If you found a daunting letter in your Atlanta or Alpharetta mailbox regarding your SBA EIDL loan, you must take it seriously. SBA EIDL debt is a federal loan that differs from tax debt, yet both are obligations that could potentially be discharged through a Chapter 7 or Chapter 11 bankruptcy. If the letter is from a collection agency, it means the government is increasing efforts to collect. While these agencies cannot immediately place a lien on your Georgia real estate or garnish your bank account, receiving this notice confirms you are in default and requires immediate action. Every business situation in Georgia is different, so talking to an attorney is the best way to understand your specific risks.

What are Your Options? 

You can attempt to work directly with the SBA by requesting hardship accommodation deferrals or lower payments to renegotiate the terms. Some business owners pursue an Offer in Compromise to settle the debt for less than what is owed, similar to an IRS settlement. However, any settlement or deferral requires the SBA to voluntarily agree and approve the request. If the SBA refuses to cooperate or takes too long to respond, a Chapter 11 filing in the Northern District of Georgia offers a path forward. Chapter 11 is available for both businesses and individuals, provided the amount of debt justifies the legal fees, and it allows you to force a repayment plan that a judge approves even if the SBA does not agree. Every month you wait, your credit actually gets worse — not better. Avoiding the problem doesn’t protect your score. It damages it.

The Bottom Line

A Chapter 11 reorganization is an effective way to deal with all debts at once, including credit cards and other commercial loans. When dealing with large debts in the hundreds of thousands or millions, the strategy changes significantly compared to a smaller loan. It is vital to read your paperwork to see if you provided a personal guarantee; if you did, you are personally responsible for the balance. Whether your business is in downtown ATL or the surrounding suburbs, consulting with a lawyer is essential to determine if a bankruptcy filing is the right move to protect your personal assets and your company’s future.