Debt After Dissolving Corporation in FL

[johnsonbunch]

Was self-employed for many years in FL and incorporated. I was sole officer, president and operator and paid myself salary. Business was dissolved fall 2008. Only debt left was a $18,000 Business Mastercard in the name of the business with my name below. I pulled an Equifax credit report last week and it does not list this card at all in my personal credit report. Money is very tight and there's no capital to pay it off from.

1. How am I responsible for this debt?
2. If I let it go past due, will it affect my personal credit?
3. Would a business bankruptcy affect my personal credit? Would that be a reasonable option?
4. Any suggestions?

[JETX]

Originally Posted by johnsonbunch

1. How am I responsible for this debt?

The fact that the card had YOUR name on it (even below the business name) very likely means that you personally guaranteed the debt. Fairly common practice for creditors on marginal or new corporations. You need to review the application you signed.

2. If I let it go past due, will it affect my personal credit?

It could, either based on the above, or a possible 'piercing the veil' action by the creditor.

3. Would a business bankruptcy affect my personal credit?

Usually no, but it depends largely on whether (and if so, how) you personally are linked to the corporation.

Would that be a reasonable option?

No one can answer that without an extensive review of the corporate records.

4. Any suggestions?

Yep. You need to talk with a good corporate attorney who can advise you on the PROPER way to close a corporation.... and what liability's, if any, you might face for NOT doing so. Lots of people think that a corporation can just walk away... and very, VERY few can without risk. For example, did the corporation EVER purchase (or take a tax deduction) for ANYTHING?? Computer(s) or Printer(s)?? Copier(s)?? Display cases?? Cash Register?? Software?? Desks?? Vehicle(s)?? ANYTHING??

If so, each and EVERY one of those items needs to be sold or otherwise disposed of properly, with the proceeds/funds accounted for (paid to creditors). It simply cannot be converted to YOUR use. If it is, YOU can be liable for the corporate debts.

[johnsonbunch]

My CPA set up the corporation and dissolved it, but your advice is sound that it may not be closed "properly." And even though all inventory is gone, there probably is some residual stuff outstanding.

(I like your signature, and agree that its an abomination/OBAMA-NATION!)

[JETX]

Here are some forms that are required to PROPERLY dissolve a Florida corporation:
form.sunbiz.org/pdf/cr2e012.pdf

You need to be careful to pay off all debts of the corporation (or leave sufficient assets in the corporation) prior to making liquidating dividends. Shareholders of a dissolved corporation can become personally liable for unpaid claims against the corporation. You will want to read and UNDERSTAND the following Florida statute:
607.1406 Known claims against dissolved corporation.--
at: [url=http://www.flsenate.gov/statutes/index.cfm?App_mode=Display_Statute&URL=Ch0607/ch0607.htm]Statutes & Constitution :View Statutes : flsenate.gov[/url]

[latigo]

This sounds disturbingly familiar.

Your CPA needs to be reminded that he/she is a licensed certified public accountant in the state of Florida. Membership in the Florida State Bar Association does not come as a perk!

(I suggested to one that officiously tried to take over the management of a lawsuit I was trying, on the strength that he was the client’s accountant, that the reason he kept so many erasers on his desk was to obliterate the line that separates the two professions.)

Do as JETX suggests. Have the entire history reviewed by an attorney experienced in these areas of the law.

Sax