# Husband's old boss is asking for repayment of 10K loan



## ConstantSpeed (May 1, 2012)

Need an ouside perspective. 

My husband was an Accounting Manager working for a company "A" back in 2004 and purchased a rental property in the same area as his boss and owner of company "A". His boss and him were good friends at the time and he provided a loan of 10K from his company "A" and put it on the books to help with the down payment and closing cost of the house. Since then Company "A" has been dissolved in 2012 due to his boss's financial problems and had to file for bankruptcy. The loan of 10K had been written off the company's books as well as other loans to other people that he loaned out. He used my husband's name and another one of his friends to use as "owners" of the new company "B" since his name could not be any where and the creditors would come after this new company "B". Now company "B" is not doing so well and his boss is asking for repayment of the 10K loan from company "A". My husband has since finished school, gotten his CPA license and works full time at a CPA firm. He does part-time work for his old boss and still manages the money for company "B" and for another online company that his boss started. Which also does not make that much money . My husband thought that since the loan of 10K was written off and the company dissolved that he no longer would owe him. I get that his old boss is probably struggling financially right now and needs money. But I just wanted your thoughts about paying him back?


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## EleGirl (Dec 3, 2011)

How was the loan written off? Was this done in reporting to the IRS?

I'm confused about company B. It is just using your husband's name, or is your husband an officer or owner of that company?


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## arbitrator (Feb 13, 2012)

*If mentioned or otherwise covered within the bankruptcy proceedings themselves, he may still owe it to either the lender or perhaps even to the Fed!

In any event, you'd be well advised to get a legal opinion from learned legal counsel!*


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## ConstantSpeed (May 1, 2012)

EleGirl said:


> How was the loan written off? Was this done in reporting to the IRS?
> 
> I'm confused about company B. It is just using your husband's name, or is your husband an officer or owner of that company?


Yes, the loan was written of in reporting to the IRS and my husband is an officer of company "B".


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## EleGirl (Dec 3, 2011)

If it was written off the IRS, the friend cannot legally as to be paid back. Your husband is a CPA, surely he knows this.

I hope that your husband knows what's going on in the business. He could be up the creek with things going down hill. why does this friend of his keep having money problems? It is incompetency? Your husband could end up liable for the taxes owned on that company. So make sure that he knows exactly what's going on.

One of my brothers got stuck with a $10K tax bill because some friend used him like that. My brother was young and just helping his friend and he got shafted.

Now there is the other issue that the friend loaned money to your husband when he needed it. What does your husband things about paying him back?

If you guys are going to pay it back (which I do not think you are legally obligated to do but you might feel morally obligated), make sure that your husband knows the status of the books for that company.

I would advise your husband to get away from the failing company.


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## ConstantSpeed (May 1, 2012)

EleGirl said:


> If it was written off the IRS, the friend cannot legally as to be paid back. Your husband is a CPA, surely he knows this.
> 
> I hope that your husband knows what's going on in the business. He could be up the creek with things going down hill. why does this friend of his keep having money problems? It is incompetency? Your husband could end up liable for the taxes owned on that company. So make sure that he knows exactly what's going on.
> 
> ...


Yes, he knows legally that his old boss can not go after him for repayment of the 10K loan. I guess he was looking at it through a moral lens and paying back someone that gifted him money in his time of need. 
His old boss has a tendency to overindulge at times. During the "good times" around 2006-2007 he bought a 1.5 million dollar house and a $50,000 dollar corvette. He ended up having to sell everything during the 2008 crash and move into his mother's house. Now he has a $400,000 house but is having money trouble again as his current company "B" is not doing so well and his has had to take a pay cut to maintain the company.

Thank you for bringing up the tax liability issue - I haven't thought about that and I will bring it up to him. He is the only one dealing with the company's books so he has a good idea of the financial standing of the company. 

Company "A" has been dissolved and no longer exist. 

My husband was leaning more toward repaying the 10K loan even though it was written off.

I guess I wanted to get thoughts on my husband not paying back the loan. What would you do?


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## EleGirl (Dec 3, 2011)

I can see an argument for paying it back. 

On the other hand, your husband could be liable for all kinds of things due to the guy's financial irresponsibility.


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## Blondilocks (Jul 4, 2013)

Does your husband still own the rental property? Why did he allow his friend/former boss to write him off as a bad debt? What were the repayment terms of the $10K loan?


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## ConstantSpeed (May 1, 2012)

Blondilocks said:


> Does your husband still own the rental property? Why did he allow his friend/former boss to write him off as a bad debt? What were the repayment terms of the $10K loan?


Yes, my husband still owns the rental property. And he allowed his former boss to have the debt written off because the company had to be dissolved, it went bankrupt. The repayment terms were that when my husband sells the rental property he would repay the 10K loan. But now he is asking for repayment.


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## EleGirl (Dec 3, 2011)

ConstantSpeed said:


> Yes, my husband still owns the rental property. And he allowed his former boss to have the debt written off because the company had to be dissolved, it went bankrupt. The repayment terms were that when my husband sells the rental property he would repay the 10K loan. But now he is asking for repayment.


Is this agreement written and signed by both?


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## ConstantSpeed (May 1, 2012)

EleGirl said:


> Is this agreement written and signed by both?


It was more of a verbal agreement that this is what the repayment terms were. When my husband received the 10K to use for the rental property there was a gift letter given to the mortgage company from the original company A that his former boss owned stating that it was a gift.


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## karole (Jun 30, 2010)

What chapter bankruptcy did the boss file for bankruptcy under?


