Secured Debt SBA loan

[adamjlaw]

I understand that unsecured debt is eliminated during bankruptcy. My question is about my secured debt. I have a house with a first, second and a third. The third is an SBA guaranteed loan. My first is for 275,000, my second is for 50,000 and my third is for 275,000. My house is worth 290,000. The market dropped right after I look out the loans and bought the business. The business is now closed but I haven't sold anything. All the equipment purchased with the loan is still in the store. I operated the business as a sole proprietor. If I declare chap 7 what will happen to my first second and third. Will the SBA loan take the restaurant equipment and call it a day or will they want my house as well?

Thanks

[adamjlaw]

Still no response

I still haven't recieved a response so I will make my question more specific. Will the monthly payments on the third continue as before I can I renegociate the payments? If my house is worth only 290,000 if they foreclose they won't recieve anything after the first and second is paid off correct. So would they foreclose anyway if I can't continue with the monthly payments?

[familyof7]

Did the sba secure the loan with the house or just the business? if both hen they are secured by both. Do you want to kep the house if so you have to pay on time everymonth if not then it will be divided betweenthe creditors who hold a secured loan if the home is worth less than you owe the negative equity will be discharged with all of the other debt you have in the chapter 7.As far as the business the equiptment may be taken by the trustee as non exempt property were you sole propritor of the business or was it inc or llc if it was llc or inc then it is not a part of the bankruptcy unless yopu file bankruptcy for the business.

[lrprn]

Wow! This brings a whole new dimension to "upside down"

With a SBA loan in the mix and a business involved to boot, you are far from the typical Ch 7 bankruptcy with a potential home foreclosure. You are going to need experienced legal help to sort this out. Have you made free appointments for consultations with 3-4 bk lawyers in your area yet?

[adamjlaw]

Not Yet

I haven't talked to any bankruptcy lawyers yet, I am currently working on a case of fraud. The previous owner gave me false Profit and Loss statments that showed a profit when their wasn't any. That is the reason I am declaring bankruptcy. Prior to the business purchase I owed nothing except my mortgage. No credit card debt or anything else. I also had 70,000 in the bank. Now I have 80,000 in personal loans and credit cards as well as this business loan for 265,000. Do you think the loan company will care about the fraud. The only reason they gave me the loan was because the business showed a profit. Also if my home were to be sold it would only be worth just enough to cover my first and part of my second. My small business loan wouldn't get anything. Is there any bargaining room. Can I threaten to walk away if they don't accept less money on better terms? I am trying to get out with my home.

[lrprn]

I haven't talked to any bankruptcy lawyers yet, I am currently working on a case of fraud.

You need to start interviewing experienced bankruptcy lawyers in your area right now. With a business involved, filing personal bankruptcy is definitely not something you should try on your own. Most bk lawyers offer free initial consultations, so make appointments with 3-4as soon as possible. You need to know where you stand on the bankruptcy side first before you continue to pursue the fraud aspect of your case. Fraud will take a long time to prove through the courts, but your bankruptcy is imminent given your debt load.

Do you think the loan company will care about the fraud.

Frankly, no. You signed on the bottom line to be responsible for the debt and that's what matters to your lender.

Also if my home were to be sold it would only be worth just enough to cover my first and part of my second. My small business loan wouldn't get anything. Is there any bargaining room. Can I threaten to walk away if they don't accept less money on better terms?

You can walk away from anything, but this is why you need expert legal advice in your situation to know whether that is in your best interest or not given your situation.

If you sell your home yourself, then you will still owe whatever is left over on the loans secured by your home. If you declare bankruptcy and allow the home to be foreclosed by the lenders, then you can walk away from the difference on the second mortgage and whatever is left over of the SBA loan after they take possession of the remaining physical business assets.

I am trying to get out with my home.

Whether you are going to get out with your home depends on what state are you in and your income over the last six months.

What state are you in? And looking back for the last six months, what is your total gross family income? Do you have a spouse? Any dependents? And what bankruptcy chapter (7 or 13) are you hoping to file?

[adamjlaw]

my state

I am currently unemployed but I have a contract for teaching that starts Aug 13. My income starting in August will be roughly 4,500 a month net. My income over the last 6 months. Zero. I operated the business without a profit for six months. I am married with one child. I looking into chapter 7. I am behind on my house payment 4,500. I can catch up if I need to but if I am going to loose the house what is the point. I am behind on my third three months 12,000. The monthly payment is 4,000. Can that be renegotiated during bankruptcy. Without the business their is no way I can pay that every month.