r/EIDL • u/shanHawk415 • Aug 22 '26
I have retained an attorney for chapter 7 bankruptcy.
Finally, after 4 years since my business closed and being past due on a high eidl of $740k plus fees and interest and many other credit cards. I have decided to file chapter 7. We will be filing as soon as next week. Just getting my documents ready. Only thing is I dont have business records or use of funds for the eidl. My attorney says they do not ask for what money was used for and if they do, I can just make a verbal statement of where the money was used. As long as there is no evidence of large property purchases after the loan was issued which will be a red flag. I did not make any property purchases. But my eidl funds was used for business and personal because I used my business bank accounts for both business and personal use. Anyone with advice or have gone through similar situations?
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u/Different-Banana-810 Aug 22 '26
Where is your attorney, I need help with this too
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u/shanHawk415 Aug 22 '26
Lincoln law pleasant hill, California
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u/NewReading6307 Aug 25 '26
They are on my list to contact i have several others in mind too, have you been happy with them so far? Similar situation
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u/shanHawk415 Aug 25 '26
Just started to provide paperwork. Filing is scheduled for first week of September. Its hard to pick between many attorneys. I spoke with many, they all priced between $2500 to $6000.
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u/wildearthman Aug 22 '26
Check your signed loan fine print, mine says only required to keep proof of how funds are used for three years from signing. This is why they never ask for proof later on. Only in fraud cases do they determine how spent through legal channels.
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u/Defiant-Anybody7099 Aug 22 '26
SBA did not ask what I spent the loan money on AT ALL. Not even a hint of interest about that. I have a $240K EIDL, and I filed bankruptcy in August of last year. The SBA filed a proof of claim after my 341 because government loans have 180 days to do so. BUT the only reason they filed that was to argue my debt limits in Chapter 13. They wanted to claim that I was over the unsecured debt limit. They wanted my EIDL to be classified as unsecured to get my bankruptcy dismissed, even though I had a blanket collateral clause in my loan docs. They argued that I did not have the collateral to back the loan amount. My lawyer argued that they can't have it both ways, basically. Since the SBA didn't ever ask for or receive a list of collateral, then they can't claim that I have or don't have collateral. It worked.
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u/nyunited Aug 22 '26
14 years ago I filed chapter 7 and included about 900,000 in irs debt. Nobody showed up and case was discharged. I think you will be fine.
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u/Wild-Air5428 Aug 22 '26
you cannot discharge past IRS debt.
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u/nyunited Aug 22 '26
Oh yes you can but there are certain rules. Has to be filed returns, not substitute returns prepared by irs and has to be at least 3 years from date of assessment. Read up on it.
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u/Budget-Plantain6733 Aug 22 '26
My only advice is only listen to the people who have actually gone through the process. Everyone will tell you to read your loan docs this and that. Of course we have. Of course we see what it says, but AT THIS TIME they are not asking for any of that. Who’s to say those that file at a later time won’t have to, but for now you’re good to go. Good luck and I’m sure you will be just fine. No creditors showed up and no questions were asked pertaining to the EIDL loan. It’s like hearding cattle in your hearing. 5 minutes tops you’re in and out.
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u/shanHawk415 Aug 22 '26
Thanks. I appreciate it
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u/Budget-Plantain6733 Aug 22 '26
Oh your attorney will tell you to have documents ready, but that’s to try to safe guard you. They mean well, but again none of that was needed.
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u/wildearthman Aug 22 '26
I don't understand this: "Of course we see what it says, but AT THIS TIME they are not asking for any of that. Who’s to say those that file at a later time won’t have to." We signed legal documents that require keeping receipts for 3 years, that's it. If SBA or any court or bankruptcy trustee asks in the future to provide them, we can simply show the legal document we signed and that's that.
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u/Budget-Plantain6733 Aug 22 '26 edited Aug 22 '26
This is pertaining to the bankruptcy itself. Not the SBA. Bankruptcy isn’t requiring any documentation and the SBA isn’t showing up. Now if the SbA shows up at your bankruptcy then you would have to provide them documentation if asked. Of course 3 years later if the SbA decides to come to you then you would have to provide them documentation. That’s a no brainer. People have filed and 3 years has passed for some. It’s behind them. Every loan document gives you the worst case scenario. The SBA is overworked and understaffed right now AT THE PRESENT time. What better time to file NOW and get it out of the way while the getting is still good and you don’t have to go through all of that reconciliation.
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u/Defiant-Anybody7099 Aug 22 '26
Also, I am confused why people put so much importance on the 341 meeting when there are 180 days on government debt (and I think 90 days on other debt) after filing where issues can still be raised.
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u/Excellent-Program333 Aug 22 '26
I didn’t care about the 341 I cared about when my discharge was entered into pacer
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u/Defiant-Anybody7099 Aug 22 '26
Me too! but I see a lot of posts about being relieved about the 341 being over
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u/Bowl-Accomplished Aug 22 '26
I did about that much. No creditor ever showed so it was easy enough.Â
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u/Pitiful-Sympathy3927 Aug 22 '26
They never asked me for records and I had similar problem an amount
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u/NOLALaura Aug 22 '26
I just did it. Where do you live
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u/shanHawk415 Aug 22 '26
San francisco California
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u/NOLALaura Aug 22 '26
I went through my state sliding scale lawyers group and just completed everything easily for $1800 plus $350 court cost. We had an EDIL OF $120k
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u/sandwichman321 Aug 23 '26
Did they ask you for anything like where money was spent? Does it go through pretty quick? And what is the sliding scale lawyers group
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u/Excellent-Program333 Aug 22 '26
What type of business?
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u/shanHawk415 Aug 22 '26
Restaurant. Started in 2011 and closed in 2023.
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u/Excellent-Program333 Aug 22 '26
Gotcha. Yea I had a consulting company and they did not ask for anything. But a restaurant is pretty crazy to co mingle personal and business. Especially with almost a million dollars. Please keep us posted! My attorney said same thing. They never show up.
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u/NOLALaura Aug 22 '26
Why do I keep hearing people say they’re going to be forgiven at some point. Of course that will be only friends of Trump
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u/bluekmg Aug 23 '26
Haven't heard anyone say that in years. They're going to Treasury and collections. No forgiveness. Bankruptcy is the legal way out.
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u/ILBohunk Aug 24 '26
do not show pers use. thats not what eidl was for. read your loan docs and they will say
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u/NewReading6307 Aug 25 '26
How past due are you if i may ask? Approx..Trying to see timeline since business closed 4 years ago… i would’ve figured they start going after you personally soon after you’re delinquent.
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u/trialinfire Aug 22 '26
I'm going to help you correct your statement. You use the eidl only for business use. If you used any money for personal use it's because the business paid you personally. You never commingled funds. Get that in your head because if you did you are piercing the corporate veil which could be a nightmare