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## ConstantSpeed (May 1, 2012)

karole said:


> What chapter bankruptcy did the boss file for bankruptcy under?


Chapter 7


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## arbitrator (Feb 13, 2012)

ConstantSpeed said:


> Chapter 7


*I may be wrong, but under Chapter 7, I believe that the debt is totally uncollectible by the party filing for bankruptcy under that particular section of the bankruptcy code. I believe that the Fed has a certain number of years under a strict statute of limitation in which to subrogate.

I stick with my original advice: See a good federal bankruptcy attorney!*


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## richardsharpe (Jul 8, 2014)

Good evening all
there is legal and there is right.

For legal you need a professional opinion from an account or lawyer. 

For right, in my opinion, if you borrow money, you are morally bound to make every reasonable effort to pay it back as agreed.


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## kristin2349 (Sep 12, 2013)

ConstantSpeed said:


> It was more of a verbal agreement that this is what the repayment terms were. When my husband received the 10K to use for the rental property there was a gift letter given to the mortgage company from the original company A that his former boss owned stating that it was a gift.


Your H as a CPA should know better than lying on a mortgage application. This is bank fraud, when he presented a fake gift letter he knew it was in fact a loan.

The whole situation doesn't pass the sniff test. He should pay the money back and wash his hands of these sort of people in the future.


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## ConstantSpeed (May 1, 2012)

kristin2349 said:


> Your H as a CPA should know better than lying on a mortgage application. This is bank fraud, when he presented a fake gift letter he knew it was in fact a loan.
> 
> The whole situation doesn't pass the sniff test. He should pay the money back and wash his hands of these sort of people in the future.


Agreed- I've never liked his old boss to begin with, he has been a bad influence in more than one way. He made this agreement with him way before we even started dating and way before he even started school to become a CPA. Just last week I learned of this 10K loan myself. I didn't know about it.


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## MarriedDude (Jun 21, 2014)

he borrowed it. He should pay it back. 

He should then seriously re-think being in business with someone that caviler about
Committing fraud. 

Spooky
_Posted via Mobile Device_


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## synthetic (Jan 5, 2012)

He should pay the $10K back. It was his boss's money and still is.


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## Hicks (Jan 14, 2011)

I seriously recommend that he pays the $10k in exchange for getting his name and credit off the books of this company.


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## unbelievable (Aug 20, 2010)

I'm not a lawyer and would suggest your husband talk to one about civil law questions. The boss is apparently not the most honorable or reliable person around. To me, the $10K wouldn't be my primary question. Even if he had to pay it, your husband could absorb $10K and life would continue. The bigger risk is that your husband is still doing business with someone who has proven to be dishonorable and unreliable. I wouldn't work for the man in any capacity and I most certainly wouldn't handle his financial business.


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## SadSamIAm (Oct 29, 2010)

I agree. Give back the 10K in exchange for getting out of Company B. No more business with this guy.


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## unbelievable (Aug 20, 2010)

The best financial advise anyone can ever receive is to not do business with dishonest people.


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## toonaive (Dec 13, 2012)

kristin2349 said:


> Your H as a CPA should know better than lying on a mortgage application. This is bank fraud, when he presented a fake gift letter he knew it was in fact a loan.
> 
> The whole situation doesn't pass the sniff test. He should pay the money back and wash his hands of these sort of people in the future.


This is what I was thinking. There are reasons for the "gift" letter, and now you hit the on the problem.. Now the "creditor" wants it to be repaid. Im sure there are easier ways around this, but, personally I would look into selling the rental property, give the 10k back. That way you are out of it completely. Lesson learned.


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## JasonKaven (Oct 24, 2014)

Oh, that's too bad!


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## whatslovegottodowithit? (Jan 6, 2013)

Have your H do what Paulie Cicero said and did from GoodFellas "Now I'm gonna have to turn my back on you." It will be a blessing for both parties involved...the broke boss will get his loot and your H will be free from the boss and his crappy businesses.

-OR-

Since your H is an owner in company "B", tell him he (your H) will take a distribution of the profits from the company in the amount of 10K (actually more given taxes) and pay it to the sleazy boss then be rid of him. This may work if the 10k isn't available to pay.


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## Hopeful Cynic (Apr 27, 2014)

Ethically, the right thing to do would be to repay the 10k loan. Otherwise your husband is just getting free money at someone else's expense when he had agreed to pay it back. But since it was written off in a bankruptcy proceeding, it's not really his boss's money anymore.

See if you can find out who some of the boss's creditors are, who got ripped off by not getting money this guy owed them when he declared bankruptcy. Give them the 10k. Try talking to the bankruptcy official the guy used for advice, see if you can choose a small company that really felt the pain of the lost money instead of a huge credit card company or bank who just absorbed it as a cost of doing business.

And yeah, STOP all the business dealings with this guy!


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## MarriedDude (Jun 21, 2014)

whatslovegottodowithit? said:


> Have your H do what Paulie Cicero said and did from GoodFellas "Now I'm gonna have to turn my back on you." It will be a blessing for both parties involved...the broke boss will get his loot and your H will be free from the boss and his crappy businesses.
> 
> -OR-
> 
> Since your H is an owner in company "B", *tell him he (your H) will take a distribution of the profits from the company in the amount of 10K* (actually more given taxes) and pay it to the sleazy boss then be rid of him. This may work if the 10k isn't available to pay.


Thats a risky option -given the boss is already proven himself to be morally...flexible. Also assumes there is actually profits. Probably 2 books....one for the government and one for the creditors...which one will he use??? Hmm.


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