If I default on a farm loan, can the bank add that note onto a second unrelated business loan?

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If I default on a farm loan, can the bank add that note onto a second unrelated business loan?

I have a chicken farm that is more than half paid for and I may loose my contract to grow birds for Tyson Foods which will leave me with no one to grow birds for. I will have to default if I’m not raising birds. I also have another business that is financed through the same bank. It is a self storage facility. Can the bank attach the farm loan onto the self storage loan? The farm has half of the original loan with FSA and half with the bank (don”t know if that matters)

Asked on July 12, 2011 under Business Law, Oklahoma

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Can a bank attached one loan to another? Not unles one of the loan agreements gives them the right to do so. Obviously, for simplicities sake, they can account for your total indebtedness as one lump sum, but that's just for bookkeeping purposes. If the loans have different terms--different property securing them; different rates; different maturities; etc.--or are to different people or entities (e.g. one is to you as an individual; one is to an LLC you own), they cannot generally be combined. The exception is if you gave them the right to combine the loans or add one to the other in the loan documents you signed; if they provide the bank with the right to do this, the bank may, since that type of contractual term is enforceable.


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