Garnishment

Can a personal bank account be frozen or garnished
for a llc business debt

Asked on October 10, 2017 under Business Law, Louisiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

No, your personal account may not be garnished or frozen for an LLC dept--that is whole point of "limited liability company," after all: to protect personal assets from LLC debts or obligations--except for the following three exceptions:
1) You personally guaranteed the LLC debt, which means you contractually gave the creditor the right to go after your personal assets for this debt.
2) Related to the above, the debt is to your bank (e.g. for a bank-issued credit card) and in the paperwork opening the account(s), you signed something authorizing them to take money owed the bank due to your LLC from your personal account.
3) The creditor sued you personally on the grounds your LLC was a sham or fraud (not a legitimate, run-independently-for-its-own-benefit business) used to defraud creditors and successfully got a court order or judgment against you "piercing the corporate veil" (the term "corporate" is used in this context for LLCs, too) allowing them to disregard the LLC's protection and go after you personally.


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