In October 2013, Andrew was in an accident in a vehicle owned by his company (of which he was a shareholder). The other driver’s insurer sought payment of $1,042.50 from Andrew’s company in relation to the accident (the debt).
Andrew’s company was wound up and the debt was left unpaid. The insurer then referred the debt to a debt collection company which pursued Andrew personally for payment. The debt collection agency had not bought the debt from the insurance company; it had simply been engaged to recover the debt.
Andrew’s complaint
Andrew complained to us that the debt collection company was pursuing him for payment when it was his company which owned the vehicle. In addition, Andrew complained that the debt collection company had placed an adverse credit listing on his credit history.
FSCL assists
We contacted the debt collection company and said the debt should not have been transferred into Andrew’s name as it was a limited liability company’s debt. The debt collection company went back to the insurer, which agreed it would discontinue pursuing Andrew’s payment of the debt.
The debt collection company also advised it would not list a default on Andrew’s credit history.
Andrew discontinued his complaint about the debt collection company.
Our insight
The purpose of having a limited liability company is to protect shareholders from payment of company debts. The debt should not have been transferred from the company’s name to Andrew’s name.
