Legal Question in Banking Law in Minnesota

I started a business with 2 other people. We got a loan from a bank that myself and one of the other partners guaranteed. The third partner was not able to. We ran the business for a while when the other 2 partners decided to go their seperate ways. Even though they relinqueshed their ownership, they did agree to continue to pay on the loan. The bank payment was $750 per month and the bank agreed to divide the payments into thirds at $250 each. I had my payment taken directly from one of my business accounts. I did not monitor that account too well that first year, and I realized that not only had they taken the 12 monthly payments I had agreed to, but they had also taken 7 additional payments of $250. It turns out that one of the partners (the one that didn't sign on the loan) did not have the $250 in their account at the time the payment was due, so the back went back and redebited my account for the payment. When I realized this, I questioned the bank and they said that since I was a guarantor on the loan they had the right to do that. My question is whether that is true, and secondly, why did they debit my account and not the other guarantor?


Asked on 6/24/10, 9:52 am

1 Answer from Attorneys
Daniel Reiff Reiff Law Office

The bank's position is, usually, correct. I cannot say that it is definitely correct in this case because I do not have the documents in front of me, but that is typically correct. You may want to check with the other owner to see if the other owner had his account double billed as well.

Regardless, it is probably a good idea to retain an attorney to see what can be done about the business debts. Just because the bank does not have a claim against the third owner does not mean you don't. Further, it seems that you have some issues regarding business debts that an attorney could help you with.

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Answered on 6/24/10, 1:12 pm


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