Judgement against an LLC

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Latest post 01-14-2013 2:16 PM by ca19lawyer2. 2 replies.
  • 01-14-2013 8:15 AM

    • TRIMS30
      Consumer
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    • Joined on 01-14-2013
    • FL
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    Judgement against an LLC

    Wife, daughter and I are the members of an Arizona LLC - a computer consulting company.

    Wife and I expect to be sued in the next few months for defaulting on a personal loan unrelated to the LLC

    Can a Judgement be placed against the LLC?  LLC has no significant hard assets - just a couple of 2-3 yr old computers.  Am concerned as the LLC is my main source of income.

     

    Any comments are appreciated.

     

    Thanks

  • 01-14-2013 10:04 AM In reply to

    Re: Judgement against an LLC

    TRIMS30:
    Can a Judgement be placed against the LLC?

    No.

    The judgment will be against you personally.

    However, "even though creditors can't collect directly from an LLC for an owner's personal debts, there are other ways creditors might try to go after the LLC for the owner's personal debt. These include:

    1) obtaining a charging order requiring that the LLC pay the creditor money distributed to the debtor-owner

    2) foreclosing on the debtor-owner's LLC ownership interest, or

    3) getting a court to order the LLC to be dissolved and all its assets sold."

    The above is from a Utah website but I suspect that the laws are the same or similar in Arizona.

    More info at:

    http://www.nolo.com/legal-encyclopedia/llc-protection-members-personal-debt-utah.html

    TRIMS30:
    Am concerned as the LLC is my main source of income.

    It's possible that a thoroughly ticked off creditor can put that income in jeopardy.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 01-14-2013 2:16 PM In reply to

    Re: Judgement against an LLC

    TRIMS30:
    Can a Judgement be placed against the LLC?

    I'm not sure what you mean by this, but your interest in the LLC is an asset that could be taken in satisfaction of the judgment.

     

    TRIMS30:
    LLC has no significant hard assets - just a couple of 2-3 yr old computers.  Am concerned as the LLC is my main source of income.

    If you're expecting to lose the lawsuit, then you'd better figure out a way to deal with the situation, and that might mean a consultation with a bankruptcy attorney is in order.

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