Suing An LLC With No Assets

A Guide To Suing An LLC With No Assets

In the United States, a limited liability company (LLC) is a legal entity whereby the owners are not personally liable for the business’s debts. Although the liability shield protects passive investors of the company and encourages investment, what happens when an LLC causes someone damages but does not have enough assets to pay?

This article will discuss valid reasons to take legal action against an LLC, the standard procedure for suing an LLC in small claims court, and how you can do it easily with .

Legal Grounds for Suing an LLC with No Assets

The liability shield does not always apply to owners of an LLC. You may claim the owners’ personal assets if you can prove any of the following cases.

Professional MalpracticeThis is when business partners of an LLC engage in misconduct while performing their duties.
Discriminatory ConductThis is when an owner of an LLC personally defrauds, injures, or discriminates against you in the course of discharging the company’s duties.
Mixing Personal Assets with Business AssetsThis is when an owner of an LLC takes personal loans to finance their corporate endeavors or uses their personal property as collateral for business loans.
Failure to Properly Identify as an LLCIf an LLC fails to state within its business premises, website, legal documents, invoice, etc. that it is an LLC, you can sue the owners of the company for deceptive masking of identity.
Failure to Legally Function as an LLCIf an LLC fails to maintain accurate LLC records and reporting standards.
Unlawful Transfer of DebtsAn indebted LLC that suspiciously liquidates, only to re-open as a new company using the remaining assets of their former company, can be liable for a lawsuit.

How to Sue an LLC?

Here are 4 steps you should follow to sue an LLC in small claims court.

1. Gather Evidence.

You’ll need everything from a contract document, promissory note, evidence of payment made, or service rendered, including any other photo or video evidence relevant to your claim, to serve as evidence.

2. Get the registered name of the LLC.

Since most LLCs operate under a variety of pseudonyms, you’ll need to search for the actual name used to register the LLC, so you can properly address your notice to sue and mail it to them.

3. Prepare a demand claim.

Your demand claim needs to include:

    • Your personal details
    • The correct address of the LLC
    • Your claim
    • The compensation you are seeking to cover your damages
    • Your intention to sue, if you received no response after 7-14 days

4. File and serve your lawsuit.

Complete and register court forms in a small claims court, send them to the company, and prepare for your day in court. A successful lawsuit against an LLC without asset can give you a judgment claim that lets you:

    • Garnish the wages or income of the owners
    • Place a lien on their bank accounts, properties, or personal assets
    • Receive punitive damage entitlement

Suing An LLC With DoNotPay

Suing a company by yourself can be daunting. Let DoNotPay fight the legal battle for you! The robot lawyer streamlines the suing process into 4 simple steps:

  1. Go to DoNotPay and select the Sue Now product
  2. Enter the type and value of compensation you are seeking
  3. Select whether you want a demand letter or court filing forms
  4. Describe the reason for the lawsuit and submit any applicable evidence

That’s it! DoNotPay will generate a demand letter or court filing forms for you. The robot lawyer will also mail a copy of your demand letter to the LLC on your behalf!

What Else Can DoNotPay Do?

Apart from helping its users sue an , DoNotPay can help with an array of legal issues, such as:

Want your issue solved now?