If I form a LLC, will it it help cover me from the time I opened or from the formation date?

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If I form a LLC, will it it help cover me from the time I opened or from the formation date?

I had a tire business for a year and had to close due to lack of finances. I had a 2 year lease and the people are threatening garnished wages and sale of property to cover the debt. I was told that if I form a LLC it will help protect me and my family from this. I this true?

Asked on January 28, 2012 under Real Estate Law, Virginia

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Forming the LLC for the business now will not protect you from a suit as I am sure that you signed the lease personally.  If you were thinking of forming an LLC and transferring your assets in to it to protect your personal assets, that may be a problem too as a creditor can try and set aside the transfer as fraudulent or to avoid payment or judgement.  I would go and speak with a lawyer to help you here.  Can you negotiate a settlement?  See if they have an obligation to mitigate damages by re-letting the property.  Don't wait for the other shoe to drop. It is no way to live.   Good luck.


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