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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41220
Experience:  Run my own successful business/contract law practice.
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A few years ago I started an S-Corp in the commercial interior

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A few years ago I started an S-Corp in the commercial interior finish out business. I had multiple subcontractors working for this corporation doing various skills.

In 2009 we were doing more work for one particular client than others. I knew better than to place all of my eggs in one basket, but we ended upside down with the finances because they were slow to pay.

This strained the cash flow of our company.

Long story short- we ended up having to close the offices and work out payment arrangements with the customer to finally get everyone paid as best we could. By the time we had been paid and all expenses, debts and bills were accrued for the business it was overwhelming.

I was able to pay off most of the subs and vendors, but a couple had large balances. I tried to personally work out a payment plan with them to pay what was owed.
We had a baby due and now I had no income, so we moved to Louisiana to find work that really never worked out. I now have a job but all that i make goes to child care, utilities, gas and bills. all the while still trying to send $25 or $100 when possible.

after some years past I have now received a letter from an attorney demanding money in full for invoices that were not paid in from a subcontractor 2009.

The corporation was dissolved in 2011 showing a loss. The attorney is coming after me personally and not the corporation. I really dont have any money to fight this and needed some advise or recommendations as to how I should deal with this?
Thank you for your question. Please allow me to assist you with your concerns.

I am sorry to hear that you are now in this situation. However I must ask, as this really changes my potential answer to you--did you formally or ever pay anything toward this debt? If you did, when was the last payment? Did you ever formally agree to pay this debt as an individual, meaning did you ever assume this debt as personally yours? How much is this debt?
Customer: replied 3 years ago.

Yes, the corporation paid about $2,500.00 towards the debt with last payment being in 2010.


 


No I never formally agreed to personally pay the debt. I did however have a phone conversation discussing the situation with the owner of that company and expressed my apologies along with what my intentions were. I did not want to file bankruptcy the over all debt is at $15,000.00.


 


At the end of everything, I would have accepted the debt personally. Just because I wanted to act with integrity. Although the reason I set up the corporation and carried insurance in the first place was to give a level of protection to my family and person.


 


 


 


 

Thank you for your follow-up. I appreciate the detail.

The reason I asked about whether or not you made payments outside the corporation is because that can create a claim and argument that the debt was formally 'assumed' personally by you, making you personally liable for it. Based on your facts I am not sure that took place if you never made payments outside the corporation. But please be aware that if you were the sole owner of the S-Corp, the creditors can potentially file suit against you by claiming that you and the entity were really the same 'alter ego', and use that as a basis to attempt to pierce the corporate veil of this entity and therefore try to get at your personal assets. Discussing on the phone, if recorded, that you were going to cover the debt, may be deemed an assumption also.

Likely the best suggestion may be to let the attorney know that if he is serious in pursuing you personally, you will simply file for bankruptcy and be done with it, but if they actually want to get paid at some point, you will instead agree to a signed payment plan that would permit you to slowly pay out this debt to them. Unless they want to lose everything, I really do not see them as permitting a bankruptcy as a viable option.

Good luck.

Dimitry K., Esq. and other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

Good advise! Thanks...

You are most welcome, glad to help!

Please let me know if I can assist in any other way. Good luck to you!