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Posts: 3
Registered: ‎04-18-2013
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Charging cards up and not paying


I have a friend who is selling their business and disolving the corporation and either filing for personal bankruptcy or something. They are not getting but a couple thousand for the business but they have no assets after the sale except a house thats upside down. I am teling him I thought it was illegal to charge cards and not make any payments on them. He also has some net 30 accounts with some pretty high limits he plans to make a couple small payments on them and stop. I said its fraud, he says no way to prove it everyone does it. I said they will put liens on the house and his answer is he'll file BK to get them removed. Alot of the charge accounts are not PG'd, so I suppose he will get away with those but its well over 100k worth of new debt and a couple hundred thousand in personal unsecured debt. Cant he get arrested for not even making 1 payment on new accounts? SMH!

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Senior Contributor
Posts: 28,776
Registered: ‎02-07-2013
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Re: Charging cards up and not paying

[ Edited ]

Your friend is in for a rude awaking if any of those cards were PG'ed 

BTW welcome to the forum

edit and depending on how the company was setup may open it up to all debts 

This point should be stressed more here an app spree should not be encouraged because its not for every profile
A thick file will support more apps at one time while a thin file may see negative reaction to this process

IMHO 4+ at one time is to many for a new file and it should be kept to 1-3 a year but we get caught up sometimes in seeing the little wheel spin and the words approved
Epic Contributor
Posts: 27,390
Registered: ‎10-23-2007
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Re: Charging cards up and not paying

how can the business be worth only a few thousand but he has $100k+ lines of credit that are not PG?

What type of accounts?

 

I mean it's not really anything new, 2008-2009 is really when the big change to how easy small business credit cards were to get because of the companies going under... Advanta Business Card (well they are gone!)

 

I think it's hard not to have personal opinions to certain things or certain people when you hear about them but it's not new and it's certainly not this one person getting away with it.  I stay mostly out of it because i dislike the politics and don't keep up with it enough to fact check but we do have an issue with foreclosures in the country right now and banks not even being able to prove that they own them because they changed hands so many times... 1 house being lived in for 5+ years by someone that may not even have the mortgage on the house can't be blamed for the house not being paid for in the millions if they are renting and don't even know can it?  may not be good example if you have not heard or or know of this happening but.... it is!

so... not sure about answering your question but if you look around or got other people to be a little candid about finances you might see a line that blurred a lot more than one would think originally.  Just depends on market, business, location, etc. etc.

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Posts: 15,442
Registered: ‎04-09-2011
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Re: Charging cards up and not paying


john18360 wrote:


I have a friend who is selling their business and disolving the corporation and either filing for personal bankruptcy or something. They are not getting but a couple thousand for the business but they have no assets after the sale except a house thats upside down. I am teling him I thought it was illegal to charge cards and not make any payments on them. He also has some net 30 accounts with some pretty high limits he plans to make a couple small payments on them and stop. I said its fraud, he says no way to prove it everyone does it. I said they will put liens on the house and his answer is he'll file BK to get them removed. Alot of the charge accounts are not PG'd, so I suppose he will get away with those but its well over 100k worth of new debt and a couple hundred thousand in personal unsecured debt. Cant he get arrested for not even making 1 payment on new accounts? SMH!


Welcome to the forums!!!

 

Thats exactly why I don't agree with BK's. I know everyone does not do that but the majority of BK's filed are in this spirit and its just an easy way out to screw over banks and make it harder for moral people out here to get good credit cards.

 

It's ridiculous. I really hope your friend gets into some real trouble for that, and made to pay it back. Its dead WRONG!!




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Moderator Emeritus
Posts: 7,225
Registered: ‎09-16-2011
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Re: Charging cards up and not paying

This really depends on his corporate structure and whether he will be liable. 

He could definately get into some legal trouble if there was the "intent" to not pay at the time the charges were made.

 

There isn't really anything you can do to help your friend, other than recommend a good attorney.


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Posts: 3
Registered: ‎04-18-2013
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Re: Charging cards up and not paying

Thanks for the responses, the lines arent 100k each but the biz do total well over 200k and personal is over 300k unsecured. The business has a great credit rating as did the owner. Hes been trying to sell for a while now but finally going to sell it to a friend whom he owes a bunch of money to. The business used to do really well but not the past 2 years. He has been borrowing every month just to pay the bills, hes paying 11k a month in just interest. When he called banks to lower interest rates or refinance they did the opposite and jacked up all the interest rates, PNC bank called a 75k LOC. Hes not worried about his personal credit so even personal cards and PG'ed cards arent a big concern. I just dont want to see him jammed up criminally or anything, but I guess theres no debtors prison right. just seems odd that someone can go out and ring up hundreds of thousands of dollars in unsecured debt and walk away from it all. I guess thats why we pay the interest rates we do. Great guy, but the economy and our local area have declined to extremes in the past couple years. He has some vehicles leased in the biz name, but I dont think anyone can take them if their being paid on. Thanks again, Ive been lurking on these boards for a while, what a wealth of information.

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Senior Contributor
Posts: 28,776
Registered: ‎02-07-2013
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Re: Charging cards up and not paying

I'm wondering if the sale will actually go through because if I was the buyer 1st thing I want to see is assets, income, sales, inventory monthly expenses, current licensing..I guess it all goes to buyer beware.....IMHO 

It all boils down to how business was setup in what state, company structure and bylaws a lot of variable indeed

This point should be stressed more here an app spree should not be encouraged because its not for every profile
A thick file will support more apps at one time while a thin file may see negative reaction to this process

IMHO 4+ at one time is to many for a new file and it should be kept to 1-3 a year but we get caught up sometimes in seeing the little wheel spin and the words approved
Super Contributor
Posts: 5,830
Registered: ‎02-23-2011
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Re: Charging cards up and not paying

Unless his creditors can prove there was "no intent" to ever pay the debts accrued, there aren't any legal issues.  However, if they could show the debts were accrued without ever any "good faith" intention to pay, then it could be considered fraud.

 

I can't see how this could be proven, even if it were true; unless, he made a youtube video boasting about it.

Moderator Emeritus
Posts: 7,225
Registered: ‎09-16-2011
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Re: Charging cards up and not paying

I'm going to move this thread to the Business Credit forum, hopefully you may get some answers from some business owners who know more about this sort of thing.


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Registered: ‎03-26-2010
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Re: Charging cards up and not paying

[ Edited ]

RE: 

Welcome to the forums!!!

 

Thats exactly why I don't agree with BK's. I know everyone does not do that but the majority of BK's filed are in this spirit and its just an easy way out to screw over banks and make it harder for moral people out here to get good credit cards.

 

It's ridiculous. I really hope your friend gets into some real trouble for that, and made to pay it back. Its dead WRONG!!

 

 

+1.

 

 

 

I do not get why people with bankruptcy get higher limits and better cards rebuilding. They have a PROVEN track record of failure and yet they are somehow supposed to be better than somebody with no history, If anything I think people who have delcared bankruptcy shouldn't get anything! If you have a bankruptcy you have proven you are not responsible. 

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