credit card companies would take a very low settlement.

@sccredit wrote:
@despritfreya wrote:
@Anonymous
I am going to suggest that your questions are way too complex for anyone on the Internet to give you any real assistance. I recommend that you seek out the advice of a well qualified attorney.

Des.
Agree here. I was in a very similar situation except I had the personal guarantees and the credit, along with substantial equity in my home. Do not use the cheap paper mill, you will regret it.