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     | Thursday, June 15, 2000 - 09:54 am  In 1996 my boyfriend (now husband) and a partner started a small business which they later incorporated in 97. As the Business Manager at the time, I called American Express to apply for corporate card under the business name. They opened a corporate account over the phone which we used for business purchases until 1997 when we closed the business (in debt), leaving a balance of about $5000 on the card. Amex wrote off the debt in Nov 97, but a credit agency soon contacted me, saying that when the account was opened that I agreed to be a personal guarantor (I did not) and that I was responsible for the balance. I sent them a cease & desist letter and immediately contacted Amex, asking for "proof" that I signed ANYTHING to the effect that I would personally guarantee the debt, and directing them to contact the business' accountant. They never responded. My husband and I recently bought a home and were pleasantly surprised to see that the Amex write-off did not appear on either of our credit reports. However, I just got a call from a different collection agency who said that Amex sold them the debt, I had 4 days to pay or else it was going on my credit report and threatening to sue me for it if I did not pay. I faxed them a cease & desist letter after speaking with a particularly infuriating representative (who seemed to get some sort of pervese pleasure from his job). Needless to say, he called me back and said that he had gone ahead and put it on my credit report and that they were pursuing litigation and would "get every penny on the dollar" from me. What the *&%$#@!!! My understanding was that since the business was incorporated, I should not be liable for the business debt and my personal credit reports should not be affected. Am I wrong? Now this debt is going to appear on my credit report! How can I stop it and make this go away forever? Please HELP!
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| | Thursday, June 15, 2000 - 10:51 am Dispute it as not yours, and get a lawyer. As I understand it (I'll look for a good citation on this later, I'm late for work as it is) under certain circumstances, a company officer can be held liable (at least to the IRS, I'm not sure about credit debt, as I said I'll look it up and post again later) for company debt. For now, be sure NOT to pay a nickle on this, and dispute anything that shows up on your report. Some of these bast^H^H^H^H Collection people take the tactic of harrasing you, hoping to make you think it's easier to pay than to deal with them. Also, having sent a C&D, I think it may have been legal for him to call you back - if the purpose of the call was to inform you about going to littigation, and if they DO own the debt, they can contact you anyway - as they own it now. That's a BIG IF however, I suspect he's just another high pressure salesman trying to bilk you out of your hard earned money.
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| | Thursday, June 15, 2000 - 11:28 am I'm so sick of these illegal collection tactics. I think the MAIN reasons why collection agencies can get away with these illegal practices is because the victims are afraid to be identified and usually can't afford or find a good lawyer. Either hire a lawyer or post here who they are along with their contact info and your case number. I'd like to know whether American Express sells these debts with personal liability or whether the collection agencies are trying to defraud people. Who is responsible? THAT's what I'd like to know.
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| | Thursday, June 15, 2000 - 01:36 pm This is NOT legal advice, but I was faced with a similar situation before. The thing that "got" me was the legal concept of "piercing the corporate veil". While corporate officers are supposed to have some protection by actions of a corporate entity, the judicial interpretation is that in some cases, the corporation is essentially the officers. That is to say that the CEO of IBM is not the same as the CEO of a 2-person business. In my case, the judge ruled that my corporation WAS me, and that as such, I was responsible for the CORPORATION'S debts directly (California, by the way), even though I had not signed anything that specified I backed the debts personally...only as an officer of the corporation. Now, in your case (I guess your husband falls under the stuff above? ),it sure seems that, if you were not a corporate officer, OR you didn't inadvertently sign a personal guarantee (and I've done that before, too), you should be clear. At any rate, this looks like "get a lawyer" material to me.
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| | Thursday, June 15, 2000 - 02:13 pm I must agree with Lynn - and, like an idiot I forgot to ask you what state you're in so I can look up the appropriate law for you.
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| | Thursday, June 15, 2000 - 04:23 pm Since Karen didn't post anything about legal proceedings I didn't think that the corporate veil was pierced. But even if it was, holding the MANAGER personally responsible for the debts of a corporation would be more than a little weird. Lynn, can you tell me WHY the judge ruled that you were the corporation? This is a matter of personal interest to me, E-mail would do to. Thanks!
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| | Thursday, June 15, 2000 - 06:40 pm Chances are good that she personally guaranteed the debt. Also suggest you read http://www.legalwiz.com/corp.htm
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| | Thursday, June 15, 2000 - 07:39 pm I didn't even contest the contention, because it was patently true. It was just 2 of us holding the offices (set up corp with attorney, all standard stuff), and we, in our minds, were indeed the corporation even though there were no personal guarantees. Perhaps if we had fought it, we may have won out, but the total amounts were less than $15K, and we felt morally obligated anyway. Still, the plaintiffs asserted from the get-go that the corporate veil had been pierced, and we just said, "OK". I sleep better these days because of it. Agreed that it's wierd that an employee who is not an officer can be button-holed. It just cannot be legal unless there is a signed personal guarantee somewhere. Still sounds like lawyer-time.
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