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Defaulting on a telephone company contract?
My sister runs a small company which she recently defaulted on a contract with a telephone co. She had a 3 or 4 year contract and when there is about one year remaining on her existing contract, she cancelled her service and went with another telephone co. provider for a much less monthly bill. She did not sign personal, and signed as a corporate officer with the co. of which she had defulted on. Her small business is still operating, and the previous co. obiously is trying to collect on her. Qestion (1) Is she personally liable in any way, when shed signed as an corporate officer? She said she is a Sub-s corp. Q(2): The collection co. left her a message stating that they are going to persuit this due to she is violating federal law, and public utility issue. Her co. is debt free, and will never obtain any outside credit, my thinking is should she even bother with finding a lawyer since she signed corporately, and it's a small co
5 Answers
- Anonymous1 decade agoFavorite Answer
Her business will now have damaged credit. And the phone company can, and probably will, pursue action against her business, and since it is an s-corp, they could potentially sue her personally as well, if she's the sole stockholder. If I were her I would try and see if I could negotiate with the previous phone company for less than what they are asking for. And if she does get some agreement to get it in writing.
- Anonymous1 decade ago
This is a bit over my legal head....but an S-Corp is similar to a LLC, where you set up the company in a way that it protects you from personal liability. So I'm having a bit of trouble understanding how they can go after her personally.
- Stephanie JLv 51 decade ago
Is the company a corporation? If so, and she did NOT sign a personal garuantee, then she is not liable herself. The company will be though, and can be sued for a judgement.
Source(s): 7+ yrs Credit & Collections - Anonymous1 decade ago
There are no federal laws being broken, the collector is full of hot air. That said, they can and will chase the company and her for the money.
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- Anonymous1 decade ago
She's liable under her credit. The company may be off the hook, maybe! Big maybe. But she's gonna eat it on her credit report.