Page 25 - Judgment Enforcement Course 1

Judgment Enforcement – The Step-by-Step Course

People start corporations to protect themselves from lawsuits. For example, if the

corporation enters into a contract, but something goes wrong (loss of funds, illness, natural
disaster, etc.) then the corporation can’t fulfill the contract. If it gets sued for breach of
contract, the person who started the corporation (called a ‘member’) can’t be held
personally liable.

Now you’re thinking, Yes, yes! That’s what I want.”

But if you start a corporation or LLC, you are still doing all the work personally. You
contact creditors, you make decisions, you do all the other things in enforcing the
judgment. Point: Anything that we do personally —even crossing the street— we are liable
for. So if someone wants to sue you for harassment, lying, or something else probably
made up, they aren’t going to sue the corporation because the corporation didn’t do
anything. You did. (Or me) So, the corporation is very little protection here.

Remember Enron? That’s the corporation whose president went to jail for fraud. He
couldn’t say “Oh, ha, ha! Enron did it, not me!” No, he did it personally. And he is
responsible. (Besides you can’t put a corporation in jail.)

Again, whether we have a corporation or LLC, we are still personally liable for
anything we personally do. It’s the same if I own a hot dog stand LLC or a flower shop
corporation.

But here’s an instance in which you might want a corporation or LLC: Let’s say you

have a large JE business. You have a secretary who runs errands for the business, like
shopping for paper and taking documents to court. Here you might want some protection,
because if the secretary has an accident in your car, you’re liable. But if it’s a corporate or
LLC car, then you’re not personally liable. (The secretary still is, though, because she was
personally involved.)

2) You also may need a lawyer to submit paperwork and go
to court for you:

Remember that according to the law a corporation is a separate
“person.” You are a “natural person.” Remember, too, that you
cannot go to court and represent another “person” unless you are an

attorney. Well, the corporation or LLC is a separate person from
you. So if you go to court and file papers or attend a hearing on
behalf of your corporation, then you are practicing law without a license. You cannot
represent another “person”.

A possible exception to this is if you have a single-member LLC. Some states will allow
you to represent the LLC (and sometimes a corporation), but only in small claims court.

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