Legal Question in Banking Law in Nevada

Do I have to continue to pay a business line of credit for a business I inherited after the original owner died? My dad died 3 years ago. He left a business to my brother and I. We've been running the business and paying down the debt on the business line of credit. We did so based on the assumption that the line of credit was the debt of the business, and we didn't want nonpayment to impact the credit rating of the business. We didn't bother telling the bank our dad had died because we never had any intention of using that particular line of credit. Recently, the bank stopped sending us the bill. We called the bank and they said the account was moved to "deceased status." They refused to give us any further information beyond that. The legal language of the original contract seemed to indicate the line of credit was the responsibility of the business, yet the bank's actions speak otherwise. Can we cease paying the balance down without it impacting the credit rating of the business?


Asked on 3/05/14, 5:13 pm

1 Answer from Attorneys
Paul Malikowski Malikowski Law Offices, Ltd.

Usually, the debts of a small business are personally guaranteed by the principal owner(s). In the event of a guarantor's death, a creditor's claim may arise, depending on the language of the debt instruments. In that case, the guarantor's probate or trust estate is required to notify the lender, and resolve the documented claim. Failing to do that may give rise to personal liability on the part of the responsible personal representative(s).

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Answered on 3/05/14, 5:25 pm


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