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Ely, Counselor at Law
Category: Legal
Satisfied Customers: 102584
Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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Hi, Im in Texas. I sold my business in 2008 for cash and

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I'm in Texas. I sold my business in 2008 for cash and note. After note payments stopped for a long period of time, we ultimately reached a settlement. The new note is now in default. Efforts to receive payments have mostly been ignored. The note is subordinate to a senior creditor, but it is secured by a personal guaranty. What are my remedies to collect?
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my replies.

I am very sorry for your situation. At this point, you have not filed suit yet, correct? Also, how much is still owed to you?

This is not an answer, but an Information Request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.
Customer: replied 4 years ago.

I filed a suit in the first matter when payments were not made. We reached a settlement in 2011 and this "new note" was part of that settlement. I have not filed suit for this current matter. Over $55,000 plus interest and collection costs is owed.

Thank you, J. Just two more questions, please:

1) Is the original debt owed by the business, or the individual, per the agreement?
2) Is the business incorporated?
Customer: replied 4 years ago.

The debt is owed by the business (I believe it is an S-Corp). The guaranty is personal.

Thank you.

Believe it or not, I know very much what this feels like. I will not go into more details, but suffice it to say that I have been in your shoes, more or less. It is a very difficult feeling, especially because you have little control over whether or not they would actually pay you out, with a constant worry that they may simply run the business under and walk away, and it is maddening. I relay my condolences, because I know very close to what you are going though.

What are my remedies to collect?

You can sue again, although this time you may attach both the business and the guarantor. Allow me to explain.

To sue in a state court, one needs to have a "cause of action." There are numerous causes of action, such as "breach of contract," "negligence," "fraud," "unjust enrichment," etc., as well as causes of action rooted in statutory law. Every state has their own although they are very similar to each other in every state.

Here, you have come into another agreement with the business and the individual via the agreement in prior suit, which they have now violated. As such, both are liable for breach of contract.

The essential elements of a breach of contract cause of action that must be prover are:
(1) There is a valid contract;
(2) The plaintiff performed or tendered performance according to the terms of the contract;
(3) The defendant breached the contract; and
(4) The plaintiff sustained damages as a result of the breach.
Valero Marketing & Supply v. Kalama International, 51 S.W.3d 345, 351 (Tex.App.- Houston [1st Dist.] 2001, no pet.).

Now, you may not be able to get as much out of the business if there is already a UCC-1 senior creditor, but whatever you do not get out of the business, you should be able to get out of the guarantor, personally. Ergo, they stand the most to lose, and as such, you may wish to let them know that you would proceed to force satisfaction of judgment after another suit, unless the business abides by the agreement struck, catches up, and continues payment.

If they have already ignored such a request, then the next step would be to file a Plaintiff's Original Petition to pursue this in Court, against both parties.

Good luck.

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Customer: replied 4 years ago.

I already spent a considerable amount with the first suit. I'd like to think there may be other less expensive options. What are your thoughts about placing this with a collection agency? Any other ideas?


I am afraid that aside from a civil suit, there are few other real options. A civil suit is how parties settle contract disputes.

What are your thoughts about placing this with a collection agency? Any other ideas?

This is certainty possible, but the most that a credit agency can do is call and harass them. They cannot sue without your permission. A collection agency does nothing but threaten for payment. If they have ignored you, then there is a good chance that they would ignore a collection agency. Aside from this, there are few other options - I am sorry.

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