We closed the business Dec 31 07. It's a Gen. Partnership. We owe $90K on bus. credit card. Bus. has no asset. What's our option

Asked over 5 years ago - Los Angeles, CA

During 2008 we transfer about $70k of personal credit card debt to our business credit card to avail of low interest rate.We have a hard time paying the monthly minimum as the interest rate adjust.We still current on all the payment but next month we are going to miss some payment.What's our best option.

Attorney answers (3)

  1. Gary J. Mugg

    Contributor Level 6

    1

    Lawyer agrees

    Answered . Assuming that you are one of the general partners, you are personally liable, and so you can use the same remedies you would have used for your personal card. Call your credit card company and ask them to restructure your payments. Many credit card companies have hardship programs that allow you to settle at less than the whole amount.

    gjm

  2. Bruce David Abel

    Contributor Level 10

    1

    Lawyer agrees

    Answered . Partners in a general partnership are liable for the partnership debts. Furthermore, in this case, the debt was initially personal and then transferred to a business card to take advantage of a lower interest rate, which even strengthens the case that the partners are liable.

    Your best course of action would be to contact the credit card company and negotiate a reduction of the outstanding balance, a reduction of the interest rate, and arrange for a payment plan. This type of settlement generally results in lower payments and allows the debtor to retire the debt sooner.

    Credit Card companies are more willing in this economic climate to work with its customers than in the past. However, make sure you negotiate that you are closing the account, not that the account is closed by the credit card company. This makes a difference on your credit rating.

    There are attorneys and companies that help consumers and business lower their credit card debt.

    But try to negotiate on your own first. Don't discuss the transfer of personal debt to the card, but explain the financial hardship and seek the best deal.

  3. Melissa Cari Marsh

    Contributor Level 14

    1

    Lawyer agrees

    Answered . Since the original debt was personally incurred and because a general partnership does NOT afford its owners with any personal liability protection, you will be personally liable for the debt. You therefore have two options to consider: (1) negotiating the debt down to a level you feel you could reasonably pay off; or (2) bankruptcy.

    Since the original debt was personally incurred and because a general partnership does NOT afford its owners with any personal liability protection, you will be personally liable for the debt. You therefore have two options to consider: (1) negotiating the debt down to a level you feel you could reasonably pay off; or (2) bankruptcy.

    Due to the economic climate may credit card companies are willing to negotiate. Your first course of action should be to contact the credit card company and explain your financial hardship (what change in circumstances is preventing you from paying off the debt). You should then ask the credit card company to arrange for a payment plan based on a reduced outstanding balance (eliminate some of the previously accrued interest) and a lowered interest rate (many are willing to lower the interest rate to 7%-9%. If you are able to meet your everyday expenses and pay off the renegotiated debt under the proposed plan,
    great. If not, then you should consider bankruptcy.

    In either case, you should contact an attorney to discuss your personal circumstances.

    Disclaimer: The information provided above is for informational purposes only, does not constitute legal advice, and no attorney-client relationship has been formed.

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