Can my LLC's bank account be garnished for a personal debt?

[pneuma1]

I'm a small business owner of a LLC. My business account has been frozen for garnishment for personal debts incurred long before I owned this business. I do occasionally use the account for personal purchases and I do transfer funds or use the ATM as a way of paying myself. I also bring home less than the federal minimum wage at this point. I do however pay taxes on those funds. The rest goes to expenses to keep the business going. I received a Challenge to Garnishment, Notice of Exempt Property. with notification of the garnishment. The first paragraph says: I/We claim the following property or money is exempt from execution or is not subject to garnishment:..........................

Can I claim here that the account is exempt because it is a business account and all the assets belong to the LLC? Do I have to file a Motion to Vacate instead based on those reasons. Or do I try to get the exemptions based on the wage issue?

[IHateCAs]

I would say no. Go speak to a lawyer as this is very important to the success of your business.

[IHateCAs]

Your using the account for personal purchases is a big no no. If you want your business to be considered as a seperate person, you must treat it like one. Would you use your old employers bank account to make personal purchases?

[unusualsuspect]

As long as the LLC account was set up before the garnishment order was done. Just do not use the account for personal expenses.

If that account is garnished, then see a lawyer as you would have a heck of a case.

[rella5]

this is from the code of the state of va. I don't know where the OP resides and this may only be in some states and maybe I'm interpreting this incorrectly and it may not apply to bank accts but it sounds to me like creditors do have some remedy against LLC members? or am I just way off base here.

§ 13.1-1041.1. Member's transferable interest subject to charging order.

A. On application by a judgment creditor of a member or of a member's assignee, a court having jurisdiction may charge the transferable interest of the judgment debtor to satisfy the judgment. To the extent so charged, the judgment creditor has only the right to receive any distribution or distributions to which the judgment debtor would otherwise have been entitled in respect of the interest.

B. A charging order constitutes a lien on the judgment debtor's transferable interest in the limited liability company.

C. This chapter does not deprive a member or a member's assignee of a right under exemption laws with respect to the judgment debtor's interest in the limited liability company.

D. The entry of a charging order is the exclusive remedy by which a judgment creditor of a member or of a member's assignee may satisfy a judgment out of the judgment debtor's transferable interest in the limited liability company.

E. No creditor of a member or of a member's assignee shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited liability company.

(2004, c. 601; 2006, c. 912.)

[littlerebel]

"Can I claim here that the account is exempt because it is a business account and all the assets belong to the LLC? "

Chances are you may not be able to claim that . Especially if you are a single member LLC. "google" search the term "charging order" and read up. A lot of people mistakenly think that because an LLC protects them from inside liabilities (suits against the entity) that it also protects from outside liabilities(creditors of members) and it is simply not true.

[pneuma1]

Thanks everyone, I've received so many different replies here and elsewhere

that I'm just gonna have to wing it. The funds currently in that account will be released Friday so I have to respond now. Luckily, there is very little in it but I guess they get to keep the freeze/garnishment going for any funds coming in for the next 90 days.

I'll be back to let you know what I've learned .