Legal Question in Credit and Debt Law in Maryland

Re: Does unusual corporation protect debtor from collection?

The mere fact that the corp owns the assets does not necessarily protect them. However, everything will depend on the exact facts of your circumstances. What you want to do is called "piercing the corporate veil". In order to do so, you must show that the corp is an alter ego for the individual, or that there is some other wrongdoing. All of this is terribly fact specific. Thus, I really can't answer without more facts.

Please feel free to give me a call if you would like to chat for a few minutes.

Lawrence R. Holzman, Esquire

Joseph, Greenwald & Laake, P.A.

6404 Ivy Lane, Suite 400

Greenbelt, MD 20770

(301) 220-2200

fax (301) 220-1214

Disclaimer: Please note that the posting of this response is not intended to constitute legal advice. You should contact an attorney to obtain information applicable to your situation. This posting is not confidential or privileged and does not create an attorney/client relationship.

Re: Does unusual corporation protect debtor from collection?

In my experience, it is very difficult, but occasionally possible, to collect a judgment under these circumstances. In order to "pierce the corporate veil", you would have to prove that the corporation was basically the debtor's alter ego. Disregard of corporate formalities and commingling of corporate and personal assets are some of the circumstances that would support a claim that the corporate entity should be disregarded.

Also, the transfer of debtor's personal assets to the corporation for inadequate consideration might support a fraudulent conveyance claim against the corporation.

Since you already have a judgment, a judge may allow you, in connection with judgment enforcement proceedings, to subpoena the affiliated corporation's bank and brokerage account records, which you would probably need to prove these kinds of claims. A good private investigator might also be helpful.

Re: Does unusual corporation protect debtor from collection?

It may be possible to pierce this corporate veil, but it depends on the facts. Just the fact that the corp owns the house is not enough, nor is the fact that he makes unauthorized withdrawals. But where there is smoke there is often fire. If the judgment is truly large enough, and if the assets being hidden are enough, it may be worth a try.