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Debt Liability

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Sweetie Hughes decided to fulfill her lifelong dream of opening her own cupcake store, Sweetie's Cupcakes. Regions Bank approved a $50,000 unsecured line of credit for Sweetie's Cupcakes based on documents signed by Hughes as the sole proprietor. Regions Bank provided funds to Sweetie's Cupcakes for two years. After the twenty-fifth month, Sweetie's Cupcakes stopped making payments on the loan. The unpaid balance continued to accrue at a rate of five percent per year as provided by the loan documents. Regions filed suit against both Sweetie's Cupcakes and Sweetie Hughes to recover the unpaid principal and interest. Is Sweetie Hughes personally liable for the unpaid debt? Why?

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This solution explains the Sweetie Hughes liability scenario. A thorough discussion is provided.

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This entire scenario is based on one sentence: Regions Bank approved a $50,000 unsecured line of credit for Sweetie's Cupcakes based on documents signed by Hughes as the sole proprietor.

The correct answer to this scenario is yes, she is liable because she is a sole proprietor. In ...

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