Can an LLC be held liable for a personal debt?
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Can an LLC be held liable for a personal debt?
I was convicted of wire fraud by the company that I previously worked for. I am ordered to by restitution which I am doing monthly. I have recently opened an LLC. Can this company that I owe money to, sue my LLC for the lump sum of the restitution?
Asked on March 6, 2014 under Bankruptcy Law, Georgia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 10 years ago | Contributor
As a general matter, no--an LLC is a separate legal entity, not responsible for its members debts (and they are not responsible for its debts). However, if it can be shown that this is not a "real" LLC carrying on business, but is instead simply an attempt to defraud your personal creditors by putting personal income or assets into the LLC's name, then yes--in that case, they can reach (through bringing and winning a court action) the LLC's assets.
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