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  1. #1
    Join Date
    Nov 2012
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    Default Personal Loan for Business That Went Bankrupt

    My question involves collection proceedings in the State of: CA

    I borrowed money from a wealthy relative in 1999 to help fund my new business. The note is secured by nothing other than a letter. The business went BK in 2004. I did not list this person in the BK because it is a relative and was very kind to me. The lender also was kind enough to help support me from 2004-2008 with no written agreement between us. The lender understood that I would not be able to pay these loans until I received my inheritance. I rec'd part of those monies in July and as soon as this relative knew I was able to pay them back they requested to be paid in full, which I did in August. They then requested payment for the "business" loan as well. I assumed (wrong) that because the business was now defunct they had written it off as a loss. They are claiming that it was a personal loan. Is there a statute of limitations on a personal/business loan?

  2. #2
    Join Date
    Sep 2011
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    Default Re: Personal Loan for Business That Went Bankruptcy

    Are you really going to put the screws to a relative that has treated you this well?

  3. #3
    Join Date
    Nov 2011
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    12

    Default Re: Personal Loan for Business That Went Bankruptcy

    Was the business incorporated or a DBA ? Did the "letter" stimuplate if the loan was given to you or the business, include repayment terms? Did the person giving the loan materially participate in the business? If the loan was not shown as a business debt in the BK - did you consider it a persoanl loan that you chose to later use to invest in the business? Did the "letter" include joint liability for the loan including both you and/or the business for repayment?

    Why not just make payment arrangements with the "relative" that was "very" kind" and supported your entreprenurial efforts? Or are they demanding full payment and you are not able to comply?

  4. #4
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    Default Re: Personal Loan for Business That Went Bankrupt

    Quote Quoting moonties
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    I borrowed money from a wealthy relative in 1999 to help fund my new business. The note is secured by nothing other than a letter. The business went BK in 2004.
    So this was a business corporation or LLC, and you put the actual business entity through bankruptcy? You can document that the money you borrowed was sequestered in the accounts of the business and not diverted for your personal use?
    Quote Quoting moonties
    The lender understood that I would not be able to pay these loans until I received my inheritance.
    So the understanding in relation to all of the loans was that you would pay them once you received your inheritance? And that first happened, in part, this year?
    Quote Quoting moonties
    Is there a statute of limitations on a personal/business loan?
    Yes, but if you are stating that you didn't breach the repayment agreement until this year that's not likely to be a problem for them.

  5. #5
    Join Date
    Sep 2011
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    OH10
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    17,019

    Default Re: Personal Loan for Business That Went Bankrupt

    It appears as a DBA, it was the equivalent of a personal loan. It also appears it was given with no interest expected.

  6. #6
    Join Date
    Nov 2012
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    2

    Default Re: Personal Loan for Business That Went Bankruptcy

    Quote Quoting michiganguy
    View Post
    Was the business incorporated or a DBA ? Did the "letter" stimuplate if the loan was given to you or the business, include repayment terms? Did the person giving the loan materially participate in the business? If the loan was not shown as a business debt in the BK - did you consider it a persoanl loan that you chose to later use to invest in the business? Did the "letter" include joint liability for the loan including both you and/or the business for repayment?

    Why not just make payment arrangements with the "relative" that was "very" kind" and supported your entreprenurial efforts? Or are they demanding full payment and you are not able to comply?
    The bus was originally a DBA, then became an LLC.
    The letter was written by me to her, and did not include payment terms, other than expressed when able.
    The person did not participate in the business in any way.
    The money was used for the "start-up" of the business and was not used for any personal matters.
    No, it only stated me.
    She is requesting full payment plus 10% interest on 55k compounded over 12 years (yipes)
    This is my sister, who jumped on all loan repayment when we rec'd our 1st inheritance distribution. The second part of the "cash" part of the estate will be distributed in 2013.
    Thanks for your reply.

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