AboutMike Weikle Expertise Banking Lender Liability; Insurance Coverage; Consumer Rights; Bank Fraud; Criminal: White
Collar Crime; Fair Debt Collection Practices Act; Directors and Officers Liability
Experience Commissioned National Bank Examiner 7 years; President of Two Community Banks; Division Claims Specialist for American Bankers Association Sponsored Insurance Program; Carter Member of the Bank Fraud Team of the Office of the Comptroler of the Curency "OCC" (National Banjk Examiners); Attorney previously representing FDIC and Resolution Trust Corporation as well as consumers and commercial borrowers in claims against the banking industry; Former Data Processing Systems Examiner for the OCC; Expert Witness on variety of banking issues in both state and federal court.
Education/Credentials Certified Public Accountant;
JD -- West Virginia College of Law - Order of the Coif
Data Processing Training Old Dominion Bank and IBM
Question If a person draws a line of credit agreement with a bank under his/her incorporated business name (two owners; one now deceased), is that person individually responsible for the balance of the loan? What if the business was dissolved before the second owner died? Would not his/her estate be responsible for at least half of the balance due?
Answer I assume each of the owners personally guaranteed the debt or co-signed with the company to get the line of credit. Both of the original parties would generally be responsible for the loan. The estate of the deceased person would be equally liable for repayment of the entire loan. However, in most cases, the lender can go take the most convenient route to collect the loan. Unless there is something different about your loan or guaranty agreement, the lender does not generally have to make any claim against the estate of the deceased party. In most cases the Bank comes after you for full payment since (I assume) you and the deceased agreed to be joint and severally liable for repayment of the entire line of credit. You could file a claim against the estate for at least half of whatever amount you paid to settle the debt with the lender.
This is a very general answer based on assumptions that may or not be true in your case. I would need to see the loan agreement, any guaranty agreement and any agreements between the guarantors to fully assess your rights in this matter. There also may be other factors I am not aware that could minimize your potential liability. If the amount owed to the Bank is in excess of $100,000, you should obtain local counsel to advise you.
