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  1. #1
    blondi372 is offline Junior Member
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    Aug 2004
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    child support/s-corp/sole-proprietorship

    What is the name of your state?Georgia

    Can the owner of a sole proprietorship who owes arears in child support be forced out of business, or have his company bank account froze?

    Can the president or majority stock holder or owner of an s corporation have the company shut down or corporate bank account froze due to arrears in child support?
  2. #2
    Snipes5 is offline Senior Member
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    CS Enforcement can likely seize any account on which the deadbeat's name is listed, regardless of the character of the account, with the possible exception of a C Corp.

    If such a seizure will bankrupt the deadbeat's business, perhaps the deadbeat should have made prior arrangements to pay the arrearage.

    Snipes
  3. #3
    nextwife is offline Senior Member
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    I'm not so sure. If a person is a co-owner of a S corp business with other partners, I'm not sure that the corporations accounts can be gutted because one member has an individual debt to a party other than the corp.

    Say, for example that the corporation is a small homebuilder. The title company writes a check to the contractors corp to pay a construction draw and the funds are deposited in their account to then pay the subs for work done on a home they are building for someone on their lot. If one partner owes CS, you are saying THEY freeze the construction draw funds ounce in the corporate account, leaving the sub-contractors unpaid (and maybe THEIR CS that any subcontractors pay out of their buisness unpaid) and resulting in mechanics liens against the lot owners property - for a debt NOT owed by the corporation the owner is doing business with?

    I DO believe that any salary that is drawn from the corp by the obliger can be garnished.
    Last edited by nextwife; 09-06-2004 at 08:29 AM.
  4. #4
    Snipes5 is offline Senior Member
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    I don't believe S Corps are as thoroughly shielded from individual debt as are C Corps. That was the reason for my reply.

    Snipes
  5. #5
    abezon is offline Senior Member
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    Yes, S-corps are as shielded as C-corps. That's one reason to use an S-corp instead of a sole-pro. The S-corp is a separate legal entity and its funds can't be garnished for a shareholder's debts.

    However, if the owner didn't take a salary or dividends, but ran personal expenses through the corp accounts, the state could ask a judge to "pierce the corporate veil" because the owner had negated the corp protections by using corp money for personal expenses. Whether this would be successful would depend on the state's laws and the facts of the case.
    This post does not constitute legal advice, nor does it create an attorney-client relationship. Postings are based only on the information provided and you should consult an attorney in your area before relying on information contained in this post.

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