January 2001 - Small Business News

My questions are- 

A) What should/can my partner do to limit her liability (to a maximum of 50% of the outstanding debt) especially when you consider that her estranged husband has contributed NOTHING towards maintaining their 5 year old boy who lives with us in our care? 

B) My partner was thinking of writing to her credit card company (removed) to ask them to split the balance in two and open a new account for her to pay off. She is an "additional" cardholder and it did occur to me that she may be able to "walk away" from the whole debt. What course of action is best? 

C) With regard to question B) what course of action  should she take when negotiating with 2 other lenders ((removed) I think) regarding joint loans? My partner left her husband in August 2000 and one of her reasons for leaving was that her estranged husband is "irresponsible with money". Since then we have been building a happy home together but a dark shadow of debt remains over my partner's head. 1. Since leaving her husband she has sent him money every month towards the mortgage, bank loans and credit card. 2. Their house is on the market and should have sufficient equity to cover their debts. 3. The utilities and Council tax are now HIS responsibility. 4. He, unfortunately (and against assurances to the contrary), is still spending on their joint credit card. 5. Worst of all, he gave up work at Christmas (December 2000) and is currently "between jobs"! 

ANSWER 1

Looking for hard and fast rules where debt is  concerned only applies when the courts are  involved. Doing 'deals' and limiting exposure is all about negotiation skills. For instance, call the credit card company and tell them you are not together and that they should cancel your name. Admit to your own spending and make proposals to reduce the balance. Totally refuse any claim they make on you for the whole balance you are not responsible for your husbands spending when you had no part in the choice to buy whatever he did - and possibly he used the card prior to you becoming an additional name, in which case you have absolutely NO responsibility for that.

 It is debatable if you have joint responsibility for the debt since then its about negotiation - do they want you to pay your debt willingly, or sue you for your husbands debts, when the husband is not even paying for his child's upkeep? I 'suggest' a judge would not be impressed! A registered letter to the card company should follow your discussion. A joint debt cannot be limited to, say, 50% by the debtors choice. The bank/lender involved will probably not reduce the security they hold, and this is fair as the company has shareholders and it is they who suffer the loss that's the world we live in. They would certainly not release the most reliable party your partner. Again, negotiation is the key 50/50 would be a great result from what you say. Get the house sold and by the sound of it, the sale should be handled by you or a sale may never happen. Utilities and council tax should be confirmed as in your husbands name only. You can ring these services direct for this information and you may have to write to them if they ask you to. Do not divulge your own income and expenditure to the lender, nor your husbands "between jobs", and always bargain as tough and as low as you can, in every respect but as hard is it can be at times remain courteous and professional.

QUESTION FROM CASE 2

Is My Loan a Business or Personal Arrangement?

I have loaned someone in April 2000 some money on a personal basis and payment was by cheque which was received and cashed. The recipient knew I needed the money back in August 2000. Subsequently his company went into liquidation and he now says he has no funds to repay me. Can I chase him for this money legally? 

ANSWER 2

From what you tell me, the loan was personal and therefore has nothing to do with a business liquidation which only covers the limited liability afforded to incorporated businesses. If, however, they were a sole trader, and not a limited company, it is likely that personal bankruptcy was initiated, and this will involve personal debts you can add your name to the list of creditors if there was any pay out from personal assets. If the debtor added your name to their company liquidation, and the debt was personal, you should notify the liquidator (the debtor will at least have to give you the liquidators name if they are attempting to get rid of you through a business debt). 

When you get the liquidator details, call the liquidator and ask whether your debt was involved and if there is no pay-out, or a very limited pay-out. Inform the liquidator that it was a personal debt and had no place in the liquidation. Confirm your conversation in a letter to the liquidator and debtor, then pursue the debt through the county court. At no time do anything that could be construed as accepting your debt as part of the liquidation, unless that is your intention for example, if you do not insist on talking to the liquidator, they may send you a form to complete that amounts to adding your name to the liquidation when all you wanted to do was find out what was going on. 

The onus 'should' be on the debtor to prove the debt was a business one, as a business arrangement would 'normally' have some formal documentation. No  documentation should imply no formal lending agreement, therefore, a personal arrangement. An I.O.U. is an important document if  a debtor name is stipulated, i.e ... 'I (the debtor) agree to pay John Smith (you)  being personal, ...'Jones Corp Ltd' (the debtor) agree to pay John Smith (you)' being a business debt.  As to verbal contracts it is sufficient for an individual to convince a county/High court judge of the existence of a spoken agreement to win a case, however difficult that may be. "His word, or mine" has a place in the legal process. 

