We got a small business loan and The loan was 80% backed by sba. The bank required us to use our home as collateral... Unfortunately, the business failed and we filed chapter 7 .... the loan was discharged but the remaining 20% continued to accrue late charges and fees from the bank.. we contacted sba to negotiate a settlement,but they said the loan has been dischraged and we owe them nothing, they forgave the full balance ($30k) but the bank stillis asking for the full amount,haow is this ossible is the sba paid them and forgave the loan? And how can a aloan accrue late charges if it was under bankruptcy?
You wrote, "We got a small business loan.... The loan was 80% backed by sba. The bank required us to use our home as collateral. ...we filed chapter 7 .... the loan was discharged but the remaining 20% continued to accrue late charges and fees from the bank."
A: The accrual is based on the non-avoided lien.
The entire lien should have been discharged in the bankruptcy against you personally. Because the 20% which remained after the SBA forgave the balance is still collateralized by the home, the lien remains on the home and is subject to late fees. This is why they choose to require the home to be included in the financing agreement so that in the event of a default they would be able to secure their losses with assets. If the SBA paid the bank the 80%, then only the remaining 20% should be secured by the home. I would need to see the bankruptcy filing as well as the loan documents to verify this information.
I hope this was helpful.
Law Office of Gregory D. Stewart, P.A.
The bank still has a lien on the property for the 20%. From the limited information, without seeing the actual paperwork, it seem the bank can still pursue bank fees if they have a valid lien. I am unsure why the Bankruptcy did not stop all collection efforts. Again, I would need to see the Bankruptcy petition and the original loan documents to give you a more accurate answer.
This answer is general and is not intended to create an attorney client relationhsip and is for informational purposes only.