If I file bankruptcy to avoid a lawsuit against my LLC, can the plaintiff go after my personal accounts if I have at times transferred funds to my personal account?
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If I file bankruptcy to avoid a lawsuit against my LLC, can the plaintiff go after my personal accounts if I have at times transferred funds to my personal account?
Asked on September 12, 2012 under Bankruptcy Law, Illinois
Answers:
B.H.F., Member, Texas State Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Generally, a creditor cannot go after the personal assets when the consumer is an LLC-- however, there are exceptions. One of the exceptions is transfers made to the personal owner's account in order to avoid attachment by creditors. Not only the plaintiff, but the bankruptcy court can go after the funds if they determine that the transfer of funds were excessive (such as to breach the LLC protection) or if the transfers were fraudulent and made for the purposes of avoiding creditors. If the transfers were larger than usual and closer to the time that you were deciding to file for bankruptcy (like within six months prior), you're going to have more issues with the transfers. If the transfers were routine (ex: you paid yourself a regular paycheck each month and the payments were not excessive), then you have a better chance of protecting the assets in your personal account. Make sure that your bankruptcy attorney is aware of these transfers so that they can start working with you now before it becomes a major issue.
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