Hello, Thanks for choosing Justanswer.com! I look forward to helping you with legal information today. You shouldn't be throwing good money after bad. A short sale would be the best option here. You need a real estate attorney or a Realtor WELL versed in short sales to try to work with the bank to get them to agree to the short sale (the bank has to sign off on any sale too since they have a vested interest in the property) and then also get the bank to agree NOT to seek a deficiency judgment for the difference between what the house sold for and the balance of the loan. If the bank won't agree to a short sale, or if it does agree to a short sale but does not agree not to pursue a deficieny judgment, then the LLC will probably be sued. If they bank decides to sue your LLC, they will at least try to get to you personally. After all, the legal fiction of corporate personhood exists specifically to create a cushion between you and the LLC's liabilities. The process of "getting to you" is called "piercing the corporate veil"-that is, getting a court to look beyond the fiction of corporate personhood to get to the person behind the curtain.
Piercing the corporate veil is a very difficult thing to do (as it should be), provided that you treat the LLC as a separate person. In practice, this means that you must conduct the affairs of the LLC separately from yours, establishing that, when you are acting on behalf of the LLC, you do so in the LLC's best interest as it is your fiduciary duty. This means taking care of a few formalities, like keeping your business license current, opening separate bank accounts and, especially, avoiding commingling your personal funds with the company's. It also means that you cannot use the company as a shield to commit fraud, and so on, and so forth.
As long as the corporate veil is not peirced, your personal credit ratings will not be affected and will remain in tact. If the LLC is also the owner of other assets and it is sued, there is a possibility that any other assets can be liened and foreclosed upon in order to satisfy the outstanding debts of the LLC.
Thank you. Let me discuss this with my husband and can I get back to you, specifically, or how does this work?
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