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  1. #1
    Join Date
    Sep 2016
    Posts
    24

    Default Can My Personal Creditor Take Money from My LLC

    My question involves collection proceedings in the State of: Arizona.

    I defaulted on a car loan to lower my personal monthly expenditures. I don't have much money to my name at the moment.

    I have an LLC account with almost no money but in the past I have mixed/personal funds/assets/expenditures in the LLC account.

    I plan to start making money with this LLC very soon, will my creditors be able to take as much money from my LLC? Or only what I pay myself from the LLC?

    A lot of the money in the LLC will be funds from sales (some that goes to subcontractors/employees some for operations expenses and some for profit).. Can they just take whatever they want? Im concerned that they will garnish the account and then I wont even be able to pay my subs/employees. How can I protect my LLC from getting touched by personal creditors?

  2. #2
    Join Date
    Sep 2010
    Posts
    19,047

    Default Re: Can My Personal Creditor Take Money from My LLC

    We pretty much dealt with this in your other thread. Your membership in the LLC (including it's future potential earnings) is fair game in a personal lawsuit.

    You can't hide responsibility for your debts by hiding assets in an LLC or other vehicle.

  3. #3
    Join Date
    Sep 2016
    Posts
    24

    Default Re: Can My Personal Creditor Take Money from My LLC

    So what are my options?

  4. #4
    Join Date
    Sep 2010
    Posts
    19,047

    Default Re: Can My Personal Creditor Take Money from My LLC

    What option would you like? You pay your debts or risk having whatever assets you have attached to pay them.

  5. #5
    Join Date
    Oct 2014
    Posts
    7,293

    Default Re: Can My Personal Creditor Take Money from My LLC

    Quote Quoting Crext
    View Post
    So what are my options?
    You avoid owing money you can't pay. To that end, carry sufficient homeowner's, vehicle, and medical insurance and manage your personal finances prudently. You can't expect to owe money and yet keep all your assets from creditors. Not surprisingly, the law provides ways for creditors to collect what is owed them. If the law didn't do that, the credit markets would dry up because no one would be willing to lend if borrowers could freely refuse to pay without consequence.

  6. #6

    Default Re: Can My Personal Creditor Take Money from My LLC

    "I have an LLC account." "I plan to start making money with this LLC . . ." "What I pay myself from the LLC." "How can I protect my LLC . .. " etceteras, etceteras . . .

    Why the quotes from your post? Because they are expressions that would bring joy and happiness to an attaching creditor should one seek to break down your imaginary barricade by proving that your precious limited liability company is nothing more than an a fašade, a front, an alter ego!

    You seem to have much to learn about the matter of protecting one's personal assets in the creation and maintaining of a licensed, fictitious business entity.

    A sterling example of your ignorance of the subject and the need to maintain your personal financial affairs totally separate from that of the LLC is in your expressing fear that a garnishment of the LLC could prevent the payment of "my subs/employees"!

    Is it necessary to explain to you that those workman would neither be your subcontractors nor your employees? Your assumption to the contrary is the very fodder needed in proving that "your LLC" is nothing but a sham, a hollow shell, a "Yellow Brick Road" straw man!

    Also, if a judgment creditor of yours were to seek satisfaction of its judgment through LLC, it would not be by way of what your refereed to as a "garnishment".

    Rather it would be "a charging order" issued by an appropriate court. Which in effect would be a lien against your economic interests in the LLC. Thus entitling the judgment creditor the right to receive any distributions that would otherwise go to you as an LLC member. (See: Arizona Revised Statutes (A.R.S.) Section 29-655(A)

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