Creditors Seizers / Charging Orders
Hey there! Let’s dive into how we can keep your stuff safe from creditors—and what happens if they come knocking anyway. We’re pros at setting up and looking after asset-protected LLCs, corporations, trusts, and family limited partnerships. Here’s the scoop on how it all works.
Keeping Creditors at Bay
Picture this: you’re in a financial pinch, can’t pay your debts, and talking it down with the creditor isn’t cutting it. Next thing you know, they’ve got a court judgment against you. If you’ve got assets they can spot—like your house, car, or bank account—they’ll swoop in and slap liens on them or just take them outright. They’re not shy about grabbing your paycheck either. Most states let them garnish a hefty chunk of your W-2 wages—except Pennsylvania, North and South Carolina, Florida, and Texas, which are a bit kinder about it.
What’s a “Voidable Transfer”?
Ever heard of a voidable transfer? It’s when you shuffle your assets around to dodge creditors—like hiding them to “hinder, delay, or defraud” someone you owe. If a court catches wind of this, they’ll hit rewind and undo the move. The trick is timing: set up your asset protection years before trouble brews, and it’s rock-solid. Try it the day after a judgment? Too late—it’s worthless. Courts sometimes use “badges of fraud” to sniff out shady moves. These are red flags like:
- You transferred stuff to your cousin or best buddy (close relationship).
- It’s a weird deal that doesn’t match your usual business (outside the norm).
- You gave it away for peanuts (inadequate consideration).
- You knew a creditor was after you (knowledge of a claim).
- You still secretly control the asset (retaining control).
If the court sees these signs, they’ll yank the assets back into play for creditors to grab.
Making Creditors Cry (In a Good Way!)
Now, imagine your assets are tucked into an LLC, Family Limited Partnership, or asset protection trust—properly set up way ahead of time. Can a creditor still nab them? Nope, not usually! One expert put it perfectly: your creditor “can just sit down and cry.” They might try for a “charging order”—a court move to snag any payouts you’d get from the LLC or partnership. But here’s the kicker: if you don’t take distributions, they get zilch. Better yet, if the entity makes profits but doesn’t pay out, the creditor might still owe taxes on money they never even touch. Talk about a win for you!
What If I’m Already in Hot Water?
If you’re already behind on payments when you come to us, the options get tricky and slim. Once you’re in default, protecting assets is like trying to lock the barn door after the horse is gone. But there’s a glimmer of hope from the Xonics case. It showed there might be a way to shield stuff even after a lawsuit hits—depending on the details. Your lawyer would need to size up the lawsuit, the amount they’re after, and what a realistic settlement might be. They’d factor in insurance or anything else that could lower your tab. Then, you might be able to protect whatever’s left above that number. It’s a long shot, but it’s something. Give us a call, and we’ll dig into it with you.
Let’s Chat
We’re here to make sure your assets stay yours—not some creditor’s payday. Whether you’re planning ahead or scrambling after a hiccup, let’s figure out what works for you!
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ASSET PROTECTION, INC.