Can a business partner’s personal financial matters interfere with future LLC earnings?

I am going into business with a partner who may have outstanding personal debt and/or collections. Can future judgements/collections affect my personal gains from the company? Would my home or personal bank accounts be in jeopardy? This would be an LLC.

Asked on June 29, 2009 under Business Law, Florida

Answers:

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I don't think that your partner's personal debts could reach your personal assets.  But his creditors could, conceivably, at some point take over his interest in your LLC, and force it to be closed down and liquidated so they could get his share in cash.  That, of course, would quite possibly ruin the business from your point of view, and you could lose your investment (or part of it) in the process.

Please have an attorney review all of the details here, as much as you know, before you commit yourself to anything.  I'm not saying you shouldn't do this, but you need to have a very clear understanding of what's possible, and what you might be able to do about it.


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