QUESTION FROM CASE 3

Can I Remove Unfair Court Judgment?

I am writing to you because I believe a member of my family is  being treated unfairly. They had finance for a motor vehicle got behind in payments and agreed a payment scheme  of UKP300 per month of the arrears of payments. The payment was made and everything seemed to be fine. A month later we received a notice saying the company was applying for repossession of the vehicle and to attend court on a specific day. Obviously they were upset because they had made the payment as agreed and had paid over UKP3500 of the debt already.

We attended court on the due date. At which point the companies solicitor also attended. The magistrates asked the solicitor for affidavits and other information about the request for a repossession order. However he could not provide any information at all including any record of how much had been paid to the company. The magistrate was very angry and rebuked the solicitor for not attending the court with the necessary information. He then ordered that the company provide a list of information including affidavits and he set a  new ate for the court hearing. We attended on that date and the company's solicitor did not attend. The magistrate threw the case out and was livid that they were not informed by the company that they were not attending. He suggested that we contact the company and find out what was happening. We subsequently found out that they had somehow gain a judgment for debt for the full amount from Northampton Bulk processing centre for county court judgements.

All this happened in 1994! Since then my family have been repeated bombarded with letters about the so called debt. At no point did they receive a court summons or opportunity to defend the case. The judgment has been registered and the company are hounding my family for UKP4000 and have recently threatened bankruptcy. We are not sure what to do but all we do know is that we got into arrears and agreed to pay this and since then we have been hounded by the company and repeatedly threatened. What is your advice!

ANSWER 3

There  appears to have been two separate court claims issued against you. This 'mix up' is not surprising considering the fashion in which the creditor attended the court (or not as the case was the second time round). This is the type of case that credit repair was meant for credit repair and you should get in touch with a credit repair company drop us a further line if you need help with this, or contact your local county court office. The credit repair will remove the county court  judgment, and you should then agree payment with the creditor it is debatable, in this case, that he creditor could reissue a court claim see consumer debt help about time limits for old debts. Offer the creditor a payment starting at 10% of the outstanding balance and let them work hard to get  more. The one issue with your particular circumstances is that you 'probably' received two separate court  claims. Should those claims be many months, or years apart the creditor may claim that it was reasonable to expect the debtor (you) to know that the second claim was a fresh attempt at taking you to court... but then again, you are not a lawyer, or are you? :))

 2. BUSINESS DEBTEBT

Why Are Invoices Not Paid by Big Companies?

QUESTION

A regular customer has not paid an invoice dated  30th October 2000 with credit terms being 30 days from date of invoice. They have since paid their November invoice. We have sent a copy invoice as they requested but it still remains unpaid. What's the best course of action, speaking to them on the phone doesn't seem to get me anywhere  . Brief Outline We are a commercial contract cleaning company working only in our local  area. This customer used to be locally owned until it was bought over by a national company. Their accounts are handled by their Head Office in southern England.

ANSWER

The fact that they have paid November says;

a) They have cash flow

b) They are  willing to pay

c) They may not have the Oct invoice at head office

Most large companies have a paper trail of gigantic stupidity and  60 days to pay is common. Get the name and number of the accounts person at their head office and ring them. Sending a letter is probably pointless as the letter needs to find the same person as you need to talk to. If you know of no reason why they have not paid it is probably an 'administration' problem, therefore, track it down now and make a note or where it went wrong and rectify it for all further invoices.

3. NET INFORMATION

UK Net Problems Continue

The Motley Fool an Investing & Finance Web Site May Pull Out of the UK One of the web sites that Credit to Cash has been critical of 'The Motley Fool' may close its UK operation as a follow up to closing the German site. We have been critical of the site in relation to debt information as the 'Fool' (as it is called) believes that debt management is a service that requires little skill and is best tackled by talking to similar indebted people as an answer to the problems.

We believe their insistence on talking, and not proving the debt service, was a tactical way of ensuring people remain on the Fools message boards, by always seeking answers, but never getting the solution.

We say, "deal with debts immediately, confidently and with purpose, or get someone else to do it for you".

4. CAN YOU HELP

We start a new section in this newsletter called 'Can you Help?' . The purpose of this section is to help provide answers for those of you seeking information, contacts, web links or anything to help you start a business. To start off we have:

A. AU PAIR / HOME HELP