How to collections people garnish small biz owners?

[CatsInTrouble]

Can they? I have an LLC and am post-BK but still dealing with damn private student loans/still dealing with collections!

So they want me to send a big chunk and THEN do payments. I am holding out for JUST payments. Everytime they call they threaten garnish, but I am an LLC, and my bank acct is separate-- not in my name, in my biz name.

[HHM]

I wouldn't be entirely confident that your business account is not in some way associated with your individual social security number.

This is what they can do if they press the issue.
1. Send a wage garnishment to the LLC (as they would any normal employer).
2. The wage garnishment is an administrative order.
3. If the LLC does not comply, then the LLC can be held directly liable for the funds. (at any rate, the amount that "should have been" garnished).

[MSbklawyer]

Are you a single member LLC?

[CatsInTrouble]

yes, single member llc.
and yes, soc # and LLC # are always kept entirely seperate. the LLC pays me a salary via check to my personal acct. all other $$ between the LLC and me are completely separate- banking, taxes, etc...

[CatsInTrouble]

But HHM, I don't have a "wage." My salary is whatever's leftover after the LLC operating expenses are paid. Theres no set $ that a percentage can be taken from. sometimes there's nothing left and then I am not paid!

[MSbklawyer]

yes, single member llc.
and yes, soc # and LLC # are always kept entirely seperate. the LLC pays me a salary via check to my personal acct. all other $$ between the LLC and me are completely separate- banking, taxes, etc...

When a garnishee (usually the debtor's employer or bank) doesn't withhold pursuant to a valid garnishment, that garnishee becomes liable for the sums that should have been, but weren't, withheld. So here, your LLC would become liable for the sums it didn't withhold from your wages. But does that have any real meaning if your LLC has no assets, no other members, and no income other than what is produced by your efforts?

[DeadManCrawling]

Interesting point, MSBKlawyer, as usual.

In states that do not allow garnishing, this could be very beneficial to the debtor.

Example: Florida law exempts up to 6 months of income in the bank for the head of household. I wonder how they calculate that. If the money is in a single member LLC or held in a corp (but unpaid wages) would that count under the exemption? Or would it have to be "paid" and taxed and transferred from the LLC or corp into a personal account?

Not asking you to answer, just an interesting angle on things.

I may explore this further, since it could pertain to me.

OP, good luck,

-dmc

[frogger]

Have you ever intermingled business and personal funds? Ever used the corp credit card for anything personal, or used a personal credit for something for the corp?

[GoingDown]

Can they? I have an LLC and am post-BK but still dealing with damn private student loans/still dealing with collections!

So they want me to send a big chunk and THEN do payments. I am holding out for JUST payments. Everytime they call they threaten garnish, but I am an LLC, and my bank acct is separate-- not in my name, in my biz name.

If it's for a student loan, you might consider getting a "Direct Consolidation Loan" from the federal government, and getting on their "Income Contingent Repayment Plan". Google those words to find the right websites. With income contingent repayment, your monthly payment can be quite low-- sometimes zero dollars per month if you are at or below the poverty level for your area. And it is still considered to be in repayment eventhough you are paying nothing on it.