Q: How long does it take to get a court order to collect money from my personal account after my LLC goes out of business?
My corporation is going out of business but the bank account is $5,000 overdrafted. The bank is closing the account and said that as the owner of the business, I am personally liable for the money owed.
A:
Things like this normally go through a process of sending you a series of collection letters, and if not paid will eventually go to a collection agency or lawyer. Nobody is going to make a big deal over a $5000 debt unless they can identify assets or income that a court judgment could be enforced against.
More frightful for you is that once you have burned a bank over an overdraft, other financial institutions are likely to reject you if you try to open a new account.
If you have other debts, see a bankruptcy attorney for help.
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A:
Under California law, the time it takes for a court order to collect money from your personal account after your LLC goes out of business can vary significantly. The process begins when a creditor, like the bank in your case, files a lawsuit to recover the overdrafted amount. Once the lawsuit is filed, the duration until a court order is issued depends on several factors, including the court's schedule, the specifics of the case, and whether you contest the claim.
Typically, after the lawsuit is filed, you will receive a summons and complaint, to which you have a set time to respond. If you don't respond, the creditor may seek a default judgment. If you do respond, the case could go through various stages, including discovery, negotiation, and possibly a trial, which can extend the timeframe considerably.
It's important to understand that the protection offered by an LLC's corporate structure may not always absolve you from personal liability, especially in cases of personal guarantees or if the court finds instances of co-mingling of personal and business finances.
Given the complexity of your situation, it's advisable to consult with a lawyer who can provide specific guidance based on the details of your case. A lawyer can also help you understand your rights and responsibilities and assist in navigating the legal process ahead.
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