You are here:
- Home
- Business
- Small Business Information
- Business Debt
- Co-signer for a Business debt - Now in collections
Business Debt/Co-signer for a Business debt - Now in collections
Advertisement
Question
I have co-signed for an equipment lease for a business owned by my friend. Along with me, the owner of the business, his spouse and ane more friend co-signed for the lease giving personal guarantees. I do not have any interest in the business and I was doing a favor to the friend.
The business is in default now and not in operation. The debtor has now sold off the lease to a collection agency and the agency has hired a lawyer and trying to collect from me. Apart from me, the 3 other co-signers do not have enough income to pay the debt, so I am assuming that the collection agency is coming after me only.
What defenses do I have now?
1. Is it mandatory that the collector ,has to take the business owner to court and prove that the business didn't or can't pay the debt. Then, the creditor has to get permission from the judge to take the owner's personal property to cover the debt.
2. Can I avoid the judgement (if sued) by any means?
Thanks.
Hemanth:
Sorry to hear of your situation. It should be incumbent on the prior owner to help in your defense of this, by if nothing less than providing documentation to the creditor that the business is closed, no assets and the guarantors are incapable of payment. This may help the collection agency in deciding what efforts it wishes to pursue, that could lead to nothing more than further default as no payments with or without judgment can be obtained. If the prior owner is capable of offing up an out of court settlement, he should do so. Get this agreed to in writing and ask for terms to payout (try for six months even if you have to sign a stipulated judgment). That is usually all these agencies want, unless the believe there are ample assets and liquidity to collect right away. The law firms are intimidating, however if they are contacting you from out of your state of residence it is unlikely they will consider suit, as they must appear in your district to file. They too can often entertain deep discounted settlements. Please be advised that I am not an attorney and that this is not a substitute or in any way intended to be legal advise. Seek an attorney if you have additional questions.
Thank you.
Christine Janklow
Related Articles
- Commercial Lease - Personal Guarantee for Commercial Lease
- What is a Personal Guarantee - Personal Guarantee Definition
- Debt Collection - What is The Fair Debt Collection Practices Act and Does it Apply to Sole Proprietorships
- Steps Before You Personally Guarantee a Small Biz Loan
- Should I Personally Guarantee Business Debt
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.