

Ask HN: 20k In Debt from company collapse, what are my options - measlyacoustic

Long story short the company that I was a founder in collapsed and after it was all said in done I am in debt ~20k to other companies for contracts and such. When we signed up for these products with other companies I just used my name and address when signing up just for simplicity sake. But, and here is the big but I think. On all of the contracts when they ask for the &quot;Company&quot; I always put the company that I was working for. But now that the company has collapsed it seems I am liable for the amount due as the companies are threatening legal action against me. What are my options? The last thing I want to happen is to be sent to collections and destroy my credit. I currently do not have the 20k to pay them out. I am looking at getting a second job and then make monthly payments until the contract is paid off. Any other possible options?
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dylanhassinger
Yes, my understanding is you are liable for the debt. Good news is: 20k is not
that much (it's less than I owe for college), and it's probably unsecured debt
which means you can tell them to go screw themselves for now.

Options would be:

\- bankruptcy. clears your debt but leaves a mark for 7 years on your credit.
it's debatable whether 20k is worth doing this over

\- payment plans. this will take forever

\- don't pay, let them get upset and possibly sue you, then settle with them
when you can. This is probably the approach I would take. You would possibly
be able to settle for as low as $5k. You might even call them up now, explain
the situation, and start trying to negotiate settlements.

I _highly_ recommend listening to The Dave Ramsey show and reading his book
The Total Money Makeover. He walks you through how to get out of a mess like
this.

feel free to contact me if you'd like to talk in more depth. I have been
through bankruptcy and learned a lot about this stuff. d@dylanized.com

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sharemywin
this will mess with your credit.

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silverlight
As others have said, this totally depends on:

1) What your company's setup was. If it was an LLC, Corp, or other such
entity, then you in theory have at least some protection, assuming as well
that

2) When you did business with this other company, you can show (legally) that
they knew they were doing business with your company, and not you as an
individual. What you put down as your address probably doesn't matter, what
matters is what the communications between you said (e.g. did you contact them
from a company-related email address and say "I'm ordering X for my company
Y?"), did you sign the contract as a "Member" or "Manager" or "CEO" or
whatever of your company, etc. This is what it would come down to in court
that you'd be trying to prove (assuming 1) was in place).

As with any situation like this it's all in the details of your specific case,
get a lawyer to talk to you for an hour and they can give you a good overview
and it's worth doing if you might owe $20k. For example, even if 1) and 2)
check out, if the debtor can show that you paid yourself money from your
company before the company paid its outstanding debts, they may be able to get
at least some money from you personally even if the company's accounts are dry
(basically, you can't just take money and run from a company and leave company
debts on the books). That's just one example of what might complicate your
situation, IANAL and there are probably a lot more. So, again, get a real
lawyer.

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tptacek
(IANAL) You only have the contract liability protections of a limited
liability company if you execute contracts _as the company_. You know when
you've done this, because most vendors are hesitant to sign contracts with an
LLC that's only a few months old.

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moocow01
Sounds like a good question for a lawyer but that being said most
(established) companies will work with you if you talk with a rep and explain
your hardship/inability to pay in full. The business rationale for this being
that going after a non-paying non-compliant customer will likely be more
expensive with lawyer/collection costs than forgiving a portion of the amount
owed.

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itazula
If the shoe were on the other foot, you would want to be paid what is owed,
wouldn't you? Look at your budget, speak honestly with those to whom you owe
money, and work out a payment plan. If that absolutely can't be made to work
within your current budget, borrow from lenders like friends and relatives
(parents and siblings). Write everything down including the amount borrowed,
and the interest you agree to pay (if any). Make sure you record all payments
made (it is so easy to lose track of this information). I DO understand the
need to claim bankruptcy in certain situations, but the burden of 20k can be
divvied up.

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chris_va
Get a lawyer, it will almost certainly be cheaper than paying your defunct
company's debt (unless you were a sole proprietorship, in which case you are
probably on the hook still).

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mschuster91
Ew. How were you incorporated?

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sharemywin
can you get a loan or credit cards to pay them off and then pay on the credit
cards? might look at prosper.com or something like that. friends, family.
combination of all of the above.

