I had a small machine shop and back in 1996 purchased a couple machines that Firstar bank financed. They took a lien on all the equipment we already owned to secure the loan.
The job that we'd purchased the equipment for was taken away from us in 1997 and by the middle of 1998 our other jobs were slowing down so we decided to downsize and auction off our older equipment so we could continue operating. The equipment sold for about 1/6 of what it was worth.
At the end of the auction I was informed by the auctioneer that all the proceeds would be going to Firstar Bank. It was 8 days before Christmas and we'd spent the last two months moving the equipment we were going to keep and getting ready for the auction and I'd exhausted all the money I had.
I did not have enough money to pay my employees before Christmas. I called Firstar Bank to see what they were doing with the money. I was behind on a couple payments so they said they were applying part of the money to them and to Januarys payment and then they were just going to hold 3 payments worth or $21,000.00 as collateral against the loan.
The only way they would give me part of the money was for me to give them a second mortage on my home. I foolishly decided to do it because my employees had kids and I didn't want them to go without. So they gave me $14,000.00
They told me If I needed them to they would apply the remaning amount to Februarys payment.in February I asked them to go ahead and do that.in the beginning of 2000 my work slowed down again and I began having trouble making the payments. I called them to tell them and they said that I was already running a month behind. They never applied Februarys payment as I had requested.
They filed a lawsuit against me and the first mortgage company didn't respond so that put Firstar in first place on my house.
I fought with them a year trying to get them to let me make reduced payments till the economy picked up.
In November they shut me down and will be auctioning off my machines and taking my home to sheriffs sale. I had to file bankruptcy or I would have owed them $400,000.00.
I guess my advice to othe people trying to run small business is be very wary of leases. These big banks are heartless. They put no money up for my house at all but now are just going to take it. Make sure if you sign an equipment lease there's a way to get out of it and if you have to put your house up it's really not worth it.
Susan
Tallmadge, Ohio
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