A Chapter 7 Bankruptcy Can:
- Eliminate your personal obligation for a defaulted SBA loan
- Discharge other unsecured debts like credit cards
- Provide you with a financial fresh start in unprecedented economic times due to the coronavirus
I've Defaulted on My SBA Loan
The COVID-19 pandemic has created massive economic upheaval. Even with government stimulus and deferments, you may find your business unsustainable. Many businesses have already closed due to the coronavirus. But you signed a personal guarantee agreeing to pay the loan personally if the business fails. As such, the lender or the government can seek repayment from you directly. This may include filing a lawsuit by the lender or administrative remedies by the government such as administrative wage garnishment.
Can Chapter 7 Bankruptcy Discharge My Personal Obligation on the SBA Loan If I Live in San Diego County?
If you live in San Diego County, Chapter 7 bankruptcy can eliminate the SBA loan obligation and stop any lawsuit or other collection activity. You may have other resolutions, such as an offer in compromise. However, if you are unable to complete an offer in compromise or you have multiple delinquent unsecured debts, Chapter 7 bankruptcy may offer relief. The SBA loan guarantee will be treated like any other unsecured debt and, therefore, subject to discharge. This means you do not have to pay the debt.
What If I Pledged My House as Collateral?
If, however, you pledged personal assets such as your house or other real estate, Chapter 7 bankruptcy becomes a less desirable option. Bankruptcy will not remove the lien on your house and the lender or SBA can still foreclose. If you pledged your home as collateral, an offer in compromise may be the more appropriate solution.
Contact Protect Law Group Today for a Free 30 Minute Consultation
Protect Law Group provides the experienced legal representation you need in a Chapter 7 bankruptcy. If you live in San Diego County and have a defaulted SBA loan, contact Protect Law Group today.