Key Bank Off-Set Personal account to satisfy LOC

[Anonymous]

Does anyone know if KeyBank or any banks can off-set your Business Line of Credit with your personal checking account? I have been with Key Bank for over 15 years and fell behind on one of my Business Lines of Credit. 70 Days past due for the first time in 3 years, I had a high credit rating, and they wiped out my personal bank account that had $23K - ALL THE money I HAD to my name. Also set aside to make my mortgage and tax payments. This left me with zero money to my name, no money to operate my business at all.

Everyone - becareful - my suggestion is pull any cash reserves you have out of the banks if you are falling behind on your lines of credit. Banks are getting ruthless and greedy, I've noticed major charges in all areas from banks to Credit Card Merchant companies, raising fees, rates, adding late fees, changing due dates to acquire additional funds and heard they are taking everything they can from valued customers.

If anyone has information about Banking Laws and off sets please share.

[Creditaddict]

wow, I just want a 23k loc!

sorry they took your personal money, but if you had so much cash lying around, why didn't you make the min. payment? It had to be less than $500 

[Anonymous]

I don't co-mingle my personal funds with business. Unless I have extra funds lying around for a CPA to un-ravel? Bottom line is don't have cash in banks that you have LOC out on; Move cash to other bank institutes or better yet in these days - store cash reserves in fire safes.

[GregB]

If the business is a Sole Proprietership, then you and the business are the same entity. Moving money back to the business is nothing in terms of accounting and your income is your business profit not the total of draws.

If the business is more complicated and a separate entitiy, I would assume they could do that only if you agreed in the original agreement. Simple term: Personal Guarantee.

There is too little info here to determine if you could have avoided the problem by simply doing a negative draw back to the business for a thousand or two. IF it is a sole proprietership and IF there was only a payment due and IF you are not trying to get away with something THEN this should have been taken care of long before a third payment was due on the LOC. I'm assuming that one payment is 70 days overdue means that a second is 40 days overdue and a third is 10 days overdue. A business that has a LOC is supposed to be working WITH their bank.

[2wheel]

I dont know how many times I have used personal money I wouldnt have personal money if it wasent for my business So I guess I owe it to myself to make sure It stays in operation. I sold a 94 camaro rs 1 time to pay payroll. And worked for free for 3 months Not 1 check issued to me 

[Anonymous]

When you have personal guarantees on Business credit, your money is co-mingled.

For accurate records, you should have made a loan or capital contribution to your business and booked it that way on your business books.  Later when the business is able, it can either pay the loan back, or if you made a capital contribution you can take a "draw" against capital contribution without tax penalty. 

I agree that 70 days past due when you have $23k in your personal account is a little skewed.

In the future, if you don't want this to happen, don't make personal guarantees, don't bank personally at the same bank you do business banking.

Banks do this all the time.  It is in their terms on the LOC and in the personal guarantee you made.  In essence you pledged your personal assets held in the bank in the event of default.

When you are the boss, you are the last to get paid, including after the bank.  And worse yet, when the business is short, you get to make it up. 

I too cannot count the times I have needed to inject capital into the business during slump periods.

Message Edited by txjohn on 05-06-2009 05:45 PM

[2wheel]

Exactly txjohn ...... The promissary note Was My only paycheck for a long time ..... Along time ago.