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Business Debt/Loan to a closed business

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Question
I loaned a substantial amount of money to a personal friend for his business/ Even though I got a note from the business for the loan, I did not get any personal guarantees from the owner(s) because  I did not think it was necessary because of my relationship with the owner(s). If I had know that I would run into problems I would have gotten personal guarantees or I would have loaned the money directly to the friend instead of to the corporation. The business was closed and even though it has not filed bankruptcy there does not appear to be any assets of the business. When the owners  closed the business they created another corporation, but it does not appear that the new corporation received any of the asserts of the closed business. Is there anything I may be able to do to get this debt paid. I had no idea that the business was going to close without paying this debt. I would appreciate any assistance you can provide.

Answer
Benjamin,
Without a personal guarantee you may want to consider researching to see if this person has any assets and if they do, filing through small claims or civil court, depending on the amount of money owed.  The type of business will help determine if there might be any funds to repay - for example, was it a sole proprietorship or an LLC or Incorporated?  

My advice would be to gather any documents that you have in relation to the debt, including any emails, search for assets and based upon your findings, proceed through the court system.

Good luck.

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Michelle Dunn

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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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