EIDL Discharge in Chapter 7
EIDL loans ARE dischargeable in Chapter 7. Unlike student loans, there is no special exception. If you qualify under the means test, your EIDL debt can be eliminated completely.
Personal Guarantee Issues
Most EIDL loans over $25,000 required a personal guarantee. The guarantee is dischargeable, but the SBA retains its lien on business assets and collateral.
What Happens to Your Business
If you file as an individual, your business may continue (sole proprietorship) or be liquidated. If the business is a separate entity, its debts are not discharged in your personal bankruptcy.
Frequently Asked Questions
Will Chapter 7 trigger SBA collection on my business?
Filing personal bankruptcy does not directly trigger SBA action against a separate business entity. But the SBA may accelerate collection on the business loan independently.
Can I keep my business?
If it is an LLC or corporation, the entity is separate. If a sole proprietorship, the trustee may liquidate business assets.
How much EIDL can be discharged?
No limit. Whether $10,000 or $500,000, your personal liability is fully dischargeable. The automatic stay stops SBA collection immediately.
Check your bankruptcy discharge eligibility with our free screening tool.
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