Business Debt/Debt of LLC

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Expert: - 6/8/2009


Question
We have a LLC company that due to the economy has been suffering severely. We fell behind on our advertising, which we have since stopped, and are not able to pay the balance. A collection agency has been continually contacting us to make the payment. We are trying to figure out the best options for us. Would the debt go away if we dissolve the company and/or start a company under a new name? If we declare bankruptcy for the company would the debt go too? We have tried to make offer to make monthly payements without success. Due to lack of business we don't have the money to make one payment and are trying to make the right desicions. thank you for any assistance in the matter.

Answer
LB,
If you owe the money, you would have to pay the balance for the debt go "go away".  If you dissolve the company and start under a new name, you will tarnish your reputation and image if the only reason you are doing it is to get out of paying a debt. You would also be burning this bridge and never be able to use this advertising company or any company affiliated with them again. If you file bankruptcy, any debt you include in the bankruptcy will be paid back pennies on the dollar after the courts decide who gets paid first and how much through whatever assets your company has at the time of the bankruptcy.  Your best bet is to make payments as you can, if they don't accept them, document that and pursue legal action. There is no law stating you cannot make payments on a balance, if they only want payment in full send a letter, so you have a paper trail telling them your situation, and how much you can pay and on what dates.  This way if they sue you, you can show your document to the judge which shows you acted in good faith in trying to pay off your debt.

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Michelle Dunn

Expertise

As one of the Top 5 Women in Collections, one of the Top 50 Collection Professionals, and winner of the Business Excellence award, I can answer any questions about debt, debt collection, improving business credit, creating a credit policy, enforcing a credit policy and collecting on past due accounts. I can also answer questions in regards to starting a debt collection agency since I have been a bill collector for over 24 years, started and ran my own collection agency for 8 years, and maintain my 12 year old Credit & Collections Association for members of the credit & debt collection industry. I am also the author of the popular and award winning book "Starting a Collection Agency, how to make money collecting money" now on it's 3rd edition. This book has won a the Writers Digest self published award as well as the New York Book Festival Award. I am a repeat contributor to the Wall Street Journal, and have been featured on NPR, CNN, as well as many other national radio and television programs. I have also been featured in national publications such as the Wall Street Journal, Forbes, Smart Money, MSNBC and much more. I have 17 published books to my name and am an accomplished speaker and consultant. I currently write 9 columns for newspapers, magazines and online portals worldwide.

Experience

I have over 24 years experience in debt collection, I started and ran my own collection agency for 8 years and I am the founder & owner of my Credit & Collections Association that I founded in 1998. www.credit-and-collections.com

Organizations
My Credit & Collections Association, I was also a member of the American Collectors Association and Plymouth Chamber of Commerce for 11 years. I am a member of many writing groups as well as my local Women Inspiring Women chapter. I am a member of Know More Media as an expert for their blog on business credit.

Publications
Business NH Magazine, Smart Money Magazine, MSNBC, CNN, Forbes.com, The Wall Street Journal, Home Business Magazine, Entrepreneur Magazine and website, many books, newspapers and television programs as well.

Education/Credentials
I have written 17 books in my collecting money series and one for Entrepreneur Press called the Ultimate Credit and Collections Handbook. My newest book is being published by John Wiley & Sons in May titled, The Guide to Getting Paid, how to weed out bad paying customers, collect on past due balances and avoid bad debt. This book is also being sold to many colleges as a text book.

Awards and Honors
My book Starting a Collection Agency, how to make money collecting money won an award from Writers Digest and the 2007 New York Book Festival in the "How to" category. I have won 2 awards from Dun & Bradstreet and Governor Jean Shaheen. I was nominated as one of the Top 5 Women in Collections twice as well as having been selected as one of Collection Advisor's Top 50 Collection Professionals by my peers.

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