Im a share holder in a LLC business and I want to know if a judgment against me personally can be attatched to the LLC?

Asked almost 2 years ago - Olympia, WA

I would like to know if I get a judgement against me can the person that is collecting the judgment try and collect from the LLC business that Im attatched to or share holder of?

Attorney answers (4)

  1. J Patrick Diener

    Contributor Level 12

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    Answered . Generally not, so long as you were not acting on behalf of or for the benefit of the LLC. If the LLC was totally separate from whatever it is that you're being sued for, then the assets of the LLC should be protected. However, your interest in the LLC can be viewed as an asset itself, and if you are making a salary or taking a share of profits from the LLC, then the judgment holder can potentially collect against those things.

    *This answer is intended for informational purposes only and does not establish an attorney-client relationship or... more
  2. Matthew Erik Johnson

    Contributor Level 17

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    Lawyer agrees

    Answered . There are two ways a judgment creditor could possibly get from your personal liability and reach into your LLC.

    1. You were acting as an agent of the LLC at the time of the accident. So if you were performing official duties, traveling, selling, or acting for the benefit of the business, then the LLC is secondarily liable.

    2. There is no discernable difference between your personal and business side. This is called "veil piercing", and can be done when you mix your personal matters with your business matters. Such as by paying personal expenses using a business account, using company assets as personal assets, and so on.

    Matthew Johnson phone# 206.747.0313 is licensed in the State of Washington and performs bankruptcy, short sale... more
  3. Larry R Schreiter

    Contributor Level 8

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    Lawyer agrees

    Answered . A judgement creditor against a partner (which is generally how a member interest in an LLC is treated) can obtain a court-approved "charging order" against the LLC. This works like a garnishment, such that it cannot force dissolution of the LLC or force the liquidation of your membership interest to satisfy its judgment, but if there are to be distributions made from the LLC to its members, the charging order serves to intercept the distribution to the member who is a the judgment debtor, and have the LLC issue the distribution, depending on the particular jurisdiction and court, either directly to the judgment creditor or to the court for application against the judgment and disbursement to the judgment creditor.

    Participation on this board does not create an attorney-client relationship. Only professional consultation and a... more
  4. Michael Bernard Rover

    Contributor Level 9

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    Lawyer agrees

    Answered . A personal judgment can attach to your membership interest in the LLC. As an analogy, imagine you owned shares of stock in Microsoft Corp. A creditor could levy against those shares in an investment account and have the shares sold to satissfy the judgment against you. Similarly, a creditor can levy on your membership interest in the LLC. The big difference is that there is not an immediate market for a membership interest in a small LLC. There is no easy way to convert it into funds to satisfy the judgment. Therefore, most creditors are not interested in levying on your membership interest unless its just to harass you into paying. The creditor cannot however directly levy the assets of the LLC though.

    Attention: This response is based upon general legal theories and may or may not specifically address issues that affect your individual legal matter or situation. It should not be relied upon outside of the jurisdiction(s) in which the attorney is licensed to practice as each state has different laws. Each situation is fact specific and requires comprehensive legal evaluation following a thorough consultation and review of all the facts and evidence available. This response does not create an attorney-client relationship between the asking and answering parties.

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