Expert: Christine Janklow - 10/22/2007

Question
QUESTION: "In 2004 I started an S-Corp. My personal credit was in the low to mid 500's so I could not get an personal credit accounts.  After the business became 2 years old I began to apply for credit, mainly through Citibank. The business was able to acquire approx 100K of credit through about 10 accounts.  I did not personally guarantee the accounts as I would not have been approved if they even took a peak at my personal credit.  The business credit files with experian and dun & bradstreet were good at that time and that is why the credit was approved.  Since then we had some bank information stolen that was very disruptive to the business. It eventually caused us to shut down in the spring of this year.



My question is, can they go after me personally for the debts?  The accounts are over 9 months past due and have already been passed around to multiple collectors. I can handle being hassled but I do not want them to go after me personally.  As I said, I did not personally guarantee the accounts, when the accounts began to get pretty far past due I asked a number of the creditors whether or not my social security number was in the file and they all said no. My ss# was on a couple applications but only for the purpose of following some sort of federal law. Again my personal credit was bad enough that there is no way I would have been approved if they used my ss# to approve it.



If the credit was based soley on the corporate credit history and no personal guarantee was given can they go after me personally? I don't mind if there are judgements against the business, there are $0 in business assets that they could collect from. I was the only principal and my name was on the card but it was a corporate card.



As an aside, I have not seen any of these debts appear on my personal credit reports as of yet.



Thanks for the help."


ANSWER: Tim:
Thank you for your inquiry. I regret the grief all these events seemingly have caused you and your business. Based on the information you have provided, it appears the debt was secured by your business and if it is closed, this debt is uncollectible. Creditors/collection agents may attempt to call you regarding this and even claim you are responsible. Again, if you were a proper business entity or corporation than this debt would appear not to be your responsibility. Should a creditor get you on the phone (try not to call or engage them), make sure to indicate the business is now closed and there are no assets available to cure the debt. I wish you better luck in your future endeavors. If you found this answer helpful, please take a moment to rate it so others may benefit as well.
Respectfully,
Christine Janklow

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

QUESTION: So would you suggest that I create a letter that I can use as a response to each of the creditors asking for proof that it is my debt and not the businesses?

or

Should I just ignore them altogether? Basically, should i let them know that the business is dead and that there are not any assets or just leave it alone.

Answer
Tim:
Thanks for your follow up question. Unfortunately there is no simple answer. You have to do what you feel is right in notifying creditors. They will generally pursue collections aggressively if they get through the phone line to leave a message or speak to someone. If you still have a business line, you might consider changing or eliminating it to reduce calls. If the calls are coming to your home or cell phone, it is your call if you wish to notify them about the status of your company.

Good luck!
Christine Janklow