Expert: Christine Janklow - 10/23/2008

Question
Hello, I have one corporation that is solid, has been in business and always paid bills & cc payments on time, & my  personal credit score is great.  I became involved in another corp and opened up a 2nd AMEX card in the 2nd business's name.  They kept upping the limit, after initially granting $50K in credit, allowed it to go to around $70K.  That business is on its way to bankruptcy. The AMEX folks have cut off my first corp card even though it has nothing to do with the 2nd one that can't make payments. Isn't this an unfair practice? Also, if the 2nd card with the $70K doesn't get paid, will it affect my personal credit? I don't recall signing any personal guarantees and have requested they send a copy of my original application as they did not give me a copy when I was done signing up.  There was not any intent to lose the 2nd business, believe me! There aren't personal purchases, it is an S Corp, and everything is very legitimate. Thank you for your help!

Answer
Lisa:
Thank you for your question. I regret that your second business is not faring well in this economy, and encourage you cut losses that will help strengthen your original business. As for the lending practices of Amex or any other lender. I can only comment based on what others have alleged. Any lender is entitled to set forth their own policy toward how, how much and what terms apply to repayment. What most business owners fail to understand is that when signing up for these cards, UNLESS you have taken time and measures to build up your CORPORATIONS credit score, you were unable to apply in the corp alone. It is likely (and typical), that a personal guarantee may exist somewhere in the language of the contract or application you signed. In order to develop true business credit, one must endeavor (as you did when you first applied for credit) in opening small trade lines, paying them, getting some bank loans, and vendor accounts that report to the corporate reporting bureau's like D&B,etc. I would not hold out hope that the creditor will send the original docs you signed, so you have proof of a PG, I know this is rarely done and one of the tactics used to keep you (guessing) and paying. Nonetheless, you find yourself with a failing business, a high balance due to a creditor and little money to pay it. You have the option of entering a hardship program (assuming the creditor will offer it) which will reduce interest and payments and usually aim to pay the account off in 5 years, or settling the account with a lump sum amount, or lastly bankruptcy but as stated you may have a PG on the account so you need to seek legal counsel on how that might affect things. If you are in a position to get some monies together in the next few months, you might consider the settlement because that might forgive a significant amount of the balance owed. Although I do not solicit through this forum, I represent a commercial debt settlement firm and can provide you with a no cost or obligation consultation if you want to seek this option. You can simply ask a "private" follow up and provide your contact info. I hope this proves helpful.

Respectfully,
Christine Janklow