Legal Question in Credit and Debt Law in Pennsylvania
credit card--business
My husband opened 3 business credit cards while in business with some friends for about a year. He was bought out in the spring of 04, and he and the 1 partner called the 1 credit company saying as much. Earlier this year, the remaining partner closed the business, and the creditors starting calling our house. Only 1 is showing up on his credit report as being closed (unpaid). The other 2 have been threatening to sue him for a few months. Is there any chance that he could pay back only whatever was owed at the time he left or his share? My husband thinks the 3 were no more than $10,000 total at that time, maybe less, whereas now they are close to $40,000 due to additional charges after he left plus all the interest. Why should he have to pay all this money for something he thought was not his responsibility? Also, since he and his partner told the 1 creditor that he was leaving the company, could that help his case, even if he is not sure who they talked to or when? Shouldn't that call have been recorded? He asked each for a copy of his signature/personal guarantee. Two have not responded and the 1 that my husband called when he left said that they don't need a signature; once you use it, you are responsible. Help!
2 Answers from Attorneys
Re: credit card--business
When a credit card or other debt is incurred, the cardholder is liable for all charges on the account until paid in full. Those include all the terms of the contract such as late charges and interest. Any other person that my be liable to your husband does not prevent the creditor from recovering the whole amount from your husband.
Accordingly, it may make sense for your husband to consider a bankruptcy. If he is eligible, the entire debt will be eliminated without paying anything toward it.
I trust this answers your question but feel free to call or E-mail on a free initial basis.
Re: credit card--business
You asked about credit card responsibility.
You need to speak with an attorney about your options regarding this debt. Business debt is not like personal debt and the business debts may come across as business debts.
Your first course of action is against the remaining business owner.
Problem is that your husband would be liable for the entire debt under joint and several liability. That means that each signator/cardholder is responsible for the entire debt. The CC company will simply collect from the person who is easiest to collect from.
This is like a joke. Three friends are hiking in the woods. One asks what happens if they see a bear. Another friend says well I guess we'll just have to outrun it. Last friend says 'Nope, I don't have to outrun the bear. I just gotta outrun one of you guys.'
Essentially, you need to feed one or both or the other owners to the CC company.
Call me if you'd like to proceed.
Regards,
Roger
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