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Business Debt/Collection from owner & company, or just guarantor?
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Question
My mother opened up a credit card with my LLC (I am the owner) and spent $25,000 on it. She is not going to pay any of it. Now the bank sent me a letter saying that "Your company, its owners, and any guarantors will be subject to collection." My mother guaranteed the loan in her own name, but could my company or myself still be in danger of being responsible for the $25,000?
Dear Stephanie:
Thank you for your question. Unfortunately, yes your company and you as an owner, could be liable for payment on this account. It does not matter if you were privy to someone using your business name or not unless it is clearly a case of identity theft, which in this case might be considered unlikely as you are related to the person who opened the account. You might want to speak to the creditor and ask them to provide you the application or contract signed so you can better understand your liability. If you get a collection notice, you have thirty days by which to send a "Verification of debt" letter which will enable you some time to investigate before you need to pay or respond. During this time the creditor is also required to verify that they are in fact authorized to collect this debt. Please visit this link to see more about statute of limitations and examples of letters to write.http://www.fair-debt-collection.com/Disputing_Collections/initial-dispute-letter.html
Lastly, if you can't get your mother to accept payment responsibility, than at the very least call the credit card company to take her name off as authorized user and see what can be worked out regarding payment plans. Lastly if no one is willing to budge and you get stuck "holding the bag" and you simply don't have the means to pay this off in full, it is possible to attempt to settle this for less than what is owed, but some payments must be in arrears first. I hope you find a way to work this out. If you found my answer helpful in any way, please take a moment to provide a positive rating so others may benefit from it as well.
Respectfully,
Christine Janklow
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Answers by Expert:
Christine Janklow
Expertise
As President of SettleSource,Inc. a business debt settlement firm, I invite you to inquire about all aspects of business debt solutions to best determine which may be most appropriate. If you have questions such as: What is debt settlement and how process provide debt relief to my business? What options are available to deal with my business debts? Is it possible for a business owner to negotiate their own settlements? Why is debt settlement preferable to filing a bankruptcy or debt consolidation? Why are creditors willing to provide settlements to a business? How will settling debts affect credit scores? or How to rebuild a business after debt is eliminated. Please ask it now! For more information regarding how debt settlement can help your business, please visit www.SettleSource.com and place your inquiry. Mention All Experts to have a confidential no cost consultation with Christine. If this is your business situation time may play a very important factor in getting matters resolved proactively before they have negative affects on the business.
Experience
My expertise is specific to providing business solutions that will have profound positive impacts on the financial health of businesses. I have 25 years experience as an entrepreneur and have developed national sales programs; strategic alliances; product development; marketing programs; business and turnaround plans and debt settlement programs all providing methods to improve the financial outlook for large and small businesses. In the area of commercial debt settlement I have over 10 years experience working with large and medium corporations and closely held businesses to enable successful debt reduction and turnaround. I am a professional debt arbitrator and have negotiated with major banking institutions as well as vendors, suppliers and other trade creditors.
Organizations
Provisors;Turnaround Management Association; Los Angeles area
Publications
Accounting Today; Web CPA; National Restauarant Association;Los Angeles Daily News; Today Magazine Monthly series of business articles entitled "Brand News."
Education/Credentials
Bachelor of Business Administration; Associate of Arts Merchandising
Past/Present Clients
American Airlines, American Express, Safeway Inc., New York Life, consumer products manufacturers; retailers, food service industry and other small businesses and service providers.
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