Legal Question in Bankruptcy in Massachusetts
How Enforceable is the Personal Guarantee, for a Corp. Credit Card Account, of t
The business is a 12-year old MA 'C' corporation; I am president, CEO, and majority shareholder. When starting out, I signed a Personal Guarantee for an AMEX Corporate Card account. We extensively used the �FLEX� plan, paying via AMEX for resale product, and getting longer than 30-day terms from AMEX (similar to using VISA). Over time (~12 mos.) the FLEX account balance grew to ~$250k, but remained current with our monthly payments of ~$30k. AMEX later lowered our card--name removed--''credit limit'' to $30k and effectively halted further card usage; the required monthly FLEX payment of ~$30k was held against our ''available credit'' on the card. We offered AMEX a FLEX repayment plan of $9k/mo., which allowed us to manage cash flow despite having to establish new individual vendor terms (previously paid via AMEX). AMEX has refused the $9k/mo. offer and is demanding at least the original $30k/mo., which we cannot support. AMEX states that I am personally liable for the outstanding ~$235k. We have only one secured creditor, a bank line of credit with ~$90k outstanding. We also have a couple of equipment leases with my personal guarantee. How enforceable is AMEX� claim of my personal guarantee on corporate charges?
1 Answer from Attorneys
Re: How Enforceable is the Personal Guarantee, for a Corp. Credit Card Account,
As a general rule, personal guarantees are enforceable, which is why lending companies and banks insist upon them. You may have some claim that there was no consideration, or that AMEX waived the guaranty at some point, but a lawyer would have to examine the documents to determine this.
You also may be able to file personal bankruptcy to avoid payment. To read a primer on personal bankruptcy see our web site at www.FiorentiniLaw.com.
Finally, if you own a home in Massachusetts, you probably want to homestead that home to protect it against this claim. To read about homesteads check our web site www.FiorentiniLaw.com.
If we can assist, do not hesitate to call the Fiorentini Law Office, 1-800-834-6964.
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