Personal Bankruptcy SBA Loan Secured by Mother's Home

[rkurashima]

I am an Air Force Reservist and was called to active duty July 2008. My business was already not doing too well when I left and finally shut down while I was deployed to Iraq. I have an SBA loan of around $80K and a home equity line of credit (HELOC) for about $70K all being secured by my mother's home. I do not want to affect her in any way, but I cannot continue paying these loans now that the business is shut down. My mother's home is at negative equity right now with the housing market the way it is. If the SBA lender and/or the HELOC bank forclosed there would be no equity left to repay them after the first mortgager was paid. I am still on active duty status and will probably continue until I retire. I am filing BK in the near future also. Please render any advice you can give. Will the SBA lender go after my mother's home with no equity for them to get paid?

 

[Michael Wechsler]

They will go after anyone they can in order to attempt to secure property or a claim to pay off on the loan.

 

[rkurashima]

Even if there is neagtive equity in the collateral?

 

[Michael Wechsler]

Even if there is neagtive equity in the collateral?

They would likely get in line as one of the creditors and it would seem moot to you who is at the head of the line. I wish you the best of luck and not sure how else I can help you here.