Will my personal bankruptcy affect my LLC?

Asked over 4 years ago - Henderson, NV

My husband and I have an LLC in Nevada and we are looking into filing for personal bankruptcy. Will this affect our LLC or is it considered a seperate entity?

Attorney answers (2)

  1. William C. Devine II

    Contributor Level 13

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    Answered . If you could sell the LLC, pay off all of the LLC's debts, and still have money remaining, then Yes, your personal bankruptcy would affect your LLC.
    When you file bankruptcy, the trustee's job is to take any asset you have that has a value, sell it, and use the excess money from that sale, to pay some of your debts. If your LLC owes more in debts than it has in assets, then it is not an asset that has any value so the trustee will generally 'abandon' the asset and you're good.

    An LLC protects you from the liabilities of the LLC but does not generally protect the LLC from your personal liabilities. There are ways to structure your LLC and reposition your assets in a way that will protect your business from your personal liabilities and vice versa, but a simple LLC doesn't do it.
    You should contact a bankruptcy attorney in Henderson to discuss this. I offer free consultations if you do not already have an attorney in mind.

    William

  2. Jeffrey Daniel Larkin

    Contributor Level 15

    Answered . The LLC will not be affected assuming it has outstanding debt that exceeds its assets or if there are no assets of the LLC at all.

    Mr. Larkin is licensed to practice law in CA and is located in San Diego. His response here does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. Mr. Larkin strongly advises the questioner to confer with an attorney in their own state to acquire more information about the specifics of their case.

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