Business Lawyer in Redding, CT
Business ownership is a challenging and risky venture. You must balance the needs of the business with the needs of your family. When you own your own company, it’s essential to plan the separation of your business and personal finances carefully. If the business is organized correctly, you won’t have to lose your home, personal savings, and property if the company fails. To better ensure that your personal assets are insulated from your business liability, it’s important to work with an experienced business lawyer in Redding, Connecticut. Here are a few things that the team at Sweeney Legal, LLC will ask you to consider as we help you create a corporate structure and asset protection strategy:
Avoid Taking on Personal Liability for Business Debt
When you borrow money to fund your business, make sure that the loan is in the business name rather than in your name personally. All the legal lending paperwork should be attached to the company’s tax identification number and not your Social Security number. Some lenders may be reluctant to lend money to a new business without a personal guarantee. If that’s the case, you may have to keep searching for an institution that understands your needs or save up and pay cash for the project. Regardless of how you choose to finance the launch of your company, make sure to work closely with a business lawyer in Redding, CT to avoid making missteps that could cost you dearly down the road.
Choose the Structure of Your Business Carefully
When you start your new business, one of the first decisions you have to make is how to structure it. An experienced business lawyer in Redding, CT can help you weigh the pros and cons of each structural option:
- If you organize as a sole proprietor, your personal assets are more at risk than if you incorporate your company. Sole proprietors are personally responsible for all business debt, so if the company runs out of money, creditors may seek to take your personal property to satisfy the obligations.
- In a partnership, liability is similar to a sole proprietorship. However, responsibility is shared according to the partnership agreement.
- Incorporating a business puts up a dividing wall between your business and personal accounts so that you are less likely to lose them if the company folds. While setting up and operating a corporation is more complicated and more expensive, it may be worth it if you have considerable personal assets.
Keep in mind that business owners are personally liable for some types of debt, regardless of how the company is set up. For example, the Internal Revenue Service holds the owner of the company responsible for payroll taxes in all types of organizations. Also, every case is different, so before you make any significant decisions, consult a competent, experienced business lawyer in Redding, CT who is familiar with your state’s laws and those of your county and municipality. While no one sets out in business ownership to fail, it’s smart and responsible to plan and protect your home and other personal assets just in case.
Creditors’ Rights: Alternative Ways Businesses Can Collect Judgments Against Debtors
Unfortunately, sometimes in business, you will have customers who don’t pay their bills and you may have to pursue legal action against them in order to collect these funds. A Reddington, CT business lawyer can assist you in this legal process.
Even when you win your case against the debtor, and received a judgment against him or her, your work is far from over. Although you received a judgment against the debtor, collecting on that judgment has proven to be the hardest part of this process for most creditors. Luckily, there are many collection techniques available today that might make the process easier. A Reddington, CT business lawyer can assist you in the collection process, as well.
The first and often most significant problem is locating a debtor’s assets. After judgment is entered against a debtor, he or she will be required to fill out a form listing all assets, unless the debtor pays off the entire debt, asks the court for an installment plan, or appeals the decision. In most cases, the debtor will fail to fill out the asset form, and your business lawyer in Reddington, CT might be able to request that the court hold the debtor in contempt, or even worse for him or her, have a bench warrant issued for his or her arrest. If the debtor still fails to fill out the statement of assets, then the court has the power to require the debtor to appear in court for questioning.
Techniques Available to Collect Judgments
If the above-listed court remedies prove to be fruitless, your attorney can search for assets by engaging a private investigator, searching the Internet, acquiring the debtor’s credit report, or requesting debtor’s interrogatories. Once your Reddington, CT business lawyer determines what assets the debtor has in his or her possession, you may pursue, among other things, the following:
- Wage Garnishment: If you know the debtor’s place of employment, you may be entitled to acquire approximately 25 percent of the debtor’s disposable income. Disposable income is the net income after the debtor’s employer makes the proper deductions. Obviously, if the debtor does not make a lot of money, your collection of wages might be significantly less.
- Levy: A levy occurs when the local sheriff seizes the debtor’s personal property assets after judgment is entered against him or her, for the purpose of satisfying a judgment. These items may include jewelry, motor vehicles, furniture, electronics, bank accounts, etc. The sheriff will advertise and sell the debtor’s property at a public auction. Any remaining proceeds after paying any costs incurred (storage, auctioneer) will be distributed to judgment creditors in order of priority. Lienholder priority is determined by the date the judgment was entered or by any Uniform Commercial Code (“UCC”) filings. If you choose this option, your attorney will research any prior liens or UCC filings, in order to determine if the debtor has sufficient assets to satisfy your judgment.
- Liens: Attaching a lien to real property the debtor owns is also a valid choice to recover any judgment; however, it might take a while before that judgment is realized. After judgment is entered, you need to record the lien in the county where the real property is located.
Consult a Reddington CT Business Lawyer for Assistance
Obviously, the most effective tool in any creditor’s toolbox to recover a judgment is information. If you are attempting to recover an unsatisfied judgment against a debtor, you should contact an experienced business lawyer Redding, CT clients recommend from at Sweeney Legal, LLC who will be able to assist you in identifying a debtor’s assets, advise you of the best way to recover those assets and aggressively pursue collection of any debt.