Collections on Business that was sold

In 2006, I started a business partnership with a friend. Unfortunately, the partnership didn't even last until the opening of the business, and we legally dissolved the partnership and transferred my portion of ownership in the business to my partner and his mother. The business continued for about another year before it closed down.

Recently, I was trying to buy a house and verified my 3 credit reports. On two of them, I have perfect credit, on the third, Transunion, much less than perfect. I found out that the alarm company sent me to collections for $1300 of unpaid debt that occured 8 months after I signed a contract between myself and my ex partner, and 4 months after the alarm company has on record that I informed them that I was no longer responsible for the actions of the business.

I spoke with the owner of the alarm company, and he verified that in February of 2007, I spoke with him when he called about a debt that was due at that time, and I informed him that I was no longer part of the business. His records show that he accepted this answer, and I never heard from the alarm company again. I have the bills in question in my hand, and the outstanding charges begin in June of 2007 (the partnership was dissolved legally in mid-october 2006), when my ex-partner moved the business from one office to another. $400 of the debt is for fees related to relocating the alarm equipment and services to the new office, which occured sometime in May of 2007. According to the owner, I never received any notices or bills about the outstanding charges because I told him that I was not part of the business, and he accepted this. When asked if he could remove the collection from my credit report, the owner stated that he could not do anything about the collection, he couldn't even accept money for it, since it was out of his hands. He told me, however, to call the collection agency in question, and to discuss my options with them.

So, I called the collection agency and explained my situation. They seemed fine with my explanation, they just wanted the owner of the alarm company to call them and verify everything I said. "No problem" I thought, since the owner had already agreed to everything that was said. I called the owner of the alarm company back and told him what I found out, and he suddenly changed his tune. He responded that he would NOT contact the collection agency, and that the account was initially opened based on my credit.

Now, I am stuck. My ex partner already owes me over $1600 in unpaid debt related to the business after I left it, including $400 in an insurance bill that went to collections in early 2007. I paid this $400 before it actually showed up on my credit report, since it was easier to pay it than deal with the credit report after the fact. Plus, at this time, I was in contact with my ex partner who agreed to pay me back. However, I think this is a topic for another post.

My question is this... I want to challenge this legally. There must be some limitation to how long and how much responsibility I can take personally for a business once it is sold. Especially, I should not be responsible for goods and services that were agreed upon without my knowledge or involvement. Unfortunately, between this event and others, I do not have the resources to pay for an attorney unless I am fairly certain that I can win and then recoup my legal expenses through follow up actions, particularly a lawsuit against the alarm company.

What I would like to do, in the meantime, is send a letter to the owner of the alarm company, reiterating my position in this issue, and the facts that he told me I was not responsible, that I never received any bills because he stated that he believed I was not responsible, and explain to him that as of this moment, I have decided not to seek legal counsel, but that once I do, and if it goes to court, if the courts decide that I am not responsible for the debt, I will turn around and sue the alarm company for legal expenses, time, and any damages as a result of their actions against my credit report. The damages include me paying a higher interest rate on my home as a result of the negative mark on my credit report. I would need to get this part in writing from the bank, but at the time, the bank told me that I was denied for a loan of up to 1% less than what I am currently getting just because of this mark on my credit report. I estimate that %1 is roughly $100 difference in my monthly payments on my home. My point is, I would like to get the point across to the owner of the alarm company that he has much more to lose if he continues to take his current position on the issue, without actually coming across as though I am threatening him. I don't want him to run over to his lawyers right away, which will force me to get my own lawyers, and could turn into a protracted battle which I neither have the resources nor the time to fight. I simply want to make my case to him that it is in both our interests for him to fulfill his original agreement with me, and inform the collection agency that I was not part of the business when these bills became overdue.

I also understand that I cannot simply pay the bill, since that would be implying that I accept responsibility for the bill, and despite all the promises by the alarm company owner and the collections agency, the collection will still show up on my credit report. So, really, I have no choice but to fight this, even if I had the money to pay the bill.

Obviously, I cannot expect my ex-partner to be of any assistance.

The only thing, in my opinion, that may work against me is that the remaing $900 of the bill is for "Balance of Contract due to Non-Payment". Unfortunately, I cannot find a copy of the original contract that I signed with the alarm company. The only recourse that I can think of, if I signed, for example, a 1 year contract, would be

1) that I signed the contract for the company, a registered Missouri LLC.
2) The owner of the alarm company was notified at least a full 4 months before charges were overdue that I was no longer the owner of the business, and he should have pursued (and may have pursued, I don't know) a new contract with the new owner
3) The alarm company never notified me about the charges, because, in their admission, they didn't feel that I was the responsible party at that time.

To me, this sounds like a lot of trouble for the alarm company to go through just to recoup $900 of a contract which may or may not be questionable? I am hoping that a well worded letter to the owner to this effect will get him to tell the collection agency that I am not responsible for the debt. The collection agency has already agreed to remove it from my credit report as if it never was there by the end of the month if he does this.

Thoughts, comments, responses?

This is the easiest of my current legal/business troubles...

Thank you.

Your posting is way too complicated and complex to receive accurate information in a forum such as this.

I would post my request for legal assistance on the part of this forum that allows you to do so and see if an attorney responds.

The bottom line is---will it cost you more in attorney's fees or payment for the outstanding bills?

Well, paying it outright will not remove it from my credit report... so that's 7-10 years that I will be paying for this.

Then you have made your decision. Hire an attorney.