Expert: Christine Janklow - 10/13/2008

Question
After seven years, I am force to close my residential construction business.  (Not much of a surprise if you read the papers)  I have incurred a great deal of debt through the business, some of which is personally guaranteed.  I realize that I am on the hook for those sums.  A bank that is owed money has a UCC on basically all of my business assets.  Liquidating all of the business assets will probably not cover what is owed.  Although I have just made the information public that I am closing my business, I have already received calls from collection agencies.  I also have unpaid bills from subcontractors on current projects.  My question is this; since I am incorporated and I have no interest in saving the business, how am I going to stop the collection agencies et al from attempting to go after me personally.  they have already contacted my parents in another state trying to collect.

Pete

Answer
Pete:
Thank you for your inquiry. I am sorry your business won't survive these difficult times. Made tougher by the fact you have debt that will survive the business due to personal guarantee. If you do liquidate and there is a deficiency on what the funds will cover, then you have the option of either filing BK or perhaps settling the difference with the creditors. You can do this on your own if you have funds and are delinquent, but it is not for the faint of heart or finances. You can hire a commercial debt settlement firm to do this (such as the one I represent) but it will take some funds to get these debts resolved over time, which means you have to have some income coming in. As for the collection calls, they do have a right to call you and anyone else who is related as a borrower or guarantor for the debt. If they are hassling your parents, you can call your states attorney general office and report this and ask how to get them to stop a potential violation of the Fair Debt Collections Practices Act. There is also a non-profit group that has a great "empowerment" program to give person to person assistance with debt collection issues. Visit www.consumerjusticegroup.org for more about their Empowerment Program. Tell your parents, not to speak to anyone regarding the debt and not to react from fear which is what most collectors want in order to get money from you. No one can go to jail or be forced to sell a home over a non-payment of this type of debt. You need some time and good representation to get things sorted out. Bottom line, get some legal advice regarding closure and or BK and you can also look into settlement. I wish you the best with your future endeavors and feel free to ask a follow up if you want to explore the latter option.

Respectfully,
Christine Janklow