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CalAttorney2, Attorney
Category: Legal
Satisfied Customers: 10244
Experience:  Civil litigation attorney for individuals and businesses.
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3 owners at a small boutique in California. I owner takes a

Customer Question

3 owners at a small boutique in California. I owner takes a credit card in his name for business. He has additional cards issued to the other 2 people, but he is the account holder.
Year later, the business isn't doing well. The card holder claims bankruptcy on that credit card & goes thru the process. The main cardholder is no longer is business at the boutique
But is now attempting/demanding to collect money for what the others charged on the credit card. If that person claimed bankruptcy, he paid nothing for the debt. Isn't it illegal for him to try to collect money he never paid to the creditor?
Submitted: 1 year ago.
Category: Legal
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

Whatever contract or agreement that the 3 parties had with regards ***** ***** would be in effect regardless of the primary accountholder's bankruptcy.

(Remember, the bankruptcy affected the accountholder's contractual relationship with the creditor (the card company), it did not change their contract rights with other parties).

There are some additional nuances to this with regard to the trustee and creditor's rights, that would affect their claims to this repayment (most of these become moot in the vast majority of bankruptcies), but they do not affect the business partner's liability in any way.

Customer: replied 1 year ago.
If they failed to make an agreement on paper or verbal, can the cardholder still pursue a case in court to collect from the 2 parties?
Expert:  CalAttorney2 replied 1 year ago.

Yes, an oral contract is enforceable, just like a written contract. The problems with these agreements obviously lies in it being much harder to definitively state what the terms were (they aren't spelled out in a contract), but you can still sue to enforce an oral contract, and the enforce the judgment.