Are SBA Loans Dischargeable in a Chapter 7 Bankruptcy?


Be sure to distinguish between a businesses bankruptcy, individual bankruptcy, loan guarantee, and secured SBA loan. SBA loans are dischargeable in a Chapter 7 bankruptcy. SBA loans are also dischargeable in a business bankruptcy.

If the SBA loan is guaranteed by an individual Chapter 7 debtor, then personal liability is discharged in the individual Chapter 7 bankruptcy. If the SBA loan is secured, then the security interest is not extinguished by the bankruptcy.

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