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SBA loan turned over to Treasury Department for collection

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    SBA loan turned over to Treasury Department for collection

    Hello, I'm hoping I can get some light shed on my situation. We declared chapter 7 because of an SBA loan debt. The business has been dissolved. We were discharged back in February. Last week, the business received a letter from the Treasury Department stating that the loan has been turned over to them for collection. My understanding is that personally, we are not liable for the debt. But what do we do as far as the "business" is concerned? What happens if they come after the business? It has nothing. Does the business declare BK? We sent a letter to the SBA department last month telling them that the business has been dissolved and the owner declared personal BK. But now it has been turned over to the Treasury Department. This is kind of freaking me out! So what is next? I just want this to be done once and for all. I get a panic attack every time something arrives in the mail. Is there anything we can do? Help!!!! Thank you!

    #2
    What is the organization of the business, LLC, S Corp, "C" Corp, Partnership, or Sole Proprietor? it makes a difference indeed. If it's some sort of Corp/LLC, then the business would have issues. Has the business been legally dissolved (filed the correct paperwork with IRS and State)?

    I have had some similar issues with old "business" debt creeping up. At the time, my debts were in my d/b/a and not my S Corp. My S Corp was administratively dissolved many years before filing bankruptcy... so I didn't need to do anything with that business.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.

    Comment


      #3
      The business is still liable.

      You will need to get with a business (debt) attorney and shut down the business entity. Too difficult to explain the process here, and there are too many "what if".

      It is unlikely the Business will file BK, a business does not get a BK discharge, if a business files chapter 7, it is simply shut down and liquidated. If you are actually doing something with this business entity, you will need to do a business flip in order to continue operations.

      Comment


        #4
        we filed two separate bk's one for the s corp and one personal. (as with an s corp there can be some personal liability). that way we were covered. as far as the state tax and fed taxes...they were both listed on the petition and actually all discharged (including employee taxes).

        as jb dissolved his s corp, that's one way of doing. for me, i had to file the company by itself. the other partner also filed as well or they could have been held responsible for the debts of the s corp.
        8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

        Comment


          #5
          Thank you so much for your replies. You are all so helpful! The business was an S Corp. There are no assets whatsoever, and it is no longer a working business. So I am not worried about what may happen to the business, per say, I just don't want it to affect our personal credit, etc... We have a meeting with a business attorney on Thursday. I hope he can shed some light and help us put an end to this once and for all. We've been discharged in our personal Chapter 7 since February, and I can't wait to get over this last hump. I hope that it won't be too big of a hump, and that we can finally move on with our lives!

          Comment


            #6
            Have you "legally" dissolved the corporation? Did you file the right papers with the IRS to dissolve the corporation? Have you filed the right paperwork with your State to dissolve the corporation?

            Whether you should file Chapter 7 to liquidate the corporation is questionable. Hopefully your business attorney can answer that question . I would NOT in any manner try to operate that business! As HHM pointed out earlier, businesses can never discharge debt and if you start operating that business again, the creditors are free to come after the assets (A/R, furniture, fixtures, etc) of that business!

            This should not affect your personal credit... but that won't stop a company from trying!
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            I am not an attorney. Any advice provided is not legal advice.

            Comment


              #7
              and try they will.

              we had one creditor a bank who had given the business a loan secured by receivables, we had all the documents to prove so. we still had a substantial amount of receivables when we filed, so the bank was free to go at it. there were absolutely no personal guarantees on the loan. however, the bank insisted due to our s corp status we were held personally liable. of course they filed an AP. i remember our atty takes us out into the hall and says i hate to say this to you, as it's always bad when i have to tell my clients they have to pay someone when filing bk. of course i argued and said what? are you saying i must pay. he said yes. i said you are fired.

              hired another atty, and of course the bank lost their AP. my point again, they will try anything and you have to watch coming and going, even in this case i had an atty who would clearly was not looking out for our best interest as well. (we had a different atty for our personal bk).
              8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

              Comment


                #8
                Tobee, you obviously have legal knowledge, but how would the average person know that the lawyer was wrong?

                Comment


                  #9
                  Originally posted by Pjmax View Post
                  Tobee, you obviously have legal knowledge, but how would the average person know that the lawyer was wrong?
                  the sad part about that, is they don't and that's exactly what they count on . i'm certain with the tactics my own atty was attempting on us, would have scared most people into signing on the dotted line. one bad apple doesn't spoil the crop or whatever that saying is. not all attys are as bad as that one was, and he also knew i was a paralegal, but he must have thought i just didn't know any better. who knows. all i know is he certainly didn't have our best interest at heart. that's why it's so important that one at least attempts to find out as much information about their own situation as possible. also, to never be backed into signing something under stress or when being pressured, that's the first sign to me, to pack it up and hold it off until i can see what's what.

                  intimidation can be very frightening to many.
                  8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                  Comment

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