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Business Debt/Corporate debt w/ personal gaurantee

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Expert: - 10/19/2010


Question
I purchased a skid steer loader for my excavating business in 2006, had to sign a personal guarantee to get financing. All was good until the jobs stopped, I owed $15600 on it, told USBank I was going to send to the auction  and was then told that the auctions were getting  enough money for stuff right now and US Bank had dealers that could get me more for my machine. I voluntarily released the machine to US bank. I then get a letter stating I owe some $17,000 after they sold my machine for $15,400. There is early termination fees, collection fees, and repo fees. I tried to refinance my house last week and was told that the repo on personal credit (in the amount of $19,800) was a huge hit and would to be able get any financing. I contacted the collection company and told them ai wanted to negotiate some sort of settlement, they came back with an amount of $13000. I requested to see how the #13000 was calculated out to be the new settlement amount, I was told they couldn't send me anything in writing but could tell me the breakdown over the phone.
So, my question is how can they require me to pay  when they won;t put it writing? Also, the collection co.'s payoff is different than the amount USBank reported on my personal credit. US Bank wouldn't talk to me about anything or send me anything regarding my account, they told me I need to go through the collection co.
The fact that I released this machine to protect my personal credit makes this all ironic. Why didn't they report this loan on my personal credit as being in good standing all those years I did make the payments? Why doesn't it show as former corporate debt on my credit report? It looks like I defaulted on auto loan right now.
Thank you for your time, Mike

Answer
Mike,
They can require you to pay without putting it in writing when they offer you a settlement amount.  Sometimes they will send a letter just confirming the settlement amount, and when you agreed to pay it.
The collection companies pay off (or settlement amount) would be different than US banks reported to your credit, this would be because of any other late fees or after selling the machine, any collection fees you may be responsible for etc. The agency does not have to offer you a settlement, they would only do that to help you out and get the debt paid off in full if possible right now for a lesser amount.
That is correct, US bank cannot discuss this debt with you if they placed it with an agency or they would be violating the law.  Legally you have to go through the collection company.
Not everyone reports good paying debts, in fact, most creditors do not so this is not unusual.
I hope this helps you to understand the law and the reasons the company is giving you.  Good luck!
Michelle Dunn

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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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