Expert: Christine Janklow - 11/14/2008

Question
I bought a vehicle about 4 years ago STRICTLY under my S-Corp.  It was under the tax id number and I DID NOT sign a personal guarantee.  I returned the vehicle when my business failed and the lender sold the debt to a debt collection company. They are now calling me and threatening to sue...even though I have said that I did not personally guarantee this debt and the business is no longer in operation.  Am I really personally liable even though I DID NOT sign a personal guarantee and it was strictly under the S-Corp's tax ID number?  Please help! I live in Texas and the collection agency is in Florida.

Answer
Megan:
Thank you for your inquiry. Based on the information you are claiming, it would appear as if they (the auto lender) are billing a deficiency on your loan or lease. They have turned over or sold the debt to a third party collection agency. If the agency is calling you, they must have first sent you a letter indicating their authorization to represent the creditor on this debt and all information regarding what is owed contained therein. You can dispute this in writing with them via a Letter of Verification to verify the creditors claim, and also if this is as you claim 4 years old (since your original delinquency?), it may be nearing the end of the Statute of Limitations for collections in the State of TX which is 4 years. Submitting any payment or promise to pay without first verifying your liability, will allow the collector to begin that statute all over for another 4 years. Furthermore, if this is NOT a law firm contacting you in your home state, than the collections agent can not sue you. Under the Fair Debt Collections Practices Act FDCPA, creditors are not allowed to threaten suit unless they are able or intend to do so, and unless they are a law firm they likely can not. Speaking to them tends to fuel more frequent calls. If you DO get a notice (or summons) from a law firm in Texas or another state indicating their intent to pursue legal action than you can hire an attorney to file an answer or deal with them directly. Your last option is to settle the debt if you do learn of your personal liability. Otherwise the Statute may be running out for them and it appears a last attempt to collect some money from you personally. Here is a link to provide more information on debt collection, stopping harassment and other statutes http://www.fair-debt-collection.com/fair-debt-act.html
I hope this proves helpful and if so, please take a moment to provide a positive rating so others may benefit as well.

Respectfully,
Christine Janklow