Legal Question - default on equipment lease?
My brother sold his business including the equipment while he was still paying on the lease for the equipment. He continued paying on the lease when he hit hard times. Now he cannot make the payments and the equipment lease company is trying collect by calling him and his wife day and night and being really nasty. He doesn’t have the money right now. What are the consequences here? There is no equipment for the compnay to repossess. They probably could not recover cost of repossessing it and selling it to cover that cost and what is owed. Will they pursue that? Can my bro be criminally charged?
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3 Responses to “Legal Question - default on equipment lease?”
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Your brother is going to have to work something out with the leasing company, if they would find the equipment he would be in a heap of trouble with the person he sold the business to with the equipment since he knew he did not own it
another issue, since it is the leasing company trying to collect and not a third party collection agency they have a wide lean way in calling etc to get paid over a third party collection
they may threaten criminal charges on selling the equipment
They could, and probably will, sue him in civil court for the depreciated cost of the equipment and for what a fair market value of it would be at this time. That said, they could attach all of his real property, home, boat, cars, trucks, etc., and he would have to make some sort of arrangement to settle the matter at a reduced cost with sufficient payments to keep the creditors happy. He may have to end up filing BK like many homeowners are doing today. It is unfortunate, but the subprime interest rate offered by companies like Country Wide has hurt us pretty bad. Good luck.
How was the equipment lease handled in the paperwork in selling his company? That should have been defined in the sales contract.
One doesn’t purchase a company where leased equipment is not defined and covered. If leased equipment was included in the sale, the purchaser should have picked up the existing lease or re-financed the equipment.
I don’t think your brother had the right to sell something he didn’t own outright. If he did, he’s in a heap of trouble from both side, the leasing company and the purchaser of his business. I can’t even comprehend that your brother would sell his company and continued to pay on leased equipment!