Most business owners have a line of credit with the bank but don’t realize that, as the business owner, they may be personally responsible for repaying any monies loaned. Often, especially in uncertain financial times, the bank will want someone to guarantee a line they might not otherwise make — usually the officer of the borrowing company. As the business owner, the bank may ask you to personally guarantee a line of credit for your company.
Unlike a traditional loan, which requires you to borrow the face amount of the loan and begin repayment of interest and principal, a line of credit requires you to repay only the amount you borrowed plus any added interest. If you don’t borrow, there’s nothing to repay. When it comes to unexpected expenses and opportunities, a line of credit provides a loan at the ready.
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Many small business owners form corporations and limited liability companies to personally insulate themselves from the obligations and debts of their business. Requiring the owner or officer of a company to enter a personal guarantee provides protection against the insulation a corporation or limited liability company provides.
Many companies who sell products, especially on credit, require their corporate customers to execute both a credit application and a personal guarantee. With a signed guarantee, the seller has recourse against the owner/guarantor should they default on payment.
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Worried it’s too late to bring a debt collection case? Don’t be. There are many ways to extend or toll the statute of limitations for New York debt collection cases. Successfully extending the statute of limitations, can afford you more time to start your case.
The statute of limitations is the length of time allowed to file an action. The time varies from state to state and is set by state legislation.
It is not always possible for a creditor to pursue legal action within the applicable statute of limitations. When that happens, it’s imperative to know the ways New York allows you to extend the time for pursuing legal action, known as tolling the statute of limitations.
News York offers several ways to toll the statute of limitations. Here are the most pertinent ways that relate to debt collection:
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Having your non-paying client acknowledge their debt in writing can extend your time to file a New York debt collection case. If the writing signed by your client contains the necessary elements, it may extend the time for you to file past the allowable statute of limitations.
New York CPLR Section 201 details the length of time to file actions within New York. The allowable time to file an action, what’s known as the statute of limitations, depends on the underlying cause of action.
The allowable time during which you can file the action for debt collection claims is determined by the underlying cause of action — whether there were services rendered or goods sold and delivered. The types of services will further affect your available time to file. For example, New York recently reduced the time for some medical providers to file debt collection cases to three years.
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