Expert: Christine Janklow - 10/19/2010

Question
Hi, I was involved as vice -president in a past family business of an S-corp with my father and was in charge of the company's credit cards and bill payments.  I am no longer with the company and have not been working with the company for years.  I had all of my shares in the company officially sold to my father and he became 100% owner of the S-corp(all income and debts included# when I left the company.  Later, the business went under and my father also filed for BK personally.  Recently I received a call from a one of the business creditors(Chase) demanding payment of more than $70,000 of a business line of credit.  They are claiming that I am a guarantor.  The business had an EIN and everything expense and income was filed with the EIN including the line of credit.  I also thought I was protected personally under the rules of an  S-corp if the business went under.  Today I also received a letter of loan obligation from the creditor demanding payment, however, it was sent to my personal address even though the letterhead is directed to the prior S-corp's name and my fathers name.  I believe they obtained my personal address over the phone by lying and stating they were someone else because I did receive a suspicious phone call from a person pretending to be from the local law enforcement department a couple of days ago wanting to verify my address and I did do so and thought nothing of it.  I recently checked my credit history and the loan did not appear on my personal credit history either.  Well I am now wondering 3 things...1)Is it legally my debt even though I have proof that I was no longer owner in any stake of the corporation long before it went under?, 2)can I or should I(within 30 days) respond with a dispute letter demanding validation under the Fair Credit Reporting Act?, 3)Is there anything I can do to get them to stop calling me at home or work?.     

Thank You in advance

Answer
Peter:
Thank you for your question. This is a most unfortunate yet typical circumstance. First, whether or not the corporation is operating or was solvent or not has nothing to do with who guaranteed the debt when the loan was issued. That remains unwavering until or unless the guarantor files a personal bankruptcy which includes the guaranteed debt or is deceased. In certain states (community property) that liability may also be incumbent on the spouse to pay. The bigger issue is did this creditor violate the FDCPA in "pretending" to be law enforcement to verify debtor information. If I were you, I would contact my states attorney general office and file a complaint against the creditor submitting whatever "proof" you may have of an alleged violation. Secondly, it does not hurt for you to respond in writing to the collection agent sending the letter to validate the debt, that will provide a 30 day window for you to determine your liability and stay collections. Lastly, you can also in writing ask them to Cease and Desist calling you at work, as that may jeopardize your position and cause financial perel.They must not call you at work if you notify them in writing, however if they pass the debt to a collector, you will need to send the same letter to them. You really cant stop them from calling your home between the hours of 8am and 9pm daily, however you can screen your calls through an answering machine or service. Bottom line is you must establish your obligation to the debt, because the creditor will not stop collections until it is paid, settled, dismissed in a bankruptcy filing or the statute runs out. If you find that you are on the "hook" then the best thing to do is either work out a repayment arrangement (with little or no accruing interest) or settle the debt if you have the means to offer up a discounted lump sum or term payment. I hope you found this answer helpful, if so please take a moment to provide a positive rating so others may benefit as well.

Respectfully,

Christine Janklow