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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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I have a question about not being able to pay on my SBA loan

Resolved Question:

I have a question about not being able to pay on my SBA loan because of a slow down in my business. The business is a C-CORP I wonder if we can default and not file chapter 7?or will they come after my home? I have been paying on the loan for 5 years without missing any payments the balance is aprox $97k. all inventory which doesn't exist either. All of the borrowed money is inventory production.
My business is a jewelry business and since the price of silver has gone up 400% nobody is buying. When we do get an order we just make the products they order. There is no inventory to liquidate.

We don't want to lose our home and we need to know what is the best way for us to go and what will happen either if we default on the loan or try to roll it in with a possible bankruptcy.
According to our CPA and the bank our personal is not attached, we got the loan on our inventory only. If we do file for bankruptcy can SBA still come after us and take our home? At this moment we have a first and a second on our home and a few credit cards (around 8,000 or less) no car payments. We have good credit. I talked to a bankruptcy lawyer. She said refinance, get another job (which I have looking been for months now) and then follow through. But we can't refi we owe too much, and I am not able to find a job. My husband's job doesn't cover our bills.
The question is what will happen if we default on the SBA in the state of New Mexico?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.

Hi JACustomer,

Was the SBA loan personally guaranteed?

Customer: replied 6 years ago.

So far, My bank and CPA said there was no personal guarantee because we are a C corp. But I am still skeptical and afraid that there could be something hidden. I rather err on the side of personal just in case. Now if I find that there was no personal guarantee signed then what? I keep looking at the contract and don't see anything that says personal. Maybe that is why I feel skeptical? I don't see it anywhere.

Thank you,

Brenda Burgard

Expert:  cfortunato replied 6 years ago.

If you did not personally guarantee the loan (and this is not unusual for SBA loans), the lender can only attempt to collect the money from the company, not from you. This means they cannot place a lien on your home, or on anything else that you own.

In fact, since you did not personally guarantee the loan, you cannot include the loan in a personal Bankruptcy, and if the business has no assets, and if you are planning on closing the business, there would be no reason to file a business Bankruptcy.


I think this is what you wanted to know. If not, please let me know.
Thank you!



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