You are here:
- Home
- Business
- Small Business Information
- Business Debt
- old business credit card debt
Business Debt/old business credit card debt
Advertisement
Question
Our small business incorporated as an S-corp in 2008. We bought the building/land/equipment/name/etc. of a previous s-corp. The previous s-corp dissolved once the transaction was complete. The last year in business of the previous company company I was a Vice President. The secretary/treasurer of the previous business is the same for the new corporation. The previous business president was the sole stock holder at the close of the sale.
The previous business has 2 large debts. One debt is a line of credit with a balance of about $90K which has (as far as I know)the previous business president's stock portfolio/retirement account as a guarantor. The other is a credit card (unsecured) with a balance of about $90K. The new business has been paying the payments on these but the economy has caused our business to slow down something has to give.
We operate at the same location as the old business with a similar name and the same address and phone number. I am the co-guarantor on a loan for the property and a credit card for supplies of the new business. The only other loan the new business has is a notarized "promissory note" to the previous business owner/president. We are not late on any payments and we do not use the old business line of credit or credit card. The new business does not use the same bank as the previous business for checking or any other loans, credit cards, etc. The accounts are still active. What should we do regarding these "old" debts? What happens to these "old" debts if they aren't paid?
Mark:
Thank you for your inquiry. Your situation is slightly complicated because based on the information you provided it seems as though the debts could possibly belong to the business. If you have a D&B and have established a separate credit rating for your business, you should probably get a reporting agency to identify where/whom it is reporting to. If the old president is the guarantor, it is likely just an unsecured and PG loan which is ultimately his to repay. That said, if the debt is defaulted upon, creditors and collectors, will try to get money from whomever is associated with that account. If this happens, they will take whatever means needed to recoup losses. In some states, the statute of limitations is 7 years, and if a judgment is obtained 10 years to collect. However, the debt can always be negotiated prior to that point and settled. If you want to proactively settle, because you can't service debt, you can elect to enroll the accounts in a commercial debt settlement program (such as the one my company offers), which can get the accounts managed and settled. Lastly, the debt won't just go away unless the guarantor files for BK.
Respectfully,
Christine Janklow
- Add to this Answer
- Ask a Question
| Rating(1-10) | Knowledgeability = 10 | Clarity of Response = 10 | Politeness = 10 |
| Comment | Thank you for the quick response. We will continue to pay the debts as any collection agency would be trying to collect from our company, even though it is an entirely new corporation. The debts, unsecured or not are for a large amount ($90K each) so I imagine no company would just "write them off", they would pursue some sort of settlement. Also, the previous company's president would not want to settle the debt with the creditors and would make an effort to get the debts put in the new companies name even though we do not have the credit to support any more debt. When purchasing the business from previous company the economy was much better and it was easier to pay off any remaining debts, now it's not so easy but it is what we'll try hard to do. Once again, Thank you. | ||
Related Articles
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.
©2012 About.com, a part of The New York Times Company. All rights reserved.