What to do about a business loan and a discharge?
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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 11 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.
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