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Are the assets of an LLC protected from the personal debts of the members?

Branford, CT |

An example would be personal medical bills that are in no way connected the the LLC.

Attorney Answers 4


  1. Best answer

    Yes the LLC assets would be shielded from the personal debts of its members, HOWEVER, as the membership interest in the LLC is an “asset of the personal debtor” that protection maybe short-lived.

    In CT an LLC is treated as a separate legal entity (so long as certain conduct isn’t engaged in to breach that corporate identity (i.e. co-mingle funds, etc). The LLC members each have a membership interest in the LLC and are therefore entitled to distributions of the LLC’s profits. In addition, many LLC members may also be employees of their own LLC and therefore receive wages in addition to member distributions.

    As a result, when an LLC member has a personal debt the creditor typically will pursue vigorously that member for payment. If personal money is not available an aggressive creditor may file suit and obtain a judgment against the individual member. Once that judgment is obtained a Connecticut creditor has a variety of post judgment collection options. The CT Judicial Branch publishes a nice summary Enforcing Money Judgments at http://www.jud.ct.gov/lawlib/Notebooks/Pathfinders/EnforcingMoneyJudgments.pdf
    As it may relate to an LLC member two possible options for collection that would involve the LLC would be Wage Executions (Section 2 on see pg 7) and/or Charging Orders (see Table 5 on pg 39).

    While the LLC assets would likely be shielded under either scenario, the LLC member’s wages and/or distributions would be at risk, effectively limiting the benefit the LLC member will realize from their company.

    You should consult an attorney to evaluate your situation and try to negotiate a resolution to your personal medical bills, something a healthcare provider may be willing to do instead of the cost and expense of pursuing collection further.

    Good luck.

    If you've found my answer helpful and informative please “Mark as a good answer” below.

    Disclaimer: The foregoing answer does not constitute legal advice, is provided for informational and educational purposes only for persons interested in the subject matter. Each situation is fact specific and may be subject to state specific laws. Without a comprehensive consultation and review of all the facts and documents at issue it is impossible to evaluate a legal problem fully. This answer does not create an attorney-client relationship.


  2. Yes, unless the members commingled their personal funds, or signed things for their personal obligations in the LLC's name. As long as things were kept separate, the creditors wouldn't even know that the member co-owned an LLC.

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  3. Yes assuming that the LLC is operated as separate from its members. Things like commingly of assets would change this answer.

    Hope this helps.

    Please remember to designate a best answer to your question.

    Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website for more tax, estate and business articles is www.sjfpc.com. and his blog is

    LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.


  4. The answer to your question lies in the State LLC act of the State where the company was formed. In most States, the LLC Act contains language indicating that the "sole remedy" of creditor of a Member of an LLC is a "charging order."

    LLCs are more like partnerships than like corporations.

    It is a fundamental of partnership that you have the right to "pick your partner(s)." This means that without your consent, a new partner cannot enter the partnership. The "sole remedy" language contained in most LLC acts is seeking to protect the same principle - that is to prevent a creditor of a Member of the LLC from becoming a new Member by attaching and buying the Membership Interest. The charging order acts like a garnishment served on the LLC. If the LLC is making a distribution, the holder of the charging order, rather than the member against whom he holds a judgment, will receive the distribution. BUT the creditor will not become a member, not have a right to attach the assets of the LLC.

    In some States, the rule is different in the case of a single member LLC.

    You need to discuss this issue with an attorney practicing in the State where the LLC has been formed.

    Answering your question on AVVO, does not create a lawyer-client relationship between us. Under the rules of the Supreme Court of Illinois, or the rules of other jurisdictions, this answer may be regarded as advertising. Because questions provided on AVVO simply cannot contain a complete description of all the relevant facts, information contained in this answer should not be considered as individual legal advice or legal opinion. You are urged to consult an attorney licensed to practice in your State regarding your own legal situation.

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