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Ask WALLSTREETESQ Your Own Question
Category: Bankruptcy Law
Satisfied Customers: 17080
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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in 2003, we took out an sba loan on a business that was a slam

Resolved Question:

in 2003, we took out an sba loan on a business that was a "slam dunk" as we were purchasing a service contract to run a corporate cafeteria in a building where 1200 ppl worked for a large company on it's way to fortune 500 status - it seemed; we did all their corporate catering, large events, subsidized charity programs etc;

successful for about 1.5 yrs and then they started layoffs and, when left with only 300 or so employees, left the bldg and relocated; bought us out but that all went to sba to pay them for the next year

The years up

sba loan balance of 465,000

(we have currently taken the few accounts that survived and turned them into a viable small business - blut it will never be able to afford the $7000 month of sba payments)
home worth about 500,000 with $330,000 mortgage left
credit line of 200,000 that we defaulted on

total attached to house = 465+330+200=995,000 on a 500,000.00 asset

we are filing chapter 7 and the debt will be wiped out - but if we keep the house the sba liens will stay attached so we have been advised to foreclose on the house and "walk away"

then, the liens are gone and sba gets nothing - right.

i would love to stay in my house (but not at the risk of never having equity because of the second lien)

any thoughts
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 6 years ago.
is their equity now,
Customer: replied 6 years ago.
no, as i owe 330,000 to mortgage so I have (for example) 200,000 equity but that is promised to the second lien holder; so, i don't know if that is considered equity or not
Expert:  WALLSTREETESQ replied 6 years ago.
you have no equity, therefore, you can file a bankruptcy, and keep your home.
Customer: replied 6 years ago.
but what about the second liens created by the sba
Expert:  WALLSTREETESQ replied 6 years ago.
the only way to keep the home is in a chapter 13, but if the trustee sees their is $200,000 in equity and $200,000 in a lien, it does not help you. He would make you pay the entire amount, however if your appraisal states the home after the first lien, has $30,000 in equity and you have 200,000 the trustee could lower the sba loan to 30,000.
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