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About Michael Fay
Expertise
My focus and specialty is in credit, so that the risk of the debt itself is minimized. This means understanding it, predicting it, and helping to correct it. Having worked in contracts & credit, I have also worked with all of the related documents such as Guarantees (personal and corporate), and Security Agreements (aka UCC’s or “liens” – but I caution you in using those interchangeably).

Experience
I have a broad background with more than 15 years in the credit industry. Ten years with Dun and Bradstreet, first as a field reporter creating reports, then in customer service, finally I served as the credit manager designing risk models for many national and international customers through D&B’s Outsourcing function. Five years with another publicly traded firm where I created the credit department and then served as credit manager for North America. At both companies we used both business and consumer data. You probably know that both business and personal credit have scores; what you might not know is how many different types of scores there are. I am familiar with and have used many different scores in each. Also be aware that each credit type (business & personal) is unique with different processes and different time frames. I have served on the board of directors for companies in many states and still serve in some capacity in a few. I contribute to credit publications and work with the non-profit arm of the SBA called SCORE.

Organizations
ACA International * NACM * Credit Risk Managers * SCORE (SBA)- Counselors to America’s Small Business * Payment Card Industry Network * PaymentSource.com * D&B Alumni * Psi Chi, National Honor Society for Psychologists

Education/Credentials
BIS in Business and Psychology, University of Minnesota * MBA is still in progress (on-line)

Awards and Honors
State of Colorado - State finals in Accounting and Advanced Accounting. * D&B Leadership Winner (3 times) * D&B Leadership Finalist (3 times) *

You are here: Experts > Business > Small Business Information > Business Debt > business credit card debt default

Business Debt - business credit card debt default

Expert: Michael Fay - 10/26/2009

Question
Hello! I purchased a franchise in Florida 18 months ago and operate as a sole proprietor. My husband never signed for anything. The business is failing and I took out 3 credit cards to try to keep it afloat which were obtained in the business name and my name with no personal guarantee. My question is if I default on any of these cards, will my family assets be at risk, my house or my husband's credit, or will it just be my name and credit at risk? Could they garnish my husband's wages? Thank you in advance for your time.

Answer
Christi.
As you might have guessed, this is a legal question as well as a financial one, and I want to state up front that I am not an attorney. The question about your husband’s assets is one of common law and I think that in Florida the answer is yes- his credit is (or can be) tied into this. But by the same token, I do not believe that the house can be attached in Florida – however I am not sure of either of those statements and you need to seek professional legal advice.

As a sole proprietorship, all of the obligations are personal. This means that there is the possibility for any of your personal assets to be potentially in play. The answer to how much of the family assets are at risk can be impacted by a number of factors, beginning with the dollar amounts involved and whose name appears on the mortgage. I think that they would have a difficult time attaching his wages.

If you applied for the cards, I will bet that it was your social security number on the application and that a personal guarantee is written into the contract language. As a sole proprietorship a separate personal guarantee is not necessary, it is automatically included.

I don’t know what kind of franchise that you bought into, but you might want to contact the AFA, American Franchisee Association; they are based in Chicago. There are currently a multitude of lawsuits against many franchisors for many reasons. I would also recommend that as you close the franchise that you see what kind of work-out the franchisor allows. It may be possible for a payment plan that avoids much of the options you named.

I am sorry to hear about your situation and wish you the best of luck.
Michael

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