The Business Failed and Five Years Later I’m Getting a Collection Call. – Davedo

“Dear Steve,

My parents started a business in 1998 in PA. I worked for the S- corp for 12 years as president. The firm went of business due to failures over time in managing revenue and costs….I could blame the economy but that’s a cop out. I used easy credit through credit cards to pay bills of mine and occasionally payables of firm. One vendor was doing work and not getting paid but continued doing work. Now, after being told five years ago the firm was insolvent and forced to close, a collection agency has sent me nastygram demanding 38,000 of this old debt to that vendor. I am in a new job and barely getting by but the bankruptcy filing I had to do gave me fresh start (2008).

Can that agency or vendor sue my parents or me for the debts of the closed company….the company had zero assets and posted several years of losses up to it’s demise. The company did not declare bankruptcy just me.


Dear Davedo,

First, let me say clearly that I can’t give you legal advice. You’d need to meet with an attorney licensed in your state to do that. But I can share with you my experience and opinion in the matter.

Did the company formally dissolve with the State? When?

Also, it’s important to know who was obligated for the debt. Was it the company or did one of you personally guarantee the debt?

At the very least, any debt you might have personally owed would have been dismissed in your bankruptcy. Talk to your bankruptcy attorney about debts you may have owed but not listed.

Just remember that because a collector makes a claim, that does not make it valid. At the very least you should immediately talk with your bankruptcy attorney about this and advise your parents if they are contacted they should request validation of the debt from the collector before they say anything else. Their request should be within 30 days of being originally contacted by the collector and should be sent by some sort of traceable means so they have proof of delivery.

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Steve Rhode

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