How can I still be liable to the SBA when my ex-wife assumed this debt in the divorce?
There’s no way around it: divorce is stressful. During this often ugly process the soon to be ex-spouses battle it out and in the end arrive at a division of property and debt that they both agree upon. It is on the assumption that this hard-won agreement represents the last word on their personal liability for martial debts that most people depend. Sadly, these agreements are not worth very much when the obligor’s finances deteriorate.
Joint and Several Liability
Whether or not your ex-spouse agreed to be solely responsible for an SBA Debt, if both spouses were guarantors on the SBA loan, then the SBA has a right to pursue either spouse for the full amount of the outstanding debt; this sad fact is a result of what is referred to as joint and several liability. And, although the SBA can only collect the full amount of the debt once, both ex-spouses remain guarantors on the original debt — that is, unless one of them settles with the SBA first.
That Hard-Won Agreement with your Ex-Spouse is Not Binding on your Creditors
The simple fact is that you divorced your husband/wife, not your creditors; they were not parties to your divorce and had no say in your agreement. Therefore, agree all you like with your ex-spouse, if he or she fails to pay off the full balance of the remaining SBA debt, you will be asked to do so. In many instances, years can pass before the SBA gets around to sending a 60-day Notice Letter making the event all the more traumatic with many a person prone to ignore it. But, it would be a grave mistake to ignore this notice — it may well be the only opportunity for you to settle the debt on reasonable terms before it is transferred to the U.S. Treasury where settlement terms are harsh and deals few and far between.
The financial collapse of a family business can often lead to divorce. Work out a realistic plan to address the SBA debt or the U.S. Treasury will ultimately work one out fore you.
Forewarned is forearmed.