Collections And Limited Liability Companies

Posted: Mar 14, 2019

By: Washington State Business Law Lawyer Babak Shamsi

When a creditor obtains a judgment against a debtor, there are numerous possible avenues for enforcement.  Typical collection efforts may include wage garnishment, bank garnishment, and personal property execution.  Collection strategies depend greatly upon the financial circumstances of the debtor.  One nuanced area of enforcement involves collection efforts against a debtor who is a member of a limited liability company (“LLC”).

Some debtors will form LLCs to shield their financial assets and income from collection.  However, an LLC does not provide absolute protection.  Under RCW 25.15.256, courts may in certain circumstances issue a charging order that permits a creditor to receive the LLC’s distributions to the debtor, in order to pay off the judgment debt.  This charging order acts as a lien, and the charged interest can even be foreclosed, allowing the purchaser of the LLC interest to assume certain rights.  An attorney can help creditors navigate through the procedural and substantive complexities involved in obtaining and utilizing a charging order.

At Beresford Booth our lawyers hold decades of experience in a wide range of matters including those involving collections and LLCs. We would be pleased to sit down and help you in any and all of your legal matters.

Beresford Booth PLLC (425.776.4100), www.beresfordlaw.com.

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