What to do about a business loan and a discharge?

Get Legal Help Today

 Secured with SHA-256 Encryption

What to do about a business loan and a discharge?

About 15 years ago, we had a business which took out a line of credit. We closed the business 2 years later and paid the interest payments personally. I found the loan papers and find that it was under the corporate name and was signed by my husband as a corporate officer. I see where no personal guarantee was signed pertaining to this note. Due to financial difficulties, I would like to ask the bank to discharge this debt. Have we sent precedent that would have the lender expect us to pay the balance (which is approximately $14,000; original amount was $20,000)?

Asked on December 31, 2012 under Bankruptcy Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

From what you write, it appears you are not obligated for this debt. If  the loan was taken out by a corporation and was not personally guaranteed by you or your husband, you would not be responsible for it; a corporate officer or an owner of a company is not responsible for the company's debts simply because he is an owner or officer. The fact that you have voluntarily been making payments would not, by itself, indicate that you are obligated to continue paying, any more than you would be obligated to, for example, take over a sibling's credit card debt if you happened to voluntarily make some payments for him or her to help out. To avoid confusion, you should send a letter to the bank (sent some way you can prove delivery) with copies of the loan paperwork making clear that it was a corporate debt; it was never personally guaranteed; you never assumed the debt or otherwise obligated yourself to it; you had previously voluntarily chosen to make the interest payments but will now be discontinuing doing so and will also not be paying the principal balance.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption