What's my worse case scenario in a lawsuit situation?

What is the name of your state? Hawaii

I was just notified that a lawsuit was filed against my s-corporation. I have absolutely no assets or access to money to pay legal fees. I'm barely surviving now. In fact, I was seriously considering filing BK for the company and myself personally prior to this recent news.

The only asset I can think of personally owning is my apartment. The I owe $200K on it and the most recent sale was $220K. However, accessing the very little amount of equity in my property is impossible because of my poor credit and closing costs.

I would basically like to know my worst case scenario. If I lose in court and a judgment is placed, would it follow me personally for the rest of my life? If my s-corp files BK, could the individual still come after me for the huge amount of money they're asking for?

Appreciate any comments and advice received.What is the name of your state?

Will follow you for 20 years and of course they will go after you "personally". After all, you are the S-Corp and it is not a hiding tool for debt or liability. BK will not defeat the judgment.

Rexlan said:

Will follow you for 20 years and of course they will go after you "personally". After all, you are the S-Corp and it is not a hiding tool for debt or liability. BK will not defeat the judgment.

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Just curious, doesn't the owner of an S-corp have limited liability? Secondly, what if this had been an LLC as opposed to an S-Corp. Then a creditor wouldn't be able to go after the LLC owner's personal assets, yes?

BTW, regarding bankruptcy. Isn't the point of a bankruptcy to get rid off all debts, albeit at a very steep price? Isn't a judgment a form of debt? Why won't a bankruptcy get rid of a judgment then??

Thanks for clarifying.

Bankruptcy is a relief from a judgment

Yes Bankruptcy would get rid of the judgment. As long as the judgment against you wasn't due to injuries of drunk driving. Any neglegence on your part. The bankruptcy would follow you for 10 opposed to the judgment of 20 years.

peppylady said:

Yes Bankruptcy would get rid of the judgment. As long as the judgment against you wasn't due to injuries of drunk driving. Any neglegence on your part. The bankruptcy would follow you for 10 opposed to the judgment of 20 years.

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Now we have two opposing replies, but I agree with peppylady. I am no attorney but I was given to understand that a bankruptcy absolves most debts, including judgments against the debtor by unsecured creditors.

And, I thought the point of running a business as a corporation as against a sole proprietorship was the benefit of a limited liability. OP, you MUST consult an attorney to get the worst case scenario but I am pretty confident that if your corporation is being sued, your personal assets are protected due to limited liability.

Thank you all for your valuale information. I received the filed Complaint a few days after posting this. Plaintiff has also listed me personally as a Defendant, along with my company. I have no money or access to money to pay for legal fees to take this to court. From what I can gather from the Complaint, I have a few days left to respond or it goes into default judgment. At this point, I don't have any assets to defend and am considering allowing it to default then file BK- business and personal.

Does anyone have insight on how this would change the "worse case" scenario presented to my original posting?

Thank you in advance for your advice.