Forums: Discussions for entrepreneurs and small business.

Hi there,

In short when the business that I`m in with my partner (of which I still don`t own any shares after 4 1/2 years of work) needed some business credit cards I opened up an American Express card to help out. I didn`t realize at that time that I was personally guaranteeing the card. I thought it was on our business line because it`s never shown up in my personal credit report.

Well, fast forward to now, the company now owes a good deal on the cards and have defaulted on payments so AMEX called me and it`s hitting my personal record pretty soon.

What protections do I have being that this is a business card as far as payment is concerned? I know it`s a debt that the business has incurred but how do I shoulder it on the companies books and not me personally?

What kind of lawyer do I need to contact to get advice on this issue?

It`s frustrating needless to say. I`m getting out of this business soon but also wanted to make sure everything is ok with the credit card payments and what not.

~Allen

I think that you`re stuck.  You didn`t say how much money is at stake here, but this is NOT a business card.  You used your credit and your name, address, etc. to open the account, so you do owe the money to Amex.  And they will get it from you, not the company.  It doesn`t matter to them what the card was used for, it was your card and you will pay.

Your claim is against the company.  Again, if it is below $10K then you would be lucky to break even hiring a criminal lawyer to sue the company for fraud.  You might have better luck in small claims court where the maximum award is usually around $5,000 (depends on the state).

However, I sense something that wasn`t said.  You probably have nothing, not even a memo from the company that ties their purchases to them.  In court they will likely claim that it was a personal contribution to the company (I.E. a "gift") and does not need to be repaid.

Maybe you can ask the company IN WRITING that they either give you the cash to pay the Amex bill or to give you all items and equipment purchased on your card.  You want their response IN WRITING.

Next, call Amex and try to work out a payment plan.

I hope that you are just young and inexperienced rather than older and really stupid.  What have you learned here?

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Steve Mann
Internet Videographer
MannMade Digital Video
My Email

Almost all credit cards want a person tied to the responsibility of the card instead of a business.  They know many businesses will fail and may leave with a great deal on the credit card, but they know they can do more with an individual.  The credit card companies don`t care what the business did or does and just wants to get paid.  You should contact an attorney to see if you have any rights, but you may get the debt as far as the credit card company goes.  Stop any charges to the account immediately!!! 

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Natalie Berrett
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Yeah, what you all have said is what I`ve come to the conclusion on. The account is cancelled already and we`re trying to figure out a payment plan for the card. It will definately get paid off, even if I have to work 3 jobs over the next 10 years to pay it off.

Just frustrating that`s for sure.

Lesson learned: Get ownership papers in a company before you start working and don`t depend on the good word of the others and secondly don`t open up a credit card for the company unless you own the company yourself. Cause no one else will treat it as important as you will.

Life goes on.

Thanks for the advice and comments.

~Alllen

How much money are you talking about?

Have you tried writing the company a letter asking for the money or the equipment purchased on your card?  If you want to pursue it in small claims court, the limit is usually $5,000 in most states.  Some are higher, some lower.  The "demand" letter is a prerequisite to a small claims suit.  You stand a pretty good chance that the company will inadvertently admit their fraud.  By the way, if the company is not incorporated, you sue both the company and the principal owner.  This way if the company is broke, you may still get a judgement against the principal owner.



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Steve Mann
Internet Videographer
MannMade Digital Video
My Email