We can't find an attorney

[desertplains]

Um, sba-attorneys.com wants $250 for a 30 minute consultation. That is not affordable in rural Wyoming

[justbroke]

When seeking an OIC with the IRS, the SBA, or any part of the government, the specialist do charge what's likely the reasonable fee in that area. I was hoping you'd have a strong bankruptcy attorney that has a strategy for dealing with the SBA which may include filing bankruptcy. I cannot provide you with any advice here. I will say, though, that the bankruptcy attorney may be the best to handle both. Only because they are familiar with your bankruptcy case. But, at the same time, an SBA specialist knows more about the OIC process and what a reasonable offer would be to release the lien on the residence.

There's no away around this; you need to deal with both the personal bankruptcy and the SBA lien on your home. I would lean on my bankruptcy attorney and hopefully they can work something out with the SBA or you could seek an OIC post-discharge. So many factors to consider and is likely why the SBA OIC specialist wants you to pay for the consult (because it is likely worth the $$$).

[desertplains]

When seeking an OIC with the IRS, the SBA, or any part of the government, the specialist do charge what's likely the reasonable fee in that area. I was hoping you'd have a strong bankruptcy attorney that has a strategy for dealing with the SBA which may include filing bankruptcy. I cannot provide you with any advice here. I will say, though, that the bankruptcy attorney may be the best to handle both. Only because they are familiar with your bankruptcy case. But, at the same time, an SBA specialist knows more about the OIC process and what a reasonable offer would be to release the lien on the residence.

There's no away around this; you need to deal with both the personal bankruptcy and the SBA lien on your home. I would lean on my bankruptcy attorney and hopefully they can work something out with the SBA or you could seek an OIC post-discharge. So many factors to consider and is likely why the SBA OIC specialist wants you to pay for the consult (because it is likely worth the $$$).

I asked his paralegal and she asked him, emailed back:

"Hi,
With regard to the SBA, we will list them as a creditor and they will get notice of the bankruptcy. We can then see if they file a proof of claim and go from there."

I can't see them not filing a proof of claim for $700K. If the building was auctioned off and equipment liquidated it will bring in pennies on the dollar. I downloaded the loan docs from idoc in my county so it seems to be perfected. Atty wants to do chap 13 for personal but knows my husband has not yet found a new job.

I thought the OIC had to come during the 60 day demand letter but her response seems after. Is this standard?

[desertplains]

I asked his paralegal and she asked him, emailed back:

"Hi,
With regard to the SBA, we will list them as a creditor and they will get notice of the bankruptcy. We can then see if they file a proof of claim and go from there."

I can't see them not filing a proof of claim for $700K. If the building was auctioned off and equipment liquidated it will bring in pennies on the dollar. I downloaded the loan docs from idoc in my county so it seems to be perfected. Atty wants to do chap 13 for personal but knows my husband has not yet found a new job.

I thought the OIC had to come during the 60 day demand letter but her response seems after. Is this standard?

If the building was auctioned off and equipment liquidated it will bring in pennies on the dollar.

Same with our house, it's out of town in bad weather, no water or furnace etc.

[justbroke]

If it's me, that sounds like a good strategy. It's called the "wait and see what they do" approach. Their lien, however, still passes through the bankruptcy. But you are likely in a better negotiating position for an OIC. Remember that they have to look at what they can recover. No one can guess at this point what they'll do until you force their hand... or make an offer.

[desertplains]

Wow, MCA's as contingent.

[justbroke]

Yep. I'd probably list them as unliquidated and contingent on my "personal" bankruptcy because they are, at best, personal guarantees.

[desertplains]

Forget about a 7 for the entity. If it is "dead", it is "dead".

Concentrate on a personal case. Typical stuff for me but I am not in your State and I don't know any attnys in Wyoming.

Accessing PACER, I looked for an attorney in Wyoming that has filed Chapter 11 cases. Such an attorney should have no problem with your type of case be it a Chapter 7 or other Chapter.

Apparently, not many Chapter 11s are filed in Wyoming as there were just a handful filed in the past year. One of the attorneys was with a big firm handling big cases so, probably not in line with your situation. The other two look more promising. I don't know if you have spoken to either one but if not, you might want to call. links for both are:

https://onehourbankruptcy.com/clark/

https://www.winshipandwinship.com/

Don't forget to check with the State Bar to see of they have had any disciplinary issues and carry insurance,

Keep us posted.

Des.

Talked with one of your recommendationts recently, he's everything I want, but he might be taking a Judge position next week and cannot contract/detainer at this time.

