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Business Debt/Former employee liable for company debt?
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Question
Hi Michelle,
My husband was an office manager for a commercial construction company. As part of his responsibilities, he often inititated, filled out, and signed credit applications to suppliers. He left this company eight years ago. Yesterday afternoon, we received harassing phone calls from a debt collection company telling us that he is being personally named in a debt collection suit against this former company. They sent my husband the paperwork in question. He filled out, and signed, as "Office Manager," a Business Credit Application, which had "Personal Guaranty" language included on it. This was in January 2002. His former company incurred $62,000 of debt with this supplier in 2009 and has not paid any of it. The debt collector said they are suing my husband because he made the Personal Guaranty on the debt. Are we liable for this? What should we do? My husband called his former employer and told him about the issue. The business owner said he is aware of the debt, and that we should just ignore the phone calls. FYI -- the company is Incorporated.
The only personal information for my husband on this credit app is his name, first and last. No social security or any other information. It is filled out with all the company's information.
Meredith,
You should not ignore the phone calls especially since they could sue you if you do. You may want to go see an attorney, if your husband did sign any type of personal guarantee, he could be liable for this debt if the company doesn't pay. My advice is to go see an attorney right away and bring all your paperwork.
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Answers by Expert:
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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