When Guarantees Apply
EIDL loans over $25,000 required personal guarantees from owners with 20%+ ownership. You are personally responsible for the full amount if the business defaults. For loans over $200,000, real estate collateral was also required.
SBA Collection Process
Demand letters, Treasury Offset Program (tax refund intercept), private collection agency referral, and potentially DOJ litigation. Typically 12-24 months before litigation.
Bankruptcy Discharge
Your personal guarantee is fully dischargeable. Chapter 7 eliminates it immediately. Chapter 13 allows reduced payment over 3-5 years. The discharge injunction permanently bars collection.
Frequently Asked Questions
Can the SBA garnish my wages?
Yes, after obtaining a judgment. The Treasury Offset Program can intercept tax refunds without a judgment. Bankruptcy stops all of this.
What if I didn't realize I signed a guarantee?
Unfortunately, ignorance is not a defense. For loans under $25,000, no guarantee was required.
Can I negotiate the guarantee away?
The SBA has an offer in compromise program. If they reject it, bankruptcy is your backstop.
Check your bankruptcy discharge eligibility with our free screening tool.
Free Discharge Screener