Business deal gone bad. I am currently repaying funds used to start a business

I am seeking advice on a situation i am currently in. Me and a friend tried to start a business. He was a silent partner for the business. His mom let us use the credit card to help get started. Well shortly after we started he had different plans which then we went out seperate ways. I am paying back the balance on the credit card that the company used to in the begining. I currently make monthly payments. Past few months have been slow with money and problems and i havent been able to make the agreeded monthly payment of $500 a month. I have been sending him 200-300 due to all i have at the moment. Today i only have enough to make 100 payment on the month untill i can get back on track next mo. He has left me threatening voicemails over the past few months. Now are threatening to get a lawyer to get me locked up or so. I have sent all money to them thru moneygram. So their is a papertrail that i make monthly payments. I was going to send the 100 tommorow and he told me dont send it i can just keep it, its not worth nothing. I told him some money is better then no money. I owe about 5500 on the card yet roughly. There was a balance over 8k. ANy idea what i am facing here. He said they have contacted a lawyer and i am going to pay for it. Like i said threats upon threats. I have never been to court and just would like some advice on what i am facing here

Asked on June 9, 2009 under Business Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Debtors' prison went out with Charles Dickins: you can't go to jail for not paying a debt, AND your friend could face legal liability for trying to threaten you with prison. People may NOT threaten to use the criminal justice system to settle non-criminal situations.

So don't worry about prison unless you stole your friend's money, which it does not sound like you did. What can your friend do? If you owe HIM money (see below), he can sue you for it. However, under the circumstances, it sounds like you would win any such lawsuit--and possibly even be able to countersue him if you chose. The courts don't like to be involved when there's no need; it's a waste of court time and tax payer dollars. In this case, you have demonstrated that you're trying to pay your friend back by making partial payments whenever you can; since all a court could do is to order to to pay your friend back as quickly as possible--which you're already doing--there isn't really anything a court would do to you and it might conclude your friend is misusing the court system and harassing you. You might send (and his attorney, if he has one) a letter indicating that you intend to pay him back as quickly as you can; listing the payments you've already made; and also committing to some very "safe" payment schedule, such as $50 - $100 a month. (You can always  pay more or faster, cash permitting.) If push comes to shove and you end up in court, this would be further evidenc of your good faith.

However, first--ARE you even late on the loan? Is there any document or agreement setting out when you had to repay the money? If not, it'd be hard for your friend to argue you're "late" when there is no schedule *and* you've paying anyway.

Also, do you owe your friend--or his mom? You said it was her credit card. If that's the case, she's the person you should be dealing with, not your friend, unless he has a piece of paper  saying that she's turned the debt over to him.

Short answer: don't sweat the threats and keep doing what you're doing--paying when you can, and keeping the lines of communication open. Only change if that you should put communications in writing, so as to have a record of them.


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