Is there anything the collection agency can do to me if I don’t pay on a corporate loan?

I sold the assets of my S corporation. 1 month after the asset sale was completed the new owner wanted to get rid of a piece of equipment that I had leased. I don”t want to pay the early termination fee of $900 that the company is trying to collect. they have turned it over to a collection agency. I did not sign a personal guarantee. The piece of equipment has ben returned to the company. I have kept the corporate name.

Asked on October 15, 2011 under Bankruptcy Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You say you sold the assets; did you sell the company itself? If you sold the company (e.g. sold the stock or shares), then it's not your issue at all. If you simply sold the assets but no the company, the company is still liable for the loan it took out, unless and only to the extent it assigned this contact to the buyer (i.e. the buyer explicitily or expressly took over the loan); that's because the oblitgation does not necesarily travel with the equipment, but remains the obligation of the person or business which took it out, except when  someone else assumes the contract or loan.

Of course, if you did not personally guaranty the loan, you personally should not be liable for it--only your corporation. That means that, depending on the situation, you could potentially default on the loan with little consequence.


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