The SBA or Small Business administration is an agency that has been set up by the Federal government to assist the small business owners get the necessary financing through guaranteeing of their business loans. There are people who think that since the SBA loan help are government-based, it is not possible to discharge them during bankruptcy. This is not the case and the bankruptcy code doesn’t have anything that creates a non-dischargeable debt.
It is true that there are some fines and debts that are related to the government and aren’t dischargeable. However, the SBA loan isn’t among them. According to Section 523(a) (7), any debt that is supposed to be paid to the government isn’t dischargeable if it is for the purpose of a fine, forfeiture or penalty. It is worth noting that the SBA loan isn’t either of these and this means that the owner will be personally liable for the debt. However, if the business was a sole proprietorship, this would not be the case.
One of the key considerations is that SBA loans also require collateral, which could be personal or business . Your personal liabilities will be discharged only by bankruptcy charges but this will not remove the liens or security interests that were granted to the SBA by the collateral. Therefore, while the debt is usually discharged, it is possible for the SBA to repossess or even foreclosure the collateral unless you or an SBA lawyer make the right payments.
How to handle SBA legal issues?
In case you have been issued with a 60 days collection letter as a result of defaulting on the SBA loan, one of the things that you need to do is to get legal help. Here are a few strategies and resources that you can use to find the right SBA lawyer.
- Choose a lawyer who handles SBA loan bankruptcy discharge. You will realise that there are different kinds of lawyers who focus their efforts on a particular part of law. The attorneys for debt relief usually work in bankruptcy, consumer and legal defense fields.
- Choose a competent lawyer. If you need a debt help lawyer to help you with the SBA loan foreclosure, you can ask for referrals, check in the legal directories or the bar associations.
With these tips, you will get an SBA lawyer. The good thing with the majority of them is that they offer low-cost or free consultations. Others will even hold meetings over the phone.