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If my LLC is being sued, what options do I have and can I be held personally liable?

If my home improvement company, a limited liability company, is being sued as a “corporation” in small claims court for a contract job, does the LLC have to follow the judgement? Can I be held personally liable for the judgement amount? Bear in mind the LLC has no assets/property to lose- would claiming bankruptcy be a solution or would I just need to stop operating? Any help would be greatly appreciated. Thank you.

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4 Responses to "If my LLC is being sued, what options do I have and can I be held personally liable?"

  1. Kasey C says:
    1) If you don’t follow the judgement, you can be sent to collections. As owner of said corporation, your personal credit history may be affected as well.

    2) Can you be held personally responsible? Possibly, depending on the other side’s lawyer and whether you have kept up with all the corporate paperwork.

    3) You need to consult an attorney, not a bunch of Yahoos like us.


    Kasey C, PC guru since Apple II days
    Always remember you’re unique, just like everyone else.

  2. Matthew Challis says:
    Generally, you CAN NOT be held personally responsible for business debts incurred by an LLC. LLC’s allow you to legally separate yourself from your business, creating a new business entity that will be held responsible for any debts.

    The only time you will be held liable for business debts within an LLC is when you have personally guaranteed a loan, or if you have personally and directly caused harm to the business or a person involved in the business or if you have done something illegal.

  3. crbesq says:
    An LLC is a corporation.

    You can only be held personally liable if you are personally named as a defendant in the suit.

    Nearly all consumer bankruptcy attorneys offer free consultations. Take advantage of this to meet with one and get advice based on all of the details of your particular situation. You can find a referral at NACBA.org (National Association of Consumer Bankruptcy Attorneys).

  4. Business Sarah says:
    A limited liability company gives you protection in these cases. While you really should run this by a lawyer to make sure everything is in place, the rule of thumb is that if you’ve run your business properly and followed all of the corporate formalities, your personal assets cannot be seized if your LLC is sued.

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