How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Ely Your Own Question

Ely
Ely, Attorney
Category: Business Law
Satisfied Customers: 86625
Experience:  Counselor at Law.
Type Your Business Law Question Here...
Ely is online now
A new question is answered every 9 seconds

I was starting up an LLC and opened a credit card in the business'

Customer Question

I was starting up an LLC and opened a credit card in the business's name. The business did not prosper and the credit card balance went to collections. Can I be held personally responsible for this debt?
Submitted: 3 years ago.
Category: Business Law
Expert:  Ely replied 3 years ago.
Hello,



Thank you for the opportunity to assist you. Please remember that there might be a delay between your follow up questions and my answers because I may be helping other clients or taking a break.



No, you may not UNLESS you made a personal guarantee loan for the LLC when you opened a credit card. If not, then you CANNOT be held personally responsible for this is what an LLC is all about.However, there is something called 'piercing the corporate veil' and in this case they CAN hold you responsible, but only if one or more of the following occurred while the LLC was in business:



Absence or inaccuracy of corporate records;
Concealment or misrepresentation of members;
Failure to maintain arm's length relationships with related entities;
Failure to observe corporate formalities in terms of behavior and documentation;
Failure to pay dividends;
Intermingling of assets of the corporation and of the shareholder;
Manipulation of assets or liabilities to concentrate the assets or liabilities;
Non-functioning corporate officers and/or directors;
Other factors the court finds relevant;
Significant undercapitalization of the business entity (capitalization requirements vary based on industry, location, and specific company circumstances);
Siphoning of corporate funds by the dominant shareholder(s);
Treatment by an individual of the assets of corporation as his/her own;
Was the corporation being used as a "façade" for dominant shareholder(s) personal dealings; alter ego theory;Essentially, the key is that they CAN 'pierce the veil' and go after you only if the LLC was a front for you only and not really a valid company AND/OR you co-mingled the funds with your own personal funds.I hope you found my answer helpful, and if so please click on the ACCEPT button. This is the only way for me to get credit for my work; I receive no credit for my time with you unless you press ACCEPT.



If you still need to clarify something or seek more information, just use the INFO button and I’d be more than happy to follow up to your satisfaction! There is no fee for follow up questions after an accept should you wish to continue in this thread and I encourage you to do so should you need clarification!



While the legal system tries to be inclusive of every possibility, sometimes, people are ethically wronged but have limited legal avenues seek relief. If so, please understand that this is not the expert’s fault, but the way of circumstance.



If you feel that I went an extra step to help, a bonus is always appreciated!



You can always request me for a future consultation through my profile at http://www.justanswer.com/profile.aspx?PF=7286322&FID=7 If you do this, make sure to begin the question with “This Question is for Eli…”












Customer: replied 3 years ago.

I am currently in the process of writing a brief for the case. Do you know of any cases or statues I could use to support my argument that I should not be held personally responsible for this debt?

Expert:  Ely replied 3 years ago.
Are they suing the LLC and YOU or just the LLC?
Customer: replied 3 years ago.

It started out that they were suing the LLC and me but on the last judgment, I was a sole defendant

 

Expert:  Ely replied 3 years ago.
This is strange. You have to argue that 'the Plaintiff has not pierced the corporate veil in this matter and the Defendant should not be held liable for the actions of the Limited Liability Company, ___(name). The Plaintiff has failed to establish any erroneous, lacking, or otherwise illicit activity that pierces the corporate veil under Berkey v. Third Avenue Railway, 244 N.Y. 602, 155 N.E. 914 (1927), Perpetual Real Estate Services, Inc. v. Michaelson Properties, Inc. 974 F.2d 545 (4th Cir. 1992), Fletcher v. Atex, Inc., 68 F.3d 1451 (2d Cir. 1995), or any other test for said action.'I hope you found my answer helpful, and if so please click on the ACCEPT button. This is the only way for me to get credit for my work; I receive no credit for my time with you unless you press ACCEPT.



If you still need to clarify something or seek more information, just use the INFO button and I’d be more than happy to follow up to your satisfaction! There is no fee for follow up questions after an accept should you wish to continue in this thread and I encourage you to do so should you need clarification!



While the legal system tries to be inclusive of every possibility, sometimes, people are ethically wronged but have limited legal avenues seek relief. If so, please understand that this is not the expert’s fault, but the way of circumstance.



If you feel that I went an extra step to help, a bonus is always appreciated!



You can always request me for a future consultation through my profile at http://www.justanswer.com/profile.aspx?PF=7286322&FID=7 If you do this, make sure to begin the question with “This Question is for Eli…”










Edited by Eli on 12/5/2010 at 8:40 PM EST
Ely, Attorney
Category: Business Law
Satisfied Customers: 86625
Experience: Counselor at Law.
Ely and 3 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

Eli if the court orders a brief am I required to send the Plaintiff a copy of it when I submit it to the court?

Expert:  Ely replied 3 years ago.
Indeed - you are required to send the opposing party a copy of the brief that you file with the Court. You do so by certified mail, RRR, or can fax it to their attorney and save the confirmation receipt.
Expert:  Ely replied 3 years ago.
There might have been a glitch in the system so please let me know if you did not see any of the answers.
Customer: replied 3 years ago.

Eli are you online? I need some more help with this mess.

Expert:  Ely replied 3 years ago.
Hello,I was offline when you messaged me, I am sorry to say. I will be online tomorrow morning. Please let me know what I can do for you?

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/lawpro/2012-6-25_171315_PT206740s.64x64.jpg Law Pro's Avatar

    Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
  • http://ww2.justanswer.com/uploads/DC/DCraneEsq/2012-8-14_14436_DCrane.64x64.jpg MShore Law's Avatar

    MShore Law

    Attorney

    Satisfied Customers:

    1233
    Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    1162
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    1142
    Run my own successful business/contract law practice.
  • http://ww2.justanswer.com/uploads/ohioatty/2009-1-22_185545_me.jpg J.Hazelbaker's Avatar

    J.Hazelbaker

    Attorney

    Satisfied Customers:

    393
    Experienced and trained in the area of business law.
  • http://ww2.justanswer.com/uploads/scottymacesq/2009-6-10_221523_small.jpg RGMacEsq's Avatar

    RGMacEsq

    Attorney

    Satisfied Customers:

    393
    Licensed Texas General Practice Attorney
  • http://ww2.justanswer.com/uploads/BA/barristerinky/2012-6-10_22423_office.64x64.jpg Barrister's Avatar

    Barrister

    Attorney

    Satisfied Customers:

    301
    13 years practicing attorney, MBA
 
 
 

Related Business Law Questions