Skip to main content

Chapter 7 bankruptcy. Does SBA loan get any special treatment or protection in bankruptcy.

Los Angeles, CA |

Just wondering if this can be discharged and what to watch for.

Attorney Answers 4


No special treatment vis-a-vis the fact that loan is an SBA loan, the loan obligation can be discharged in bankruptcy. However, SBA loans tend to be secured loans so the lien will often survive the bankruptcy or must otherwise be dealt with.

Mark as helpful

12 lawyers agree


There is no special treatment if it is a straight unsecured loan. If it is secured, then loan might still be owed after the bankruptcy (depending on the circumstances). You should contact a bankruptcy attorney to determine your options with regards to the loan.

Mark as helpful

9 lawyers agree


It's treated the same.


Mark as helpful

5 lawyers agree


Normally, no. However, SBA loans are often secured debts, so the collateral is at risk if you take it out in a bankruptcy. Also, the SBA "could" (see it happen a couple of times) turn the unpaid debt it eats from the bank from which you obtained the loan (government guarantees) over to the IRS and ask them to collect upon it. IF that happens, they make the argument that it is a non-dischargeable governmental debt, making the bankruptcy pointless.

We can be reached at 507.334.0155 (Toll Free: 888.777.5009). Our web address is: www. Answers on Avvo are not to be considered a response to a specific legal issue in a specific jurisdiction - they are to be considered only general responses to hypothetical scenarios posed by the questioner. For specific legal advice, please consult with a licensed attorney in your jurisdiction. No information contained herein should be construed as a solicitation for business, an offer to perform legal services in any jurisdiction in which the attorneys of Corbin Law Office are not licensed, or the dissemination of legal advice. No creation of an attorney-client relationship should be assumed or implied. We are a debt relief agency. Corbin Law Office helps people file for bankruptcy relief under the bankruptcy code.

Mark as helpful

8 lawyers agree

Bankruptcy and debt topics

Recommended articles about Bankruptcy and debt

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics