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Hello,
I have a question:
I have about $50k in UNSECURED credit card debt and one judgement has been obtained against me (only one so far). I do not have any personal accounts at any major banks, I use a small local bank and even there I try not to keep much money. My mortgage is paid by a corporation, otherwise I use cash for daily expenses.
I am an officer of a corporation and currently this corporation has a single member (myself).
All income stays in the corporate account, I DO NOT withdraw anything as salary.
My question: Can the plantiff, their attorney or a collection agency somehow manage to intercept the corporations' income? Or am I safe as long as the income is earned by the corporation and not myself?
P.S. This is a purely legal question, please no "moral" talk,only facts =) Thank you.
Dear CD, I am a cheat and a fraud. Even though I am only a "little guy", I still steal big, dirty and legally. Why should the big guys have all the fun? Please tell me how to do this more effeciently. And on a final note, withhold your moral judgements. I add this because I know what I'm doing isn't exactly "right", but hey ... the law's the law, right?
You can't use a corporation or any other business entity to shield you from liability for personal debt. While it may make it tougher for creditors to get at that money, this will only delay the inevitable. At the end of the day, creditors can get at whatever assets you have to satisfy the debt, and one of your assets is your ownership interest in the corp.
And even if this were the other way around, i.e., it was all business debt, the fact that you seem to freely intermingle corporate and personal expenses may destroy the liability shield your corporation could provide.
Dear CD, I am a cheat and a fraud. Even though I am only a "little guy", I still steal big, dirty and legally. Why should the big guys have all the fun? Please tell me how to do this more effeciently. And on a final note, withhold your moral judgements. I add this because I know what I'm doing isn't exactly "right", but hey ... the law's the law, right?
Whatever. Similar stuff is done all the time, just on a much larger scale, and with variations. When I see something like this, and then remember how TARP was passed, I tend to not lose any sleep over it. The key issue here is that any decent lawyer will quickly discover the corporate veil has been pierced, and be able to go after assets. In a bankruptcy, that would likely be just the house, and it would be difficult to do much with except for filing a mechanic's lien on it. As for collection agencies, I doubt they would spend the time or money.
For those with panties in a bunch, the usual method is to take a huge salary for years, load a corporation with debt, then take the corporation bankrupt, and perhaps buy the assets back for pennies on the dollar and start over. Ever wonder why mattress and rug stores ALWAYS seem to be going out of business? It is an easy way to clear judgments and suits, along with any future liability.
Whatever. Similar stuff is done all the time, just on a much larger scale, and with variations. When I see something like this, and then remember how TARP was passed, I tend to not lose any sleep over it. The key issue here is that any decent lawyer will quickly discover the corporate veil has been pierced, and be able to go after assets. In a bankruptcy, that would likely be just the house, and it would be difficult to do much with except for filing a mechanic's lien on it. As for collection agencies, I doubt they would spend the time or money.
For those with panties in a bunch, the usual method is to take a huge salary for years, load a corporation with debt, then take the corporation bankrupt, and perhaps buy the assets back for pennies on the dollar and start over. Ever wonder why mattress and rug stores ALWAYS seem to be going out of business? It is an easy way to clear judgments and suits, along with any future liability.
Harry, my panties aren't in a bunch, but I truly believe that what made this country great and why being an American was something that was respected and honored all over the world was our relative lack of corruption. I feel like Mr. Smith in Washington when I talk like this, but I believe every word of it. Our nation was built on hard work, thrift and honest dealings. When you look at why we prospered and Latin America didn't, I think it's because of our values and our character. Argentina should be a first world economy today. But it's not. And it's not from lack of resources or opportunities. It's from lack of character and values.
I believe our nation's future will not be as bright as its past. And it's because too many MikeinSeattles have quit wondering how they can get ahead and help their fellow citizens and better the Republic at the same time; now, they just wonder how they can get ahead. I'm not singling Mike out here. His dishonest dealings are small potatoes and just par for the course these days. Hardly shocking... and sadly, now even expected.
I just think it sucks. I wish Mike had established a business because he had a good idea on how to sell something or do something better than it had been done before because Mikes that like at are what make communities better. Instead, Mike established a business to figure out how he could waste thousands of other people's dollars and not be penalized by it. Whatever.
I guess this is the part where Mike weighs in that he racked up $50,000 in unsecured debt for noble reasons, and discharging it is the only sensible thing to do so he can get on with his life as a productive citizen. Whatever, Mike.
As the old song goes, go ahead and *********r neighbor... go ahead and cheat a friend. America was beautiful while it lasted, but idealism grows into cynicism as it ages and people figure out that idealists make easy marks.
Harry, my panties aren't in a bunch, but I truly believe that what made this country great and why being an American was something that was respected and honored all over the world was our relative lack of corruption. I feel like Mr. Smith in Washington when I talk like this, but I believe every word of it. Our nation was built on hard work, thrift and honest dealings. When you look at why we prospered and Latin America didn't, I think it's because of our values and our character. Argentina should be a first world economy today. But it's not. And it's not from lack of resources or opportunities. It's from lack of character and values.
I believe our nation's future will not be as bright as its past. And it's because too many MikeinSeattles have quit wondering how they can get ahead and help their fellow citizens and better the Republic at the same time; now, they just wonder how they can get ahead. I'm not singling Mike out here. His dishonest dealings are small potatoes and just par for the course these days. Hardly shocking... and sadly, now even expected.
I just think it sucks. I wish Mike had established a business because he had a good idea on how to sale something or do something better than it had been done before because Mikes that like at are what make communities better. Instead, Mike established a business to figure out how he could waste thousands of other people's dollars and not be penalized by it. Whatever.
I guess this is the part where Mike weighs in that he racked up $50,000 in unsecured debt for noble reasons, and discharging it is the only sensible thing to do so he can get on with his life as a productive citizen. Whatever, Mike.
As the old song goes, go ahead and *********r neighbor... go ahead and cheat a friend. America was beautiful while it lasted, but idealism grows into cynicism as it ages and people figure out that idealists make easy marks.
I truly hope there are more of us out here that feel the way you do rather than the way Mike does. But sometimes I can't help believing that we are a dwindling minority and that makes me feel very pessimistic about the future.
Hello,
I have a question:
I have about $50k in UNSECURED credit card debt and one judgement has been obtained against me (only one so far). I do not have any personal accounts at any major banks, I use a small local bank and even there I try not to keep much money. My mortgage is paid by a corporation, otherwise I use cash for daily expenses.
I am an officer of a corporation and currently this corporation has a single member (myself).
All income stays in the corporate account, I DO NOT withdraw anything as salary.
My question: Can the plantiff, their attorney or a collection agency somehow manage to intercept the corporations' income? Or am I safe as long as the income is earned by the corporation and not myself?
P.S. This is a purely legal question, please no "moral" talk,only facts =) Thank you.
Nope. It might make it a little harder to get at your assets, but after they prove you are the corporation and the corporation is you, it'll be as easy as pie.
Hello,
I have a question:
I have about $50k in UNSECURED credit card debt and one judgement has been obtained against me (only one so far). I do not have any personal accounts at any major banks, I use a small local bank and even there I try not to keep much money. My mortgage is paid by a corporation, otherwise I use cash for daily expenses.
I am an officer of a corporation and currently this corporation has a single member (myself).
All income stays in the corporate account, I DO NOT withdraw anything as salary.
My question: Can the plantiff, their attorney or a collection agency somehow manage to intercept the corporations' income? Or am I safe as long as the income is earned by the corporation and not myself?
P.S. This is a purely legal question, please no "moral" talk,only facts =) Thank you.
I don't know all the details. But I have had a few courses and know quite a few people in the legal world, and I'm pretty sure that the answer is:
1. Yes, the collection agency can intercept the corporation's income under certain circumstances of alleged fraud.
2. No, you are most certainly NOT safe.
The spirit of most of the laws pertaining to this is: if it actually acts like a corporation, then treat it as a corporation; if it acts like a front for personal income protection, then treat it like personal income. This is similar to the tack they take for dealing with contractors/interns vs. full-time employees for tax purposes. They basically say: if it acts like a full-time employee, we'll treat it like a full-time employee, regardless of what you call it. There are specially developed tests for this. Similarly, there are numerous, detailed "tests" that a skilled attorney will relish the opportunity to apply to your case to potentially poke through your charade of a home-made "corporation" - especially once they root through all of your actions and scrutinize every move you've made for the past decade or so.
Say, ever heard of the term "piercing the corporate veil"?
Bottom line is that people are not as stupid as you think, and you're not the first to come up with this little idea. I hope you consulted with good attorneys and tax accountants before you committed yourself to this course of action; else, you may quite possibly deserve to be prosecuted for fraud. But I'll leave that to the courts to discern - it sounds like you're inevitably heading for a legal battle anyway.
Asset protection can be pretty complicated. You really need to speak to an attorney who handles this type of thing.
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