Documentation a creditor needs to take action

[superjtrdr]

What is the name of your state? Texas
I am a contractor that closing my business without filing a bankruptcy, Last year was rough and I want out. I have settled various debts without damaging my credit but there is one left for $9,000. What I want to know is what kind of leverage I might have negotiating for a more favorable settlement. I signed a credit app several years back and have had various contractors who are not directly part of my business pick up materials from this vendor over time for projects. These contractors never signed and I never agreed verbally to these invoices. The total over several years is roughly $54,000. I want to negotiate for a fraction of the $9,000. If I never signed or verbally agreed to any specific transaction does that give me leverage? What kind of documentation would this vendor need to damage my credit? I am going to shoot for a 50% settlement with these people.

 

[Zigner]

There is no way that we can guess whether a creditor will negotiate with you or what terms you may be able to negotiate if you do. Based on what you've said here, you owe the money. Others on this forum may give you some pointers, but I, for one, am not going to help you in your quest to find some sort of loophole to screw over vendors who dealt in good faith with you.

Negotiate with them, but don't do so from a position of trying to screw them.

 

[adjusterjack]

If I never signed or verbally agreed to any specific transaction does that give me leverage?

No.

What kind of documentation would this vendor need to damage my credit?

Whatever records the vendor has now is plenty. If you are delinquent in paying the balance and the account is in your name as an individual or you gave a personal guarantee that's all he has to say on your credit report. He's probably got enough to win a lawsuit.

Your only leverage is CASH.

Offer the 50% and see how it goes. If he says no, ask how much of a discount he is willing to make for a lump sum cash settlement. If he says no you either pay the $9000 or don't and wait to be sued or sent to collections. It's that simple.

Edited to add: Remember, this is your vendor, not a collection agency. Your vendor would probably want cash more than he wants to trash your credit.

 

[quincy]

https://forum.freeadvice.com/threads/how-to-negotiate-a-settlement.428587/

The above link is to advice offered by a FreeAdvice member. “TigerD” is a former debt collection agency owner and current attorney. There are some good suggestions on how best to approach your creditor(s) when trying to negotiate a settlement of your outstanding debt(s).

 

[zddoodah]

I am a contractor that closing my business

What sort of business? Sole proprietorship? Partnership (general or limited)? Corporation? LLC? Something else?

What I want to know is what kind of leverage I might have negotiating for a more favorable settlement.

None of us know what leverage, if any, you have. However, the answer to the question above may factor into it. It would also be helpful to know if you personally guaranteed the debt in question.

If I never signed or verbally agreed to any specific transaction does that give me leverage?

Maybe, but you've only given us limited facts and circumstances. You told us that "various contractors who are not directly part of [your] business pick[ed] up materials from this vendor over time for projects." What does it mean that these contractors were "not directly" part of your business? What sort of materials? What was your/your company's connection to the projects? What do your contracts with these contractors say? On whose authority did these people pick up materials that were charged to your account? You told us that the total was about $54k and that $9k remains due and owing, which means that you presumably paid $45k for these transactions. Correct? If so, that means you did not dispute the first $45k. Right? So are you now going to claim that the last $9k wasn't authorized? What makes the last $9k different from the first $45k?

What kind of documentation would this vendor need to damage my credit?

Unless you have a valid basis to dispute the bills, the credit application, the credit application and invoices will suffice.

 

[superjtrdr]

What sort of business? Sole proprietorship? Partnership (general or limited)? Corporation? LLC? Something else?




None of us know what leverage, if any, you have. However, the answer to the question above may factor into it. It would also be helpful to know if you personally guaranteed the debt in question.




Maybe, but you've only given us limited facts and circumstances. You told us that "various contractors who are not directly part of [your] business pick[ed] up materials from this vendor over time for projects." What does it mean that these contractors were "not directly" part of your business? What sort of materials? What was your/your company's connection to the projects? What do your contracts with these contractors say? On whose authority did these people pick up materials that were charged to your account? You told us that the total was about $54k and that $9k remains due and owing, which means that you presumably paid $45k for these transactions. Correct? If so, that means you did not dispute the first $45k. Right? So are you now going to claim that the last $9k wasn't authorized? What makes the last $9k different from the first $45k?




Unless you have a valid basis to dispute the bills, the credit application, the credit application and invoices will suffice.

