Judgment resulting from failed business

[aaxander]

Back in 2003 I co-founded a small home services corporation.

The corporation set up a large annual advertising contract with a Yellow Pages company, for full page ads across multiple books, at a total cost of about 10,000 a month. As the CEO and co-founder of the company, I had initially signed this advertising contract (on behalf of the corporation), but the terms of the contract did not explicitly make me personally responsible for its fulfillment.

For a few years, things went well, but In 2006 the company ran into extreme financial difficulty.

As a result of the financial difficulties we encountered, we (myself and the other co-founder/shareholder of the company) elected to dissolve the business. Payment for this annual Yellow Pages contract was not completed before the business was closed; we made approximately 1/3 of the total payments before we ran out of funds. After the dissolution, the remaining assets were liquidated and I closed the book on this chapter in my life. It was a painful time, and I wanted to move on. I got busy with a new job, and didn't even check my credit report until a few months ago. As it turns out, my credit report shows that in 2007 a judgment was levied against me, holding me personally responsible for this Yellow Pages contract. The damages on this are now over $100,000.

I was the one who signed almost all of the company contracts. At the time I thought that the liability protection of the corporation would prevent me from any form of personal liability, but my credit report seems to tell a different story.

I want to get the judgment off my record. What would be the correct course of action to deal with this judgment? I am certain that the original advertising contract did not include any language that would have made me personally liable. Despite this, the judgment has already been awarded, and I don’t know how to protest the ruling.

A few days ago I called the collection agency that was the plaintiff in this case, and they said that I should file a dispute and they would look into it. I have done so. But I got the Case ID# and found a summary of the case at the website of the courthouse, and it clearly names me in the judgment. I’m expecting that the dispute won’t change anything because it will simply refer back to the records of this judgment.

Has anyone else had the experience of being part of a small business that went under amidst a dark cloud of unpaid expenses, and then had negative credit marks show up on their personal credit report during the fallout? Based on my own experience, I’m guessing this is a common occurrence, but I haven’t yet seen any posts about this in the forums. If you have also had this experience, please share your story in this thread.

In regards to my own situation, what can I do now?