Full question:
I'm underwater $125,000 on my primary residence, other than that I have very little debt. If I let house go to foreclosure should I be overly concerned about a deficiency judgement Indy mac Bank coming after assets in Nautilus Fitness Plus, LLC formed in Nevada and Baker Properties, LLC formed in Va. Both LLC's are two member LLC.
- Category: LLC
- Date:
- State: Ohio
Answer:
In Ohio, if your property goes into foreclosure and sells for less than the mortgage amount, the lender can seek a deficiency judgment for the remaining balance. If you formed your LLCs with the knowledge of potential foreclosure, their assets might be at risk. This could be viewed as a fraudulent conveyance if assets were transferred to the LLC to avoid creditors.
The Uniform Fraudulent Transfer Act defines a fraudulent transfer as one made with the intent to hinder, delay, or defraud creditors, or if the debtor did not receive equivalent value in exchange for the transfer. A transfer may also be deemed fraudulent if the debtor was engaged in a business that left them with unreasonably small assets or if they intended to incur debts beyond their ability to pay.
Additionally, under the alter ego theory, a court may hold you personally liable if it finds that the LLC does not have a separate identity from you. This determination depends on the specific facts of your case.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.