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SBA Lien after Chapter 7

Posted on: 19th Aug, 2009 05:22 pm
We had to file chapter 7 back in march due to failed business. We had personal guarantees on SBA loan. They have lien on our house. The amount left on the SBA loan is about 278,000.00. Our house is not worth more than 125,000.00. Our original mortgage (which we did not reaffirm, but we are current on payments) is about 192,000.00. Any way to get out of this mess without doing more damage to our credit? Our attorneys told us if we want to stay living in house keep making payments and we will be ok. We are basically renting our home from the bank. If we want to ever own a home again, what is the best way to deal with this? What happens if we stop making payments and just walk away from house?
Hi dianeomvig!

Welcome to forums!

As you've not reaffirmed your mortgage, you are not personally liable to pay off the loan. However, the lender still holds a lien on the property. If you stop paying the mortgage now and walkaway from it, then the lender would foreclose the property and sell it off to the recover the dues.

As far as buying a new property is concerned, you'll have to wait for sometime. In order to get a conventional loan after chapter 7, you'll have to wait for 4 years whereas to get a FHA loan, you need to wait for 2 years after the discharge.

Feel free to ask if you've further queries.

Sussane
Posted on: 19th Aug, 2009 08:08 pm
we filed chapter 7 3 years ago, we did not reaffirm either our mortgage or HELOC, but having been paying timley on both. The SBA loan was discharged but the lien remains. on our home. What would be the likelihood fo negotiating with the aba loan holder toreleas the lien fromour property, We owe as much in our mortgage and heloc than we would get for our home, so sba would not get anything at sale.
Posted on: 15th Jul, 2011 12:23 pm
Hi khamel,

If you had included the loan in your bankruptcy filing and did not reaffirm it, then you won't be liable for making any payment. You have been discharged from that debt. You may surrender the property to the lender and get rid of the property. You may negotiate with sba regarding the payments. However, even if the lender accepts your request, he will not report your regular payments to the credit bureaus.
Posted on: 15th Jul, 2011 11:25 pm
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