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Letitbeover · Jul 13, 2009, 02:42 PM

Hello,
A collection agency is after me to pay a personal debt. I have an incorporated business. I withdraw cash from the business account as wages for myself. I have just a little more than the amount owed in the business account. If they find out I have my own business can they touch my business account or demand information on my clients. They are asking for my employment and wages in order to settle an amount. They are giving me 48 hrs. to respond. Any help is appreciated. I live in Ontario, Canada.
Thanks

tickle · Jul 13, 2009, 02:49 PM

Your personal debt has nothing to do with your business account. Please do not let them pressure you into releasing information. You do not owe them an explanation, you do not owe them a phone call. They can wait their 48 hours, they can wait another 48 hours. I live in Ontario Canada and I have been through this before. Basically I ignored them. They ranted and raved at me and I said 'bring it on'. They never did. The only difference was it was not my personal debt, it was my husbands. They were after me because they couldn't get to him.

No, to answer your question, they cannot take money from your corporate account.

No judgment against you, then they are out of luck.

Ms tickle

AK lawyer · Jul 14, 2009, 10:28 AM

Originally Posted by tickle

... No, to answer your question, they cannot take money from your corporate account.

No judgment against you, then they are out of luck.

Strange how so many people get confused on this. Personal assets cannot, in general, be touched to satisfy the debts of the corporation's owner.

It doesn't go the other way, however. If you own the corporation they can, eventually, get the assets of the corporation.

As Tickle says, they would have to sue you first, of course, and get a judgment.

All of this assumes that Canadian law isn't that far out of sync with U.S. law. I doubt that it's that different.

tickle · Jul 14, 2009, 05:11 PM

Originally Posted by AK lawyer

Strange how so many people get confused on this. Personal assets cannot, in general, be touched to satisfy the debts of the corporation's owner.

It doesn't go the other way, however. If you own the corporation they can, eventually, get the assets of the corporation.

As Tickle says, they would have to sue you first, of course, and get a judgment.

All of this assumes that Canadian law isn't that far out of sync with U.S. law. I doubt that it's that different.

Husband had a corporate account, creditor couldn't touch it, only personal assets.

Tick

Letitbeover · Jul 15, 2009, 05:04 AM

Thanks so much guys! I guess I've got some thinking to do and perhaps more research.

excon · Jul 15, 2009, 08:03 AM

Originally Posted by tickle

Husband had a corporate account, creditor couldnt touch it, only personal assets.

Hello tick:

I think what the lawyer is trying to say, is that the ACCOUNTS of the corporation are safe... But, your husband OWNED the stock in his corporation, and the STOCK is an asset that can be seized. That doesn't mean they will do it, but they can.

excon

tickle · Jul 15, 2009, 09:04 AM

Originally Posted by excon

Hello tick:

I think what the lawyer is trying to say, is that the ACCOUNTS of the corporation are safe... But, your husband OWNED the stock in his corporation, and the STOCK is an asset that can be seized. That doesn't mean they will do it, but they can.

excon

Yes, I know tangible assets (you are meaning inventory, right ?) can be seized, but he didn't have any. He was a manufacturers rep. so there was only an office in our home.

Tick

excon · Jul 15, 2009, 09:11 AM

Originally Posted by tickle

Yes, I know tangible assets (you are meaning inventory, right ?) can be siezed, but he didnt have any.

Hello again, tick:

Not really. The tangible assets belong to the corporation and aren't subject to seizure. But, the stock certificates that he owns, ARE assets that can be seized. Of course, if there's no value to them, then they're not going to take them. But, if the corporation had any assets, they could seize the stock of the company that owns those assets.

excon

AK lawyer · Jul 15, 2009, 10:39 AM

Originally Posted by excon

Hello again, tick:

Not really. The tangible assets belong to the corporation and aren't subject to seizure. But, the stock certificates that he owns, ARE assets that can be seized. Of course, if there's no value to them, then they're not going to take them. But, if the corporation had any assets, they could seize the stock of the company that owns those assets.

excon

Thanks, Excon. Just to be sure Tick understands, let me try to lay it out slowly:

Let's say, hypothetically, that I am a creditor of the OP.

I get a judgment against OP, and a writ of execution.

I sieze all assets belonging to the OP. Let us assume that the only asset is the one we know about: 100% of the shares (stock) of the "incorporated business".

I immediately freeze the corprate account.

Then I do whatever I need to do to make those shares mine. Have a judicial sale, get a court order, whatever.

Then I elect myself president/ treasurer of the corporation and write a check from the corporate account.

Make sense now, Tick?

tickle · Jul 15, 2009, 12:53 PM

Thanks AK and Ex. It is much clearer. I don't need that very wonderful advice now, but someone else will I hope. My husband didn't have any stock worth value, and what went into the bank came out really fast ! So nothing left, at that time, to worry about.

tick

SafeHeart · Jul 19, 2009, 06:46 PM

I thought that the reason to incorporate was to protect your personal assets from company assets?? But is your personal income paid out of the company part of the corporate deal? Also, I am in the U.S. and not Canada but here creditors have to go through the courts to get a garnishment order.

Best to not give them any information! After all, they cannot get your goat if they do not know where it is tied.

excon · Jul 19, 2009, 07:46 PM

Hello S:

Once the corporation pays YOU, it's not longer a corporate asset. It's YOURS.

As has been said above, company SHARES are a personal asset, so those too are subject to seizure. However, one could put the shares of their corporation into a TRUST. Once there, they could NOT be seized.

excon