Am I still liable for a line of credit for a corporation I sold in 1993?
We opened a business line of credit in about 1985 in the name of our corporation. We sold the business in 1993 to a friend and stupidly left him to pay the line of credit. It has been 60-90 days behind for 15 years but has never showed up on our credit report. Now a collection company is calling wanting us to pay it off. Will this ever show up on our personal credit if we ignore it?
The key fact in your question is, "in the name of our corporation." If the line of credit was an asset (or liability depending your perspective) opened in the name of the corporation, and you sold the stock of your corporation in 1993, then you should have zero liability for repaying the loan. It, like the name of the business, any machinery or tools, the customer list, goodwill, and other assets and liabilities are the property of the corporation.
However, if the bank opened the line of credit on the condition that you back it personally, then you may have liability. Take your loan documents, all documents relating to the sale of your business, and letters you received regarding collections to an attorney in your state who specializes in contract law. An hour's worth of attorney's time is not cheap, but you really need an answer from someone who can review your documents and is versed in your state's laws.
Do not ignore this issue, but do not take it as gospel from the collection agency that you have liability for this debt. After all, they are in the collections business and if they can convince you that you are still liable for the debt they will accept your money gladly.
If, after consulting an attorney, you learn that you have liability, you may have some options. See the following Bills.com blog entry for some options to consider when dealing with business lines of credit.
Regarding your question about your credit report, assuming you are liable for the debt, yes it could affect your FICO score. See the Bills.com article FICO score calculation for background information.
I hope this information helps you Find. Learn & Save.