We went into business with a friend a few months ago. It didn't work out for us so we pulled out. But before we pulled out, we purchased an insulated Van from Chevrolet and a $10,000 line of credit. My wife signed for both although both were put under the Corporations name. A few weeks later we pulled out but our partner decided to stay and continue on with the business. She said she would go to the lawyer and have my wife's name removed from the Line of credit and the van purchase and she would pay them both off. So far she hasn't had her name removed but she has made 2 payments. We don't trust that she'll continue to pay them both off. We would like them both in her name or to just take my wife's name off relieving her of any responsibility. What recourse do we have? Would a notorized letter from our former partner saying that she's responsible for both be binding? Thanks.

Hello Randy:

The loans appear to have been made to your wife. The bank isn't going to let her off the hook just because she wants off.

I'm not sure what you can do. You've given the van to the corporation and unless you control the corporation, the corporation doesn't have to give it back - unless, of course, you've signed an agreement with the corporation about the van - and you didn't, did you?

It looks like you've also given the cash to the company. Do you at least have a note or an agreement with your former partner or the company specifying that it was a loan??

It doesn't look like a loan. You didn't even say it was a loan. You said you "pulled out", but I don't know what that means?? Do you still own stock?? Are you officers of this corporation?? Maybe this money and van were your contributions to the corp. Do you have anything in writing that says it ISN'T? Did you, or do you have a lawyer??

I think you're screwed!

excon

We went into business with a friend a few months ago. It didn't work out for us so we pulled out. But before we pulled out, we purchased an insulated Van from Chevrolet and a $10,000 line of credit. My wife signed for both although both were put under the Corporations name. A few weeks later we pulled out but our partner decided to stay and continue on with the business. She said she would go to the lawyer and have my wifes name removed from the Line of credit and the van purchase and she would pay them both off. So far she hasn't had her name removed but she has made 2 payments. We don't trust that she'll continue to pay them both off. We would like them both in her name or to just take my wifes name off relieving her of any responsibility. What recourse do we have? Would a notorized letter from our former partner saying that she's responsible for both be binding? Thanks.
Not likely. If the lender wanted signatures, they wanted assurance that the debt would be paid. They will hold your feet to the fire until they are completely paid off. You friend needed the money to start the business and likely doesn't have even more money to pay it back at this time. Some options might include paying off the debt yourself and signing an agreement with your friend to buy it from you. You then become the "bank" and can go to court to collect if necessary. Going into business with someone else is always risky and it is very wise to consult a lawyer first to consider all of the possible outcomes and costs. Yea, it can cost money, but look how much this is going to cost. Sorry. (For any else reading this, ths SBA, Small Business Administration has useful guide books before joining forces with someone to become the next Bill Gates. (whose dad by the way, IS an Attorney)