Am I able to collect on past due account from customer if I close the business?

UPDATED: Oct 1, 2022

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Am I able to collect on past due account from customer if I close the business?

I have a customer with past due account. If I want to close the business, can I still file to collect from the customer?

Asked on February 21, 2019 under Business Law, New Mexico


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

It depends:
1) Your business is a sole proprietorship: the money is owed to you personally, so you personally may collect (including by suing, if necessary).
2) Your business is an LLC or corporation and while you closed the business, you did not dissolve the LLC or corporation: the LLC or corporation can still collect.
3) Your business is an LLC or corporation and it "assigned" (sold or transferred by a legal document, for consideration or something of value) its accounts receivable to you personally: having taken over the right to be paid, you may collect.
4) BUT if the business was an LLC or corporation and you dissolved it without transferring the rights to the accounts receivable to you--in this case, you can't collect, since the entity which had the right to collect ceased to exist without transferring that right to anyone else.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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