Can a LLC protect money and a vehicle from a personal bankruptcy?
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Can a LLC protect money and a vehicle from a personal bankruptcy?
I have a sole proprietor DBA which has not made any money until now. I will make about $10,000 in a month or two. If I form a LLC in the meantime, can I protect the cash earned and a vehicle that will be transferred to it from bankruptcy caused by a probable foreclosure in 2011? Will I lose my car in bankruptcy if I keep it personally or is it exempt? Would a Chapter S or an Inc. be any better?
Asked on November 5, 2010 under Bankruptcy Law, Florida
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Whether or not you would afforded protection in any of your assets depends on when the transfers were made. Generally, when you file for bankruptcy there is a "look back" period where the trustee is able to go back in time - generally one year but can be longer by state statute - and takes a look at all assets that have been transferred either to other parties or to corporations. They look at the reason for the transfer - as it can not be to hide assets or remove them from the reach of the trustee - and the amount of the transfer - a house sold for a dollar to avoid it being part of the bankrupt's estate. I would speak with an attorney - maybe a debt counselor too? - about how you can save everything that means something here to you and avoid problems in the future. Good luck.
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