I worked for my family who owned a private school (corporation) & I loaned them $32,000 that they didn't pay back.

Asked 10 months ago - Missouri City, TX

They needed $32,000 to pay off the IRS. They came to me because I was on a game show and won. I loaned the money to the SCHOOL (corporation). We had a formal agreement via promissory note that they would pay me back. In 2 1/2 years, they have paid back a total of $900. In June of 2012, the school closed down, which pretty much let me know they weren't going to be paying me back. I've lost my house since because I didn't have money to pay my mortgage, and developed a progressive eye disease that is causing me to go blind along with a lot of pain and discomfort. I'd have the money to pay for my surgeries needed if they would have paid me back.

Can I sue if the school is closed, since they had insurance within the time frame they promised to pay back? Would I be suing them or insurance?

Attorney answers (4)

  1. Brian W. Erikson

    Pro

    Contributor Level 18

    5

    Lawyers agree

    Answered . You need to retain an attorney to evaluate and assess your situation and determine how best for you to proceed. The strategy will differ depending on what the promissory note states, whether you secured some assignment or lien position in connection with paying off the IRS taxes, whether you filed a UCC-1 financing statement or took some collateral, and whether you secured personal guarantees or individual signatures. All these factors will have to be evaluated.

    Insurance generally will not cover this sort of contractual commitment. I suspect that the insurance to which you refer would be general liability insurance. General liability insurance does not ensure that the obligor on a promissory note repays the note.

    The statute of limitations for collection of debt is generally four years, so you need to consider retaining an attorney soon.

    Good luck.

  2. Howard M Lewis

    Pro

    Contributor Level 20

    1

    Lawyer agrees

    11

    Answered . I am sorry that you are going through this please work with a contracts/ business attorney in your area many will handle it on a contingency fee basis, take care.

    Legal disclaimer: The response given is not intended to create, nor does it create an ongoing duty to respond to... more
  3. Keith Dewitt Peterson

    Contributor Level 7

    3

    Lawyers agree

    Answered . Promissory notes must meet certain requirements. The Note must meet those requirements. If the Note meets those requirements, you may sue the school, but the school may not have assets to satisfy any judgment, thereby making the right to sue meaningless. The question should be if you have any alternative claims against its owners. Some attorneys will take this on a contingency basis. You should seek a commercial litigation attorney to review the documents and advise you of your rights.

  4. Celia R Reed

    Contributor Level 20

    3

    Lawyers agree

    Answered . You should review the note and loan to see if your parents guaranteed the loan in their personal capacities. I am not sure what type of insurance you are referring to, but you sue the entity or person owning the insurance and then the entity or person informs the insurance company of a claim. You should consult with an attorney to see if there are other options.

    Sorry to read of this situation and hope you can get repaid.

    Please note that I am answering this question as a service through Avvo but not as your attorney and no attorney-... more

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