Legal Question in Credit and Debt Law in California

Can a credit card sue an individual for a business credit card even though the credit card is in the business name?


Asked on 9/18/11, 2:33 am

2 Answers from Attorneys

Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Read The Friendly Contract. In the law, there is no such thing as a "business." There are sole proprietorships, partnerships, and corporations. If the card was in the name of a corporation, and you didn't sign a personal guarantee of the corporation's debts, then they have to sue the corporation. Otherwise, tag, you're it.

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Answered on 9/18/11, 3:17 am

What Mr. Stone is saying is that only corporations and LLC's have legal existence separate and apart from their owners. Otherwise the "business name" is nothing more than another name for the owner(s) and the liabilities of the business are the liabilities of the owner(s). In addition, if a corporation or LLC is not funded and operated as a completely independent legal entity, creditors can sue the owner(s) directly and ask the court to "pierce the corporate veil." Such things as not holding regular board and shareholder meetings, not having corporate resolutions before taking significant actions, and especially if the owner(s) treat the funds of the business as if they were just in their own personal account rather than having formal dividends, salaries, etc., are all red flags for a court that indicate the LLC or corporation should really just be treated as a sole proprietorship or partnership.

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Answered on 9/18/11, 4:41 pm


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