Expert: Christine Janklow - 11/2/2011

Question
I can be held personally liable for a debt of my former employer?
As an employee of a company that is a sole propitiator ship not an LLC, I was in charge of advertising and sales and I was required by the owner to sign agreements/contracts that had "personal guarantee" language written into them. The company hit finical trouble in late 2009 and let me go because they could no longer pay me in 2010. Now I am being sued by Yellow book for an unpaid debt.
The attorney for Yellow book states that since it is a Commercial debt and not personal it is governed by the Uninform Commercial Code” Not the FDCPA. I am trying to find some law that states they can hold me financially liable for the company’s debt that in no way benefited me. When I worked for the company I was not responsible for payment of this account, as I was realtor dealing with sales and advertising not accounts payable.  Can Yellow book hold me financially liable and obtain a judgment against me.?

Answer
Trish:
I appreciate the question, and regret that unfortunately this is a very common scenario. As for the "rights" that you have or don't have, the FDCPA rules are available to enforce unfair collections, harassment or unnecessary public disclosures for consumers, which you are one. If you were a business owing another business, it is a bit harder to enforce and possibly may stand under some rule of UCC. However, that is not at question as much as how much this creditor views you as a responsible party to this debt and if they have the right to go after you for recovering their losses. Technically they do have that right, circumstantially you only were a purchase orderer for the business, and by way of signature as an employee that should not render you liable, but if you agreed to allow the purchase to be initiated by way of your good credit or provided a social security number, it may be much harder to argue that. I have known many like yourself who thought they were helping a friend or employer in business gain something by putting themselves on the line then getting stuck with the bill. Creditors only need a small technically to put that kind of pressure on you to collect. If you really feel you don't owe it or had nothing to do with a personal guarantee, then it is your right to contest it within the first 30 days of notice sent by a collection agent or creditor. This is a validation request done in writing and you do have the right to ask for backup to their claim. Does not mean they will provide it but it stalls the process for that period of time. However if they have sent this to a legal remedy and do serve process to you, then it is probably time to get an attorney involved who can make the case to them that you are not liable or present the facts supporting your side in a court so the creditor does not get an automatic judgment if no one shows up to contest this. Conversely, you can always offer a cash settlement to appeal them to dropping the case. If they dont buy into your argument best to get legal advice sooner than later. I hope this helps and if so please take a moment to offer a favorable rating so others may benefit as well.

Respectfully,
Christine Janklow