Partnership Bankruptcy with a twist

[dtracycar]

What is the name of your state (only U.S. law)? Washington

So I have what I believe is an unusual situation. I am in a general partnership with my husband with a lawn care business. We have been on a downward spiral and have now decided to stop doing business. There are 2 large bills that were incurred years ago when my husband was in a general partnership with someone else, under a similar business name. The former business partner moved to another state and that business was dissolved. It was an LLC. Then my husband and I formed our new partnership that is not an LLC. The two large accounts have now come back to haunt us. The other partner has disappeared off the face of the earth, that business no longer exists, but collectors are still pursuing my husband. How can we go about stopping this? Does he need to file for personal bankruptcy in order for them to go away?

Any advice anyone has would be great.

Thanks!

 

[LdiJ]

What is the name of your state (only U.S. law)? Washington

So I have what I believe is an unusual situation. I am in a general partnership with my husband with a lawn care business. We have been on a downward spiral and have now decided to stop doing business. There are 2 large bills that were incurred years ago when my husband was in a general partnership with someone else, under a similar business name. The former business partner moved to another state and that business was dissolved. It was an LLC. Then my husband and I formed our new partnership that is not an LLC. The two large accounts have now come back to haunt us. The other partner has disappeared off the face of the earth, that business no longer exists, but collectors are still pursuing my husband. How can we go about stopping this? Does he need to file for personal bankruptcy in order for them to go away?

Any advice anyone has would be great.

Thanks!

If your husband signed a personal guarantee for the debts (very likely) then yes, bankruptcy would likely be his best option.

 

[dtracycar]

If your husband signed a personal guarantee for the debts (very likely) then yes, bankruptcy would likely be his best option.

I have a feeling he didn't, but I'll have to find out. If he didn't, then what? He seems to be the only person they can get ahold of to try and collect from. The other guy is dead or in the wind. Does any of that have anything to do with me and our partnership? Even if we liquidate our business assets, it wouldn't come close to what is owed.

 

[LdiJ]

I have a feeling he didn't, but I'll have to find out. If he didn't, then what? He seems to be the only person they can get ahold of to try and collect from. The other guy is dead or in the wind. Does any of that have anything to do with me and our partnership? Even if we liquidate our business assets, it wouldn't come close to what is owed.

With a small business partnership its pretty normal for creditors to insist on personal guarantees, which is why I think its likely that he did sign a personal guarantee. Even without a personal guarantee its possible that the creditor could "pierce the corporate veil" to go after your husband personally.

However, your husband should try and find out just how old these debts are, and whether the could possible be past the statute of limitations.

Here is some info on statutes of limitations for WA:

http://credit.about.com/od/statuteoflimitations/g/wasol.htm

 

[single317dad]

To clarify, the OP asked how to make the debts "go away". While the age of a debt can be a defense in case of a lawsuit, it does not make the debt go away. I hope that didn't come across as nitpicking; it was simply intended to give OP a clearer picture.

 

[latigo]

What is the name of your state (only U.S. law)? Washington

So I have what I believe is an unusual situation. I am in a general partnership with my husband with a lawn care business. We have been on a downward spiral and have now decided to stop doing business. There are 2 large bills that were incurred years ago when my husband was in a general partnership with someone else (?) , under a similar business name. The former business partner moved to another state and that business was dissolved.(?). It was an LLC. (?) Then my husband and I formed our new partnership that is not an LLC. The two large accounts have now come back to haunt us. The other partner has disappeared off the face of the earth, that business no longer exists, but collectors are still pursuing my husband. How can we go about stopping this? Does he need to file for personal bankruptcy in order for them to go away?

Any advice anyone has would be great.

Thanks!

Be realistic. You cannot expect someone at this distance to tell you whether or not your husband is legally bound to the creditors of the defunct "similar business".

For one thing you are unable to explain how that business was structured. In one breathe you tell us that the former and now defunct "similar business" was a "general partnership" and in the next that it was an "LLC".

Which leads to the obvious conclusion that you are unaware of how the personal liability of the participants in a "business partnership" differs from that of the "members of a limited liability company" .

Plus, you causally allude to the former business being "dissolved" (of which I'm sure you know nothing of) and yet someone is claiming that the business debts were not satisfied, dissolution or no dissolution.

If you want to know just how to go about making the "2 bills" go away, you will need to consult with your lawyer who can draw out the information needed to properly advise you. Sadly, it won't happen in here.