Post Judgment on LLC

[csfos513]

Won a judgment on a company LLC individual. After I won the judgment the LLC was forfieted for not paying Taxes. The state says now they are not covered by most LLC rules so that I may proceed at collection options. Would you try now getting a writ of execution for property? This guy is now opening a different LLC under a new name? Since the state shut him down and I have a judgment for 3K what are my options?
Sick a collections company and lose 40% of my judgment? Go to courthouse and send a writ to this guys home?

 

[FlyingRon]

Won a judgment on a company LLC individual. After I won the judgment the LLC was forfieted for not paying Taxes. The state says now they are not covered by most LLC rules so that I may proceed at collection options. Would you try now getting a writ of execution for property? This guy is now opening a different LLC under a new name? Since the state shut him down and I have a judgment for 3K what are my options?
Sick a collections company and lose 40% of my judgment? Go to courthouse and send a writ to this guys home?

Do you think the defunct LLC has any assets to collect upon? You're in a secondary position on collection to the tax man.

What was the nature of the LLC and the judgement? It probably would have been a good idea to pierce the vail and name the member responsible.

 

[latigo]

Won a judgment on a company LLC individual. After I won the judgment the LLC was forfieted for not paying Taxes. The state says now they are not covered by most LLC rules so that I may proceed at collection options. Would you try now getting a writ of execution for property? This guy is now opening a different LLC under a new name? Since the state shut him down and I have a judgment for 3K what are my options?
Sick a collections company and lose 40% of my judgment? Go to courthouse and send a writ to this guys home?

Interesting but confusing.

If, as you above write, your judgment debtor is an individual , then the only significance of his being a member of an LLC, past, present or future, is the prospect of obtaining a charging order against his then current LLC membership interest.

You tell us that the state folks inform that due to the forfeiture the rules are out the window for the defunct LLC. And then ask if you should try “getting a writ of execution for property”.

But you don’t identify what property; the judgment debtor’s individually owned non-exempt property - OR assets that may be owned by an LLC of which your judgment debtor is a member.

In sum, your options are limited. Your judgment is against an individual. That individual’s non- exempt assets would be subject to execution in order to satisfying the judgment.

If he is a member of an active LLC, his interest in the entity could be made the subject of a charging order. But you could not execute against specific assets owned by the entity. That is, unless as flying Ron indicated he is using the active LLC as what is know as has alter ego, meaning doing business as a separate entity in name only (an extremely common practice). In which case if proven, you could proceed directly against the assets of the LLC.

But far too complicated and expensive just to try and collect $3K!

Turn you judgment over to a collector and hope for the best.

And next time you visit the site be sure to mention which of the 50 states is involved.

I was going to say “mention the state of the union”, but that is too depressing.

 

[Willlyjo]

Interesting but confusing.

If, as you above write, your judgment debtor is an individual , then the only significance of his being a member of an LLC, past, present or future, is the prospect of obtaining a charging order against his then current LLC membership interest.

You tell us that the state folks inform that due to the forfeiture the rules are out the window for the defunct LLC. And then ask if you should try “getting a writ of execution for property”.

But you don’t identify what property; the judgment debtor’s individually owned non-exempt property - OR assets that may be owned by an LLC of which your judgment debtor is a member.

In sum, your options are limited. Your judgment is against an individual. That individual’s non- exempt assets would be subject to execution in order to satisfying the judgment.

If he is a member of an active LLC, his interest in the entity could be made the subject of a charging order. But you could not execute against specific assets owned by the entity. That is, unless as flying Ron indicated he is using the active LLC as what is know as has alter ego, meaning doing business as a separate entity in name only (an extremely common practice). In which case if proven, you could proceed directly against the assets of the LLC.

But far too complicated and expensive just to try and collect $3K!

Turn you judgment over to a collector and hope for the best.

And next time you visit the site be sure to mention which of the 50 states is involved.

I was going to say “mention the state of the union”, but that is too depressing.