Current atty/asst is not available, calls and emails go unanswered plus there is huge confusion on payroll/trust OIC vs SBA OIC and no answer on that after 3 weeks. And, no interest nor guidence on OIC's. Husband signed the chap 7 areement this morning and sent hime $500 smh. Wish he would have talked to before he did that. Same with the business finances LOL smh.

Talked with a great atty last week. He was either on vacation or does winters in an warm country which is now in catel turmoil and cannot reach him (meaning he is unable to return calls/emails/texts.

Any other ideas for me please?

[despritfreya]

Any other ideas for me please?

I've been "away" from this thread for a while. Let me read through it before I respond. Response will be either today or tomorrow.

Des.

[despritfreya]

I have reviewed all of the posts in the thread. There is not enough info other than you owe $700k to the SBA and the SBA is secured by both the commercial building and your residence, and, probably the other assets of the entity.

1. When were the MCA loans taken out (before or after the loan from the SBA)?

2. What is the total owed on all MCA loan combined.

3. What is the value of the building (not the assessed value but what you believe it will actually sell for)?

4. Is the SBA the only mortgage against the building? If not, how much is owed on the other mortgage and which was taken out first?

5. How much is your residence worth (again, not the assessed value but what you believe you can actually sell it for)?

6. How much do you owe on the first mortgage on the home (SBA is probably the second)?

7. Are you current on your residential first mortgage?

8. Are you current on your vehicle loans? How much is owed on each and what are the vehicles worth?

9. Has your husband found employment?

Let’s get the answers to the above and go from there. As to the attorney you found that might take a judgeship, ask him for a referral. As to the 5th wheel. . . it is unlikely that you will be forced to live in it and, in reality, you will most likely surrender it back to the lender as it is probably too expensive and not "necessary".

Des.

[desertplains]

I have reviewed all of the posts in the thread. There is not enough info other than you owe $700k to the SBA and the SBA is secured by both the commercial building and your residence, and, probably the other assets of the entity.

1. When were the MCA loans taken out (before or after the loan from the SBA)?

2. What is the total owed on all MCA loan combined.

3. What is the value of the building (not the assessed value but what you believe it will actually sell for)?

4. Is the SBA the only mortgage against the building? If not, how much is owed on the other mortgage and which was taken out first?

5. How much is your residence worth (again, not the assessed value but what you believe you can actually sell it for)?

6. How much do you owe on the first mortgage on the home (SBA is probably the second)?

7. Are you current on your residential first mortgage?

8. Are you current on your vehicle loans? How much is owed on each and what are the vehicles worth?

9. Has your husband found employment?

Let’s get the answers to the above and go from there. As to the attorney you found that might take a judgeship, ask him for a referral. As to the 5th wheel. . . it is unlikely that you will be forced to live in it and, in reality, you will most likely surrender it back to the lender as it is probably too expensive and not "necessary".

Des.

1. When were the MCA loans taken out (before or after the loan from the SBA)?
After

2. What is the total owed on all MCA loan combined.
He does not know the total but over the limit for chap 13 unsecured debt, over $527K

3. What is the value of the building (not the assessed value but what you believe it will actually sell for)?
It will sell for pennies on the dollar, hope for $600K but could be like $250K if it sold at all during an auction. Going on the market for sale next week for less than is owed. We don't know yet, realtor said check with our atty first smh.

4. Is the SBA the only mortgage against the building? If not, how much is owed on the other mortgage and which was taken out first?

SBA #1 secured by building and our home and after pulling contract up we waived our homestead exemption rights.

SBA #1 $700K, SBA #2 $150K

$300K loan before either SBA's from old building to buy out previous partner. Owe $54K on it still. Secured by "company name"

5. How much is your residence worth (again, not the assessed value but what you believe you can actually sell it for)?
Professional evalution yesterday (no comparables), in mail next week from realtor that knows the area well for ~ $150K which I'd guess it would sell for quickly. Issue is if we leave pipes will freeze and crack (no furnace, wood stove only).

6. How much do you owe on the first mortgage on the home (SBA is probably the second)?
$60K. SBA is lienholder #2.

7. Are you current on your residential first mortgage?
yes

8. Are you current on your vehicle loans? How much is owed on each and what are the vehicles worth?
No vehicle loans though my 21 year old pickup may have more equity than the state exemption

9. Has your husband found employment?
NO

The attorney did get the judge position, I asked for a referral yesterday and asst said I should ask him today on our 3:00 pm phone call, but not sure that will happen.

