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

Asked over 1 year ago - Los Angeles, CA

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

Attorney answers (4)

  1. Matthew Scott Berkus

    Contributor Level 20

    12

    Lawyers agree

    Answered . 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.

  2. Rex Tran

    Contributor Level 10

    9

    Lawyers agree

    Answered . 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.

  3. Michael J Corbin

    Contributor Level 20

    8

    Lawyers agree

    Answered . 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. corbin-law-office.com.... more
  4. Robert Parkinson Taylor

    Pro

    Contributor Level 13

    5

    Lawyers agree

    Answered . It's treated the same.

    Rob

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 

Ask now

28,537 answers this week

3,129 attorneys answering

Ask a Lawyer

Get answers from top-rated lawyers.

  • It's FREE
  • It's easy
  • It's anonymous

28,537 answers this week

3,129 attorneys answering