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Asked about 2 years ago - Yonkers, NY
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A credit card called my home & said that my husband & I were responsible for "business credit card" for $20,000.
How can we start to get out of this mess?
I'd consult a bankruptcy attorney, but a few things to consider right away:
If by payroll, you have employees other than yourself or your husband, let them go. Do not permit them to continue to work knowing you cannot pay them. In New York, my recollection is you may be personally liable for that.
Second, you may well be personally liable for payroll taxes relating to those employees, so get those paid. Another reason to not let them to continue working and accruing payroll liability.
With regard to the credit card, without seeing the terms and conditions, likely, the company required your personal guarantee in connection with issuing the card to the company, so you may well be personally liable. Do not charge anything on the card that you cannot pay off personally.
If the card is in the name of the business, he should not be liable. But if the company had the card issued in his name he may be liable. That would depend on what the credit card application said and whether the company has been paying the bills. He should not be liable for other bills of the corp, unless they are able to "pierce the corporate veil." This happens when the shareholders ignore the corporation and treat the assets as if they were the shareholders' personal assets. Although it may be too late, be sure the corp has a separate checking account and keeps minutes of its Board and shareholders' meetings regularly to protect against such an attack. Beyond that, it sounds like it is time to bail out of the company. He should sell his shares if possible, and seek another business opportunity. He should consult a good business lawyer.
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DISCLAIMER—This answer is for informational purposes only under the AVVO system, its terms and conditions. It is not intended as specific legal advice regarding your question. The answer could be different if all the facts were known. This answer does not establish an attorney client relationship. I am admitted only in California.
(Bryant) Keith Martin
sbbizlaw.com
The first thing that should happen is to cut as many costs in your company as possible. As painful as it is, human resources is the easiest section to cut. You must let any non-essential employees go.
Second, call the credit card company and get a copy of your initial contract. Go over it with a fine-tooth comb and see if you have agreed to personally guarantee the business card. If there is no personal guarantee clause, unless he has done something to allow the creditors to "pierce the corporate veil," like co-mingle funds, he should not be liable. Consult an attorney and have them negotiate with the credit card company. Something to certainly keep in mind is bankruptcy. Sometimes, the threat of bankruptcy alone is enough to negotiate good deals with your creditors.
Consult a bankruptcy and business law attorney in your area. Credit card companies will try and get away with only what you allow them to.
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