Lien Release for Discharged SBA debt
by ENG016, Window Shopper
- Created: April 3, 2014, 12:10 am
- Updated: April 3, 2014, 12:12 am
My SBA loan was discharged in Chapter 7 three years ago. This is a screwed up story, but this is where I am now... The SBA still has a lien on my home (3rd position). The primary mortgage was also discharged. The Home Equity Loan (2nd lien) was reaffirmed (yes...I know....). I asked my BK attorney to have the primary and second loans reaffirmed, but just discovered last fall that the primary was discharged. I had been paying the primary until I found out it was discharged. The second has always been paid current. It's obvious that I was is in serious denial after our business failed and didn't take my attorneys advice to walk away from our home completely. We tried to limit the discharge to business related debt as much as practical, but are still dealing with the consequences of that naïveté (no matter how well intentioned...). Now I'm trying to cut my losses! I'd like to sell the home and avoid foreclosure if possible. The big obstacle is the lien associated with the SBA loan. The house financials are: - market value approx. $460k - first lien approx. $365k - second lien approx. $58k - third (SBA) lien approx. $180k In a foreclosure auction it would be doubtful if there was any equity remaining for the SBA lien. I see the Offer in Compromise option, but it seems focused on pre-discharge loans. Is this process available to people in my situation? If so, what guidelines do I use for submitting the request? The required documents are certainly different. The loan guarantee has already been paid to the lender, so do I deal directly with the SBA or go through the lender? Thanks in advance for your advice!
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