LLC I started doing business with this vender in 2022. That's when I signed the credit application. I have sub contractors that do various work for me. They pick up materials they need from various venders. I don't think this vendor requires any signature when things are picked up. I monthly receive emailed statements and I pay, 2023 went so bad I stopped paying and waited for vendors to contact me. I have saved some money but not much settling with people. Everyone is paid except this last one.

 

[adjusterjack]

All you can do is make an offer. Use the techniques from TigerD's post and see how it goes.

 

[zddoodah]

LLC I started doing business with this vender in 2022. That's when I signed the credit application.

In the event you are going to continue to operate any business in the future, the first thing you need to learn is not to speak in the first person about a business entity like a corporation or LLC. For example, "The business is an LLC. The LLC started doing business with this vendor in 2022. At that time, the LLC executed the credit application (I signed in my capacity as managing member)."

Repeating what I wrote in my prior response: It would also be helpful to know if you personally guaranteed the debt in question.

I have saved some money but not much

Is this your personal money? Or the LLC's money? If the former, why are you using personal funds to pay LLC debt?

If you are not a personal guarantor on the account, then you have lots of leverage because the only way that the creditor can pursue you personally for LLC debt is by trying to "pierce the corporate veil" (it's the same for LLCs as for corporations). On the other hand, if you personally guaranteed the debt, then you don't have much leverage at all (beyond the threat of bankruptcy).

 

[quincy]

LLC I started doing business with this vender in 2022. That's when I signed the credit application. I have sub contractors that do various work for me. They pick up materials they need from various venders. I don't think this vendor requires any signature when things are picked up. I monthly receive emailed statements and I pay, 2023 went so bad I stopped paying and waited for vendors to contact me. I have saved some money but not much settling with people. Everyone is paid except this last one.

Read over the terms of the credit you applied for to see if you committed yourself to paying the debt personally. It sounds like you might have. It also sounds like you authorized the subcontractors to use this credit to charge materials, which makes you and not the subcontractors responsible for paying for the materials.

Does the vendor send the billing statements to you, in your name, or to the LLC? Has the LLC paid these bills from a company account or have you personally paid the bills?

It appears to me that you have two options: filing for bankruptcy, which you say you want to avoid (and, if $9000 is now the extent of your debts, bankruptcy does not seem to be your best option anyway), or paying the vendor what is owed.

You can attempt to negotiate with the vendor to settle the account for a lower amount (make sure you actually have the cash available to pay the negotiated sum) or try to work out with the vendor a payment arrangement that you can afford.

The vendor, however, does not have to agree to anything but the full amount owing.

Again, TigerD’s suggestions on negotiating are smart.

 

[Taxing Matters]

What is the name of your state? Texas
I want to negotiate for a fraction of the $9,000.

No harm in trying to negotiate it down. You won't know if you try. I take a different view of doing that than Zigner does. As long as you don't lie or mislead the creditor about the facts there is nothing wrong with trying to get a better deal than paying the whole bill. You both are business people should be sufficiently knowledgeable about how contracting deals are done in your area. If you don't know the risks of the contracts you enter into that's going to be on you. If the creditor doesn't go for a settlement, you're no worse off than you are now.

If I never signed or verbally agreed to any specific transaction does that give me leverage? What kind of documentation would this vendor need to damage my credit? I am going to shoot for a 50% settlement with these people.

Not much leverage there because I'm betting there was a contract there, simply one that was informal. Moreover those past deals can used by the supplier to support its claim that there was a contract. Even if there was no contract, you accepted the materials the vendor provided and under the common law you'd owe the vendor the reasonable value of those supplies (which may be less than the lender is asking you to pay.

Note that because this is a commercial debt, the protection of consumer rights laws won't apply to you.

If you pay less than the full amount owed the lender may report that to the credit bureaus, even in a settlement. However, in the case of a settlement, the report must include that the debt was satisfied by settlement, which looks a whole lot better to future creditors than a report that just says you failed the $9,000 owed to the creditor.

Bear this in mind: in Texas if the creditor sues and wins, you may have to pay the creditor's legal fees and costs in addition the judgmennt awarded on the contract claim. On the other hand, if you went to court and won, the vendor generally would have to pay your legal fees and costs. And of course if you lose you are also paying your own lawyer too. So that raises the stakes involved if you go down the litigation route The parties may alter how the attorneys are paid by agreement, but from what you've said so far, I'm guessing that you don't have such an agreement.