I think you are confusing law and morality here. I posted some links upthread that talk about this sort of thing. While I agree that the OP got the short end of the stick, it’s not as if offset is new or unique to this situation. Speaking legally, as opposed to sympathetically or morally, yes the credit union agreed to allow them to withdraw money–the credit union owed them the money–just as they owed the credit union money. In cases where parties owe each other money and one doesn’t pay, the other generally has a right of offset or setoff (the right to keep the money owed to the defaulting party). http://www.helpwithmybank.gov/faqs/banking_offset.html
You may want to read the OP. That’s the first post, which explains what is happening. Anyway, the important note is
Anyway, back to the main point, I guess what bothers me about the OP is that it seems to me to be disingenuous.
The facts, if I understand them right, is that the OP invested personal money in, what appears in the linked thread, to be a really bad business plan, heavily dependent on one client who already seemed shaky. (Or maybe that was just the expansion phase, whatever.) As later comes out, the debt was all about the business.
I’d say it makes a tremendous difference in tone between ownership in a business and “a job,” not the least of which is the degree of implied responsibility. If you are just working in a company, minding your own business and suddenly find yourself out the door on a Monday afternoon, then sure, it’s usually out of your hands. However, when you are an owner, then there’s a greater degree of responsibility for the situation.
Investing in businesses is risky. Even with a solid business plan, many things can go wrong. If you are going to run a business, you can never be as financially conservative as if you were going to work for someone else for the rest of your career.
However, if things go south, and many times they do, then the big girl thing is to pick up the pieces and go on. I’ve got a friend who used to alternate between living in a MacMansion and his car, depending on how the business of the day was going. He finally found something that has worked out better long term for him, but I always admired his philosophical attitude when things were on the downside.
It’s all part of the game. Moonstarssun gambled with her own money, her employees’ time and money, and money from the CU. When the shit hits the fan, and there’s no longer enough money on the table for everyone to get their due, it’s naive to assume that people won’t find ways to grab whatever scraps they can.
Had the OP been the tale of a person who gave a shot at a business, but failed (even with a poor plan) then sure, it would be more sympathetic. Who here hasn’t screwed up really badly at some time? But playing for sympathy can backfire, and screaming at the CU and pointing fingers just makes it seems that she doesn’t understand the rules of the game she’s playing. Having your last dollar get taken sucks, but when you’ve bet it all, sometimes you’re going to lose it all.
It depends on the business and the people involved, but most small business owners don’t have the capital to finance everything themselves. Businesses are risky, and small businesses that much more so.
You usually try to minimize the risk by have a good business model – where are you going to get income from, how large of expenses, etc. You try to minimize exposure while still allowing yourself to
Just from the brief description here, it doesn’t seem that was the case here. She admits that she didn’t like taking on the burden of an increased workforce with an uncertain client, which proved to be the end.
Even with good business models, there is risk. Without a realistic plan, it becomes a crap shoot.
I’m not sure where you’re doing business. Most small businesses I’ve seen go under, especially start-ups, do not close with any profit. Many small businesses in the US are financed by a combination of savings and borrowing; often credit cards or home loans. In service industries companies won’t have much in the way of assets, but once they’re in business for a while you’d expect that their receivables will be greater than any accounts payable and any debt. But what happens if their receivables become uncollectible? Suddenly, they’re deadbeats.
This isn’t limited to small businesses in any sense either. Corporations regularly incur debt of much more than the cash they have on hand. Whatever was used as collateral might be an asset that can’t be realized anytime soon. Corporate bankruptcies occur all the time because companies have apparently borrowed more than they can afford.We don’t characterize those companies as deadbeat, instead, we recognize that declaring bankruptcy is a good move.
And in a sense, moonstarsun did not take the credit union’s money. She had equity in her home, and the bank gave her money based on that equity. They knew there was a risk, they have recourse.
moonstarsun, I’m sorry you’re going through this. I hope things work out for you.
