What should I do if a small claims case is filed against me personally, but the money was received by my LLC?

Question from M, What should I do if a small claims case is filed against me personally, but the money was received by my LLC?

Answer from AI:

Understanding the Legal Distinction

Firstly, it’s important to understand that there is a legal distinction between you as an individual and your Limited Liability Company (LLC). An LLC is a separate legal entity, and typically, its owners are not personally liable for the company’s debts. This is one of the main reasons why many business owners choose to form an LLC.

Service of Process

In the United States, a lawsuit is not officially initiated until the defendant has been served with a copy of the complaint and a summons. This is known as “service of process.” If you were not properly served, you may have grounds to challenge the lawsuit. However, the rules for what constitutes proper service can vary by state and even by county, so it’s important to consult with a legal professional to understand your rights and obligations.

Steps to Take

Here are some general steps you might take if you find yourself in this situation:

1. Consult with a Legal Professional: Given the complexity of this situation, it’s highly recommended that you consult with a legal professional. They can help you understand your rights, the potential defenses available to you, and the best course of action.
2. Review the Complaint: Carefully review the complaint to understand the plaintiff’s claims. If the plaintiff is claiming that you personally owe them money, but the money was actually given to your LLC, you may have a defense.
3. Respond to the Lawsuit: If you were properly served, you will need to respond to the lawsuit within a certain period of time. Failure to respond could result in a default judgment against you.
4. Challenge the Service: If you believe you were not properly served, you may be able to challenge the lawsuit on these grounds. Again, a legal professional can help you understand your options.

Legal Advice

This information is intended to provide a general understanding of the law. However, each situation is unique, and the laws can vary greatly by state and county. Therefore, it’s crucial to consult with a legal professional for personalized advice.

For more information on small claims court and the process of being sued, you can visit the U.S. Government’s official website. For more information on LLCs and personal liability, the U.S. Small Business Administration has useful resources.