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Legal Ease
Legal Ease, Lawyer
Category: Canada Business Law
Satisfied Customers: 96432
Experience:  I am a practicing lawyer and have also been an online professional for 5 years.
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My business is going bankrupt and I personally guaranteed

Customer Question

My business is going bankrupt and I personally guaranteed one of the creditors. The creditor has summoned me to court on the personal guarantee level for a bill that is $1800 for my bankrupt company. At what point does this affect my personal credit rating? If the court determines I owe $1800 and I pay it right away, does this still negatively affect my credit rating or does it only affect it if i don't pay it after this point?
Submitted: 3 months ago.
Category: Canada Business Law
Expert:  Legal Ease replied 3 months ago.
I am sorry to hear that you were in this very difficult situation.Did the creditor retain a collection agency?
Customer: replied 3 months ago.
No they did not. They are using in house council.
Expert:  Legal Ease replied 3 months ago.

Is the creditor a bank or credit union? Or is this just a private business?

Customer: replied 3 months ago.
It is just a private business. It was a supplier. Unsecured (other than the personal guarantee).
Expert:  Legal Ease replied 3 months ago.

That is excellent news. There is no possibility that your credit rating can be harmed. The reason why is it only someone who has an account with one of the credit reporting bureaus can file a report and it is exceedingly expensive to have this account which is why only very large businesses and collection agencies can do this.

Does that answer your question?

Please feel free to post back with any follow-up questions you may have. If you don't have any then I hope I have earned a 5 star rating but if you don't feel that I have please don't hesitate to reply back and let me know what more I can do to assist you. Finally, please know that even after you rate me I will be here for you and you can ask follow-up questions if you think of them later on at no further charge of course.

Customer: replied 3 months ago.
This company is called Lordco and is an automotive parts company. They are quite large and Canada wide. I strongly suspect they have an account with a credit agency. My question is... being that they have taken me personally to court, does it affect my credit rating based on a court result (if i pay the ruling amount right after)?
Customer: replied 3 months ago.
Also all someone has to do is go to a collection agency to get the amount collected which would hurt my credit rating correct? But i would assume they would hurt my companies credit rating. How does it work with a personal guarantee? Can they hurt my credit rating directly also or does it go through a different process?
Expert:  Legal Ease replied 3 months ago.
Unfortunately, because it is a personal guarantee you are in debt and it would hurt your credit rating if this went to a collection agency.
Expert:  Legal Ease replied 3 months ago.
I didn't see your first post until now. I was earlier responding to the second post.Your credit rating will be improved if you pay off the debt butbif there is a judgement it harms your rating and then on the record it would say there is a judgement and then it will be marked as paid off if you pay it off.The best you can do is try to find out if they have an account and if they do then pay it off right away. And you may consider asking them to agree not to put in a report if you pay off the debt at once.
Expert:  Legal Ease replied 3 months ago.

Is there anything more I can help you with at this point in time?

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