Being sued for BIL's corporate credit card debt

[Dewey]

What is the name of your state? AZ

This is a bizarre situation. I'm hoping someone here can assist.

Last Saturday, my husband was served with a summons for a credit card debt of his brother's company. I am named in the lawsuit as Jane Doe, spouse.

My husband assisted his brother in setting up this corporation about 8 years ago. They opened up a couple credit cards for the business. It is my understanding that they were card holders (joint) and the credit card was in the name of the corporation.

My husband has not had anything to do with this business for the past 4 years....not received a dime, etc. Of course, I told him then to be sure that his name was removed from everything having to do with the company.

Obviously he didn't.

The business has been dying a slow, painful death and BIL got in way over his head and failed to tell my husband that he decided to simply stop paying bills.

We were completely blindsided in receiving this summons. We had no knowledge of this debt, no phone calls, no letters to our home--when they obviously had our home address to be able to serve us the summons.

It is suspicious that BIL and his wife have NOT been served over this debt when it was always their company.

We will be filing an answer promptly with the court. I will also be sending a letter to the debt-collecting attorney who is suing us to validate the debt since we really know absolutely NOTHING about this debt or the history of this account.

We obviously need to see how this account was set up....otherwise, how could this attorney be suing us as individuals when this card belonged to a corporation (INC.)? We also know at a minimum that this card would have had his brother as a card holder or joint account and he would at last be half responsible.

Any advice for this unique situation?What is the name of your state?

[ecmst12]

Hire a lawyer. Google "joint and several liablity".

[Dewey]

The amount isn't worth hiring a lawyer over. It's only $4500.

[Some Random Guy]

You have to look at the original documents for the credit card agreement. In that document there will be a personal guarantee by the brother in law, your husband or both. No credit card company will give an unsecured card to a new corporation.

If both of them are personnaly liable, then they are each liable for the full debt. That means that the credit card company can sue either of them for the full amount. Since your brother in law has no money, they are coming after your husband.

The credit card company was not obligated to send notices to your husband before suing. The fault for your being ambushed with the lawsuit lies with the brother in law.

[Dewey]

Originally Posted by Some Random Guy

You have to look at the original documents for the credit card agreement. In that document there will be a personal guarantee by the brother in law, your husband or both. No credit card company will give an unsecured card to a new corporation.

If both of them are personnaly liable, then they are each liable for the full debt. That means that the credit card company can sue either of them for the full amount. Since your brother in law has no money, they are coming after your husband.

The credit card company was not obligated to send notices to your husband before suing. The fault for your being ambushed with the lawsuit lies with the brother in law.

Excellent answer--that helps a lot.

How would it be best to go about getting a look at the original documents for the credit card? Is that something I should put the burden of onto the attorney who is suing us when I request a validation of this debt--or is it something we should be initiating ourselves directly with the credit card company?

[ecmst12]

Arizona is a community property state, too. So YOU are liable for the full amount of this debt as well as your husband.

[las365]

We will be filing an answer promptly with the court. I will also be sending a letter to the debt-collecting attorney who is suing us to validate the debt since we really know absolutely NOTHING about this debt or the history of this account.

You are correct, that is exactly what you should do.

Next, make sure any and all credit card accounts and any other vendor or bank accounts that your husband's name may be on are closed.

After the debt is validated, since you can afford to, go ahead and negotiate and pay off the debt. Then you are left with the decision of whether/how to collect from your BIL. It's a touchy and sad situation. Best of luck.

Is that something I should put the burden of onto the attorney who is suing us when I request a validation of this debt--or is it something we should be initiating ourselves directly with the credit card company?

Since the cc company is represented, you will need to deal with the attorney.

[Dewey]

Originally Posted by ecmst12

Arizona is a community property state, too. So YOU are liable for the full amount of this debt as well as your husband.

Uh, yeah--I know.

That is why I'm on here trying to sort this mess out since I can't trust my husband to do it right when he failed to get his name off of everything having to do with that company in the first place.

[debtcollector`]

Originally Posted by Dewey

The amount isn't worth hiring a lawyer over. It's only $4500.

Then pay it.

[Chien]

And you've been sued. You're past the "validation stage". Focus on responding. Focus on resolving. If necessary, focus on getting the information that you want by way of discovery, but don't focus on "validating with the attorney", unless she/he is going to be extraordinarily (and voluntarily) helpful, because you'll get your answers after a default judgment, if you get them at all.

[debtcollector`]

Originally Posted by Dewey

We will be filing an answer promptly with the court. I will also be sending a letter to the debt-collecting attorney who is suing us to validate the debt since we really know absolutely NOTHING about this debt or the history of this account.

You are being sued - you no longer have the right of validation. You need to use the discovery process.

DC

Rats he beat me to it

[Dewey]

Originally Posted by las365

Next, make sure any and all credit card accounts and any other vendor or bank accounts that your husband's name may be on are closed.

Already did that....BELIEVE ME.

After the debt is validated, since you can afford to, go ahead and negotiate and pay off the debt.

Is it better to just do that through the court or do we negotiate with the attorney directly? I imagine once we file an answer with the court, we'll get a court date, but who knows if they will have validated the debt by then?

The amount is not a problem and we could easily pay it full immediately. We just do not want this bad debt on our credit report.

Then you are left with the decision of whether/how to collect from your BIL. It's a touchy and sad situation.

We've already informed him that we expect to be paid back. If he does not pay us back within a reasonable time (we'll determine that once he's back on his feet) then we will have to file a small claim for the amount. He agrees.

[Dewey]

Originally Posted by debtcollector`

You are being sued - you no longer have the right of validation. You need to use the discovery process.

DC

Rats he beat me to it

Discovery process? What is that?

[debtcollector`]

Originally Posted by Dewey

Discovery process? What is that?

that is why $4500 is worth talking to an attorney.

[las365]

Yeah, apparently it's too late for the validation route- DC and Chien know their stuff. You can negotiate directly with the attorney.

Discovery is the formal Q&A process that one goes through to obtain information during litigation. Unless your BIL is denying that he made the charges, it would probably largely be a waste of your time.