Whether we are representing a plaintiff (seeking a judgment) or a defendant (defending against a judgment), an early conversation with the client almost always includes the reminder that getting the judgment is the easy part. Collection, regardless of which side you are on, is the hard part.
We have represented multiple clients who have a judgment against them personally. The creditor will almost certainly seek to discover personal assets such as bank accounts, vehicles, and other property held in the debtor’s name. In many cases, clients previously took steps to protect their various personal assets, such as with a comprehensive estate plan. Clients frequently become concerned about how the judgment will affect their business interests. That answer depends in large part on how the business interests are structured.
For example, an interest in an LLC has some advantage to individual members faced with a judgment against them personally as well as to the company. Under Illinois law, creditors cannot seize property belonging to an LLC to pay off personal debts of any LLC member. However, personal judgment creditors can obtain a charging order against the member’s interest. Such a charging order directs the manager of the LLC to pay to the creditor any distributions that would otherwise be paid to the judgment debtor. Such a charging order has no effect on the operations of the LLC whatsoever as the judgment debtor is gaining no interest in the LLC. Accordingly, a personal judgment against a member of the LLC does not affect the LLC itself or any other members of the LLC.
At Donnelly Law LLC, we are experienced at advising clients with respect to the consequences of personal judgments and their relation to business interests. If you are concerned about pending or imminent judgments against you, contact Donnelly Law LLC for a thorough consultation.
The information is this article does not constitute legal advice.