I don’t know that anyone is expecting you to starve yourself to pay back your debts. On the other hand, maybe pitching a tantrum when the credit union tries to cut its losses isn’t such a good idea either.
You had an agreement. You didn’t live up to your end. Maybe that wasn’t your fault - lots of people who default say so, and some of them are right. But calling it “stealing” when the credit union does what you agreed they could do is a bit much. One wonders why the same “business is business and it’s nothing personal” attitude towards the employees who didn’t get paid can’t be applied to the credit union.
Good luck on the job search.
Regards,
Shodan
Risk, always. Most small business fail. That is why smart people try to keep as big a wall as possible between their personal and business finances.
Debt, often, but certainly not necessarily. There are some small-business advisors that recommend never borrowing a penny (save up the money, start small, fund all growth with profits).
:smack: That’s why I’m never asked back! 
I think the OP is going to make damned sure something like this never happens again (as much as one can). Truly, I believe she sees this as a major fuck up on her part. If in her emotional reaction to all this she blamed the credit union, so what? That doesn’t make her delusional or a liar or a bad person.
Again, the only thing I think she should blame herself for is starting a Pit thread and expecting sympathy or willing ears(eyes?). Sure she made some mistakes, costly ones that hurt now and will for some time–isn’t that enough? Or does she need to give a pound of flesh to the Dope as well?
Yeah! Because Fannie Mae and Freddie Mac (government sponsored lending institutions) have performed marvelously these last 3 years and didn’t contribute to the mess we’re in! (Hint: They’re pretty much insolvent.)
Two different companies. The one I was invested in closed in February, and I was lucky enough to land a job with a company that was expanding about the time we closed up shop. Unfortunately, that company was having the same problems everyone else was at that time: no one was giving out loans. So unfortunately, my new employer couldn’t get the funds to keep the business going. I got laid off.
Sorry if it sounded like I was doing a little bait and switch there when I was explaining everything. I was trying to keep my story from running even longer than it was. It wasn’t a lie of omission, it was a desire to be somewhat brief.
I still consider the whole issue with the employees very personal. And I plan to pay them out of my own pocket when I can. Of course I can’t do it now, and I can’t drag around a big load of guilt every day about it–that’s counterproductive. They’re one of many debts I need to take care of, whether we declare bankruptcy or not. (At least my portion of what’s owed to them. My business partner will be responsible for his share as well.)
Oh hell yeah. We will definitely be working with a good financial advisor/debt counselor once there are finances to advise us about. And I don’t put the blame for any of this on anyone but ourselves. Of course I was reacting emotionally, but I bet most of you would do the same thing, especially after a seven-month downward spiral.
I was just looking for a place to vent when I started this thread. I wasn’t expecting sympathy or hugs or any of that stuff. It’s appreciated, of course, but I don’t see myself as the innocent victim of the economy, the credit union, my business partner, the Mafia or the Illuminati. Bad luck, bad timing, bad (or maybe just ill-considered) decisions were all contributing factors, as were some outside factors I had no control over.
Yep, I made mistakes. Yep, I’m paying for them. I take responsibility. Doesn’t mean I can’t bitch about it, though, does it?
One more comment, this one for TokyoPlayer. You mention doing the big-girl thing, that I gambled with employees’ income, etc. In my own defense, I fought like hell to keep the company going, putting in 80-hour weeks and trying desperately to handle way more than I was hired to do initially (and more than was agreed to as my role when I invested). I was hired to take care of the creative side of the business so my partner could handle business development. When I realized he was completely incapable of handling the business side of things, I did my best to pick that part up too. His mental health started to crumble, and I was essentially left running the whole company–after he made the decision (that I disagreed with) to hire a bunch of employees.
I’m not giving you a sob story or trying to play the victim here. I’m pointing out that I did the best I could in a shitty situation. Yeah, I fucked it up, but I made a valiant effort to keep things afloat and to NOT fuck up. There was no “oh well” about it.
So why are successful entrepreneurs lauded when they recount how they had several mortgages and maxed out their credit cards to bootstrap a business? America loves that when it is successful.
