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As my business dwindles, my only income is Social Security. Can the Govt. withhold my Social Security to pay my SBA loan?

Evansville, IN |

My only asset is my condo. I paid $55,000 for it; and it has a $20,000 mortgage on it. Can the govt. take my condo?

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Attorney answers 3


I know that the IRS can take money out of a social security check & would suspect that the SBA could do so as well. The important thing is to read the terms of the SBA loan, including all of the fine print. The SBA is well known for requiring borrowers to put up everything they own as colllateral. You very likely agreed to give the SBA rights to your social security check as well as your condo when you borrowed from them. So get out your magnifying glass & look at the fine print in the contract!

Can't find the contract? The SBA will gladly provide you with a copy.

Hope this perspective helps!


Does the SBA have a lien on the condo?

Whether or not the SBA will have a right to go after the debt will depend upon whether or not the debt is a secured or unsecured debt.

The fact that it is an SBA loan does not give it any greater protection against bankruptcy.

In either event, the issue of whether the potential equity in your condo is available to your creditors, including the SBA will depend upon whether the equity is exempt.

Some States have their own exemption laws, some States use the Federal exemption laws, in some let you use either the State or Federal exemptions.

You need an experienced bankruptcy attorney.


This is a much more complex matter than you may imagine. When you say you have an SBA loan, that can mean many things. There are SBA guaranty loans and then there are loans directly funded by SBA through CDCs. Of course there is also direct SBA loans under the disaster assistance program. I've worked in SBA lending (for SBA as well as banks) for 15 years and know that there are many questions that need to be answered before you even get to the question of whether SBA can dip into your tax return or other government issued funds.

Secured or unsecured debt, either way, your condo can potentially be at risk. Again, there are many unanswered questions. You paid $55,000 but what is it worth today? This is the value you will need to know to be able to determine if there is any realizable equity for SBA (after the first $20,000 lien).

The answers, other than the value of your home, are in the closing documents. You should have an attorney licensed in your state take a look at the documents and your situation in order to get a ligitimate legal answer to your question. Since SBA is a very specialized are, try to find one with SBA loan knowledge and experience if you can.

Please note that this is not legal advice and I am licensed to practice in NY state only. My answer is strictly for informational and educational purposes only and should not be relied on as as legal advice. Also, this communciation does not constitute or create an attorney-client relationship. If you find this information helpful, please click the thumbs up button below. I hope I have helped. Good luck!

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