If you Owe more than $30,000 contact us for a case evaluation at (833) 428-0937
contact us for a free case evaluation at (833) 428-0937
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What Does The New Chapter 11 Subchapter V Mean For Your SBA Loan?

Struggling small business or personal guarantors of an SBA loan can take advantage of the new Chapter 11 Subchapter V bankruptcy procedures.

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What Does The New Chapter 11 Subchapter V Mean For Your SBA Loan?

The new part of the bankruptcy code is aimed at making reorganizing small businesses easier, more streamlined, and less costly.  Read on to learn more.

The new option for troubled SBA loans

How Is Chapter 11 Subchapter V Different?

The new Chapter 11 Subchapter V bankruptcy has many differences from a regular Chapter 11.  For instance, some of the changes are as follows:

  • Plan easier to confirm
  • Only debtor can file plan
  • Disclosure statement not required
  • Contested plan may be confirmed over objecting impaired class
  • Absolute priority rule not applicable
  • No creditors committee
  • No quarterly U.S. Trustee payments

These changes will result in faster and thus less expensive reorganizations for small business.

As such, your small business may use the new Chapter 11 Subchapter V to reorganize in this current economic climate.  The use of Subchapter V may be one route to keeping your business going.

Traditionally, regular Chapter 11 bankruptcies have been expensive and the success rate of a company or individual making it through the life of the bankruptcy plan was much less than 50%.

Therefore, struggling businesses whose main debt consists of an SBA loan may find the new Chapter 11 Subchapter V bankruptcy a potential option to rescue the business.

The Biggest Change Results In The Ability To Modify A Lien On Your Home

Individuals may avail themselves of new bankruptcy procedures as well as small businesses.  Most importantly, it may provide you with the opportunity to modify your SBA related loan.

If as part of your SBA loan, you pledged your primary residence as collateral, neither Chapter 7 or Chapter 13 bankruptcy  will likely help in the event of default.  However, Chapter 11 Subchapter V may help.

For instance, a small business debtor's plan may modify the rights of a holder of a claim secured by the principal residence of the debtor if the new value received in connection with the granting of the security interest was:

  • not used primarily to acquire the real property; and
  • used primarily in connection with the debtor's small business

Therefore, you could possibly use the Chapter 11 Subchapter V to save your house and modify the terms of repaying the loan if you pledged your house as collateral as part of your personal guarantee.  You will, more than likely, not rid yourself of the lien.  Preserving your home constitutes your goal with the new bankruptcy code.  If you have no other options, you should explore the new bankruptcy option.

Contact Protect Law Group Today

San Diego County residents and small business that may benefit from a bankruptcy should contact us for a consultation.  Our attorneys can help you and your business.

Protect Law Group has proven, nationwide experience resolving SBA loan or Treasury collection cases for individual debtors. Our Firm Attorneys can resolve SBA loans in default through out-of-court negotiations, offers in compromise and structured workouts.

We also have extensive experience in the court room as well.  If you have been sued by your SBA lender in state or federal court in San Diego, Orange and/or Los Angeles County and need litigation or bankruptcy assistance, call us now to discuss the specifcs of your case.

Owe more than $30,000? Contact Protect Law Group for a Case Evaluation or call us toll-free at 1-888-756-9969.

We can analyze your SBA debt or Treasury debt collection problems and advise you on potential solutions.

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Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure

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Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements

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Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.

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$505,000 SBA 7(A) LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)

Clients borrowed and personally guaranteed an SBA 7a loan.  Clients defaulted on the SBA loan and were sued in federal district court for breach of contract.  The SBA lender demanded the Client pledge several personal real estate properties as collateral to reinstate and secure the defaulted SBA loan.  We were subsequently hired to intervene and aggressively defend the lawsuit.  After several months of litigation, our attorneys negotiated a reinstatement of the SBA loan and a structured workout that did not involve any liens against the Client's personal real estate holdings.

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$220,000 SBA 7A LOAN -DOT WAIVER OF ADMINISTRATIVE FEES & COSTS

Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection.  Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest.  We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.

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$375,000 SBA 504 LOAN - SBA OIC CASH SETTLEMENT

Client personally guaranteed SBA 504 loan balance of $375,000.  Debt had been cross-referred to Treasury at the time we got involved with the case.  We successfully had debt recalled to the SBA where we then presented an SBA OIC that was accepted for $58,000.

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