Hey, moonstarssun, maybe you could ask a passing mod to change the thread title just a bit. Say, replace the words “Credit union” with “SDMB Personal Responsibility Brigade”.
Good luck with your job searches. 
All 300 million of them, all thinking the same thing, huh?
Personally, I can admire their pluck in pursuing their dream, while simultaneously also thinking to myself that it was a stupid thing to do. I don’t bear them any ill will, unless in so doing they harmed someone else (e.g. they had kids, who are now homeless) or are somehow expecting other people to make it all better.
And AFAICT, the “if it works, you’re a genius, if not you’re an idiot” dynamic is pretty much a universal one, not specific to America. If there’s a difference, it’s in degree, not in kind.
How concrete operational are you? I said “in general” several ways and times. No one here thinks all 300 million Americans think alike on anything.
Yes, exactly. But IMO, in America, it is prevalent to a higher degree. That’s all. Line this up with your “expecting others to make it all better” and you’ve proven my point about the attitude America in general has about failure. Our social safety net is threadbare compared to other Western nations (and Asian ones, AFAIK). When small businesses go bankrupt, we all (all tax paying Americans) end up paying for it, one way or another. Why do castigation and acrimony have to go with it?
I’ve been away all day, so this is the first chance I’ve had to see the responses to my post of this morning. I hadn’t checked the OP to see what, if anything, had been said about the terms of the loan, which is why I blew that point. I’ve never borrowed money from a bank or credit union where I also had an account, so the concept of “setoff” was never a factor, which is why I wasn’t familiar with that particular aspect of banking regulations.
Not that it’s likely to come up for me personally, but that is certainly one reason to avoid borrowing money from any bank where I also have an account. I do have a credit card from the same bank where I have a checking account, but I’ve only used that card once (it was free when I opened the account).
Sweetheart, I was responding to the post where you decided to address me. I got no time or interest in going back to read what you said elsewhere.
“Social safety net” is a broad term, but generally speaking we have much, MUCH more of one than most Asian countries such as Japan.
I have no idea why you think this is true in any relevant sense. People owed money by the business pay for it, to be sure, and I suppose in some sort of ripple effect it hits everyone eventually … so what?
And as noted: small buinesses do not necesarily need to borrow money. Out of business does not equal bankrupt, if you’re smart.
I have never seen anyone castigated for failing in business per se; that would be quite boorish behavior. Usually I see them praised for giving it a shot. That’s certainly my attitude. I have seen people castigated who took unwarranted risks with money they shouldn’t have been gambling with (i.e., their kids’ college money, a second mortgage), or who took a risk and then wanted to blame everybody else or have someone else pay for it.* IMO, both of those types are wholly deserving of castigation, as they have behaved irresponsibly.
- I am not talking about the OP
Making a loss is not the same thing as being insolvent. If you start off with assets - liabilities equal to $100k at the start of the period, falling to $99k (ignoring drawings or additional infusions of capital) means you have made a loss. Balance sheet insolvency only occurs when assets - liabilities hits 0.
moonstarssunI didn’t say everything in all those quotes. Credit the proper person. Uncool.
Never been to China, have you? There is a society that only cares how much money you make.
Nope.
Sorry–bad coding on my part. I know those weren’t all yours, I just failed to put the names in when I was doing the quotes.
Indeed. To the extent that the credit union didn’t steal anything. But then again, nor did the OP. Didn’t stop you from accusing her of it.
Being unable to repay a debt is not theft. Lying on a loan application would be. Taking on the debt in the knowledge that you cannot repay it is arguably theft. But taking it on in good faith, intending and at the time able to repay it, and then, through changed circumstances being unable to repay it isn’t theft.
So we have the following situation:
Person A incorrectly claims a financial institution tole their money after a frustrating personal experience with said institution, and what seems like a very stressful overall situation.
Person B incorrectly accuses Person A of stealing, without extenuating circumstances.
Person B comes across much worse in this situation, IMHO.