Expert: Christine Janklow - 2/1/2012

Question
QUESTION: We had a business contract with Monitronics for three years sold the company with location that had alarm installed about 1/2 way through the contract, did everything Monitronics said regarding changing over ownership.  New owners left the system in the building and couldn't take do to landlords.  New company owners told Monitronics to cancel the service and stop paying monthly.  Now Monitronics is calling our cell phone numbers and indicated that we are responsible for the rest of the contract, really.  The agreement had the business name and our business Tax ID Number,  if this goes into collections with it go to the business name (LLC) or against the Tax ID Number, we didn't sign a personal guarantee.  Who is at fault here.  Monitronics is indicating that sent a new agreements to the new owners and new owners failed to sign and return.  But new owners did update the online account to their information and were paying for a few months.  Who is a fault??? I was told this should be against the LLC not the Tax ID Number, anyone out there experienced this with Monitronics.

ANSWER: Melissa:
Thank you for your inquiry. Regardless of the vendor in question, typically when accounts are forwarded to a collection department or agency, you have up to thirty days upon receipt of written correspondence to dispute the debt as invalid. This should be done in writing by you and show documentation to the fact that you sold, dissolved the business, others who assumed payment on the account became the responsible party when they assumed the account and payment thereof. In other words, most creditors will assume the originator or guarantor responsible and it is yours to prove you don't owe the debt. If you have any documentation regarding the Sale/Purchase agreement and or any transfer of leased equipment/contracts, that needs to be acknowledged by a creditor. The people who purchased your business are the ones that defaulted on this contract so they are the ones that should be responsible in repayment. As for the annoyances of collections activity, remember this is a commercial account, therefore FDCPA rules do not usually apply regarding telephone calls to cell phones or other contact numbers.
The collection agencies will use any public number to try and gain information to collect the debt. Also it is unlikely that anyones personal credit will be affected by negative reporting. You should try and contact the new owners and put pressure on them to address this issue immediately. If it becomes an issue that must be addressed by you then simply offer a small settlement to close out this account once and for all and negotiate the best possible deal to do so. I hope you found this answer helpful and we appreciate any positive ratings from our readers.

Respectfully,
Christine Janklow

---------- FOLLOW-UP ----------

QUESTION: Christine,
I guess hows does that work when the contract is in the company's name and tax id.  The new owners purchased the LLC but discontinuing using the tax id that we signed the contract with Monitronics.  We didn't sign a personal guarantee. New owners aren't returning our calls.  Its the LLC that would be responsible correct?

Answer
Melissa:
There are too many variations of contracts to know for sure. However, one could argue that upon the new owners purchasing the LLC and continuing to utilize vendor relations previously established, they benefited, and were in agreement that they were obligated to pay for the service by doing so. Furthermore when they did pay (for whatever period of time) the actual writing of a check is sort of an admission that they assume responsibility for the debt and all of the terms and obligations associated with it. So in short, yes the new LLC has the obligation and burden to prove they don't owe if they are disputing.

Best of luck.

Christine Janklow