Can I Discharge My SBA (Small Business
 Administration) Loan in Bankruptcy?

   If you have a Small Business Administration (SBA) loan, you must include it in your bankruptcy schedules.  SBA loans are dischargeable in bankruptcy.

   However, you need to pay attention to the SBA paperwork you received at the time you took out your SBA loan.  We have seen some instances where an SBA loan gave the lender a “blanket lien” against all of the debtor’s property.

   A blanket lien is not a judicial lien and thus cannot be avoided per Section 522 of the Code.  Similarly, you may not be able to avoid the blanket lien in its entirety as a “non-purchase money lien on household goods” under Section 522.

   If there is a blanket lien, you should be able to settle the lien for whatever value remains in the property you have.  Therefore, in the case of an SBA loan, we need to pay a great deal of attention to the schedule of property we identify at Schedules A and B of your petition (real and personal property).

   If you have an SBA loan, please make that fact known to your Clark & Washington intake attorney so we can properly advise you.