Called previous atty back that lives in Mexico during our harsh winters here and hopefullly moving forward with him.

[justbroke]

despritfreya

[despritfreya]

Based on your responses, here is the summary:

For the entity:

1. The entity, which is or will be closed, owns a building worth maybe $400k and personal property that is probably not worth much.

2. The entity (or more likely you and/or hubby) still owe $54k for the purchase of the business. The seller holds a first position lien against the building and is fully protected by the value of the building.

3. The entity owes a bank (guaranteed by the SBA) $700k. This loan is secured by a second lien position against the building, the personal property and, as additional collateral, a second position lien against your home. In addition, you and/or your hubby personally guaranteed this loan. (I emphasis the "additional collateral" for a reason which is discussed below.)

4. The entity took out a SBA EIDL loan for $150k. That loan is a second position lien against the personal property owned by the business (2^nd behind the bank loan of $700k). My guess is that this loan was not personally guaranteed as it is below the threshold amount for such guarantees nor is it a lien against the building.

5. The entity took out one or more MCA loans, all of which are “secured” by the personal property of the business but are behind the SBA so, the liens are worthless. Total owed is over $500k and all were personally guaranteed.

6. The entity is going to try to sell the building. Since the first lien ($54k) would get paid in full, that lien is not an issue. The issue is a “short sale” as it relates to the bank (SBA backed) loan. Will the bank agree to a short sale? No way to know until you ask and try to work a deal. If it says “no”, let the bank foreclose. Whatever it gets for the building should be applied 1) to pay off the senior lien and 2) to pay down the bank’s loan. You will be “responsible” for whatever remains owed – an amount that will still be a lien against your home.

Let the SBA for the EIDL loan, take all of the business’s personal property. The SBA may even ask you to sell the items for it and the proceeds turned over and applied to the $150k loan.

No bankruptcy for the business (7 or 11) as, presumably, it is dead.

The other business debt that is personally guaranteed will fall to you and/or your hubby. This is typical.

_______________________________________

For you and/or hubby:

You most likely do not qualify for Chapter 13 because, between all of the personal guarantees and your personal bills (credit cards, medical bills, personal loans etc), you are over the unsecured debt limit for a Chapter 13. For bankruptcy purposes, you will be looking at either a Chapter 7 or a Chapter 11. You can even look at the "Chapter 20" (filing a Chapter 7 first, getting a Discharge and the closing of the case and then following up with a Chapter 13) but explaining this would take too long. Discuss this with your attorney.

I note that in one post you talked about listing the guarantees as “contingent”. If such is allowed in your District, maybe you will be below the unsecured debt limit for a Chapter 13 as “contingent” and “unliquidated” debts are not included in the totals for qualification purposes. In the majority of Districts, and unless the loan documents limit liability, such guarantees are not “contingent” unless, at the time the bankruptcy is filed, payments are current and being made by the borrower. Even then the designation as “contingent” is questionable and goes directly to what the loan documents state.

1. You own a home that is subject to two mortgages, the “real” first mortgage and the $700k loan that is owed to a bank and backed by the SBA.

2. Your home is worth, let’s say, $200k. The amount owed to the first mortgage is $60k leaving (without deducting the cost of sale) $140k in equity. This is the “value” of the second mortgage’s position. But. . . since the commercial building has been sold (or foreclosed), you do not owe $700k. You owe something less. Let’s say the balance remaining is $500k. This lender is “under-secured” – its remaining collateral is not worth what is owed.

Despite being secured by your primary residence, the second mortgage, in the context of a Chapter 11 or a Chapter 13, can be subject to modification because it had additional collateral for the loan. See 11 USC 1124(b)(5) and/or 11 USC 1322(b)(2). Assuming your District interprets the Bankruptcy Code like mine does, this means that your Plan of Reorganization can “cramdown” the loan thus treating the bank as secured up to the value of its lien ($140k in the above example) and unsecured for the balance.

In the context of a Chapter 13, you must show the ability to fund the Plan when you file the case. In the context of a Chapter 11, there can be a delay in “proving feasibility” since 1) the Plan is not due when the case is filed and 2) payments under the Plan typically are delayed until about 30 days after the Plan is approved by the Court. In either Chapter you can "play" with that large SBA backed loan that took a lien against your home.

I know this is not a comprehensive explanation of what can be done but I do hope it has given you a bit more insight. Work with your attorney (whomever that ends up being) and certainly feel free to reach out if you have specific questions.

Des.