Turn his judgement over to a collector? Bad advice Lat. A collector, if successful, would charge about half of the judgement. If the judgement can be recovered, it certainly wouldn't be too complicated or expensive if the Op did a little research on Judgement Recovery. Sorry but nobody should have to rely on the expensive collection organizations to recover their judgements.

 

[dcatz]

I have to agree with latigo and to a greater degree than just finding the post confusing.

I read it when the thread began and only FlyingRon had replied. I then had to go back through the prior 8 posts to know the OP is in Texas, a notoriously debtor-friendly state. My immediate thought was to pass because, if the OP has to pierce the veil to collect, this will not end well. Moreover, it wasn’t and still isn’t clear to me from the description of the debtor (“company LLC individual”) whether he was one of a number of shareholders in a now-defunct LLC (making a charging order a viable means of enforcement) or whether he “was” the defunct LLC (meaning an alter ego theory of liability).

Seemingly, the OP sued the individual debtor (or did he?) Was it for action(s) other than those of the LLC (if so, why is the LLC even mentioned)? If it was for acts committed “by the LLC” while it was the assumed alter ego of the individual, that’s a different matter, and the limitations of Texas recovery statutes make enforcement against the new LLC a more important consideration.

However, primarily, I agree with latigo because I disagree the OP effects recovery by doing “a little research on Judgment Recovery”. Piercing the veil or proving alter ego as a pre-condition to recovery is about the most difficult task a creditor’s rights practitioner can have, and a collection agency is not going to do it either and is going to turn it over to its attorney and the OP might as well skip the middleman and go direct.

I don’t know how many times you’ve personally attempted that, but I speak from experience in a much more creditor-friendly state and often advise clients not to spend the money unless there’s a clear basis to support the effort. The necessary discovery can be long and extensive (and may not even be available to the OP post-judgment in Texas) and expensive. Just because someone is a one-man LLC doesn’t make him vulnerable, and there are companies all over the net that will prepare and file the papers for you. It’s less expensive to do it right than it is to cut corners and leave yourself vulnerable.

If he’s trying for recovery in Texas and wants to do it himself, he should research other means and ensure that the tax problems won’t stop him whatever he comes up with.

 

[latigo]

I have to agree with latigo and to a greater degree than just finding the post confusing.

I read it when the thread began and only FlyingRon had replied. I then had to go back through the prior 8 posts to know the OP is in Texas, a notoriously debtor-friendly state. My immediate thought was to pass because, if the OP has to pierce the veil to collect, this will not end well. Moreover, it wasn’t and still isn’t clear to me from the description of the debtor (“company LLC individual”) whether he was one of a number of shareholders in a now-defunct LLC (making a charging order a viable means of enforcement) or whether he “was” the defunct LLC (meaning an alter ego theory of liability).

Seemingly, the OP sued the individual debtor (or did he?) Was it for action(s) other than those of the LLC (if so, why is the LLC even mentioned)? If it was for acts committed “by the LLC” while it was the assumed alter ego of the individual, that’s a different matter, and the limitations of Texas recovery statutes make enforcement against the new LLC a more important consideration.

However, primarily, I agree with latigo because I disagree the OP effects recovery by doing “a little research on Judgment Recovery”. Piercing the veil or proving alter ego as a pre-condition to recovery is about the most difficult task a creditor’s rights practitioner can have, and a collection agency is not going to do it either and is going to turn it over to its attorney and the OP might as well skip the middleman and go direct.

I don’t know how many times you’ve personally attempted that, but I speak from experience in a much more creditor-friendly state and often advise clients not to spend the money unless there’s a clear basis to support the effort. The necessary discovery can be long and extensive (and may not even be available to the OP post-judgment in Texas) and expensive. Just because someone is a one-man LLC doesn’t make him vulnerable, and there are companies all over the net that will prepare and file the papers for you. It’s less expensive to do it right than it is to cut corners and leave yourself vulnerable.

If he’s trying for recovery in Texas and wants to do it himself, he should research other means and ensure that the tax problems won’t stop him whatever he comes up with.

Most elucidating dcatz. But let me explain something.
Agreeing with me isn' t going to enhance your reputation in here.