Can my earnings from my corporation be garnished and why? 10 Answers as of July 20, 2015

I am self employed and own a 50% interest in a C corp. I have a judgment against me by a credit card company and I am making payments to a law firm on their behalf. Business is terrible so I am having a lot of problems paying them. We are manufacturer’s representatives and don't buy or resell anything. We only get a commission on products we sell and those funds are paid directly to our corporation. Can my earnings from this corporation be garnished?

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Ronald K. Nims LLC | Ronald K. Nims
Yes, since your creditor has a judgment, they can garnish your funds from whatever source that you get them. But it's tricky to garnish an owner of a small business because the owner can decide how and when to distribute any earnings. For example, if they get a wage garnishment order, you can stop paying yourself wages and make distributions.
Answer Applies to: Ohio
Replied: 7/20/2015
Stephens Gourley & Bywater | David A. Stephens
Yes they can.
Answer Applies to: Nevada
Replied: 7/16/2015
Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
Yes. Not the earnings OF the corporation, but your earnings FROM the corporation. You might want to consult a lawyer or financial adviser who could make some suggestions about lawful ways to protect your assets from creditors.
Answer Applies to: Wisconsin
Replied: 7/16/2015
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
Generally, they will not be able to get to those monies.
Answer Applies to: New York
Replied: 7/16/2015
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Do you receive a pay check? If so yes. The corporation would have to honor the garnishment. If you receive a draw, no. BUT they could levy your bank account. BUT.... they can't do anything without a judgement.
Answer Applies to: California
Replied: 7/15/2015
    Edelman, Combs, Latturner & Goodwin, LLC | Daniel A. Edelman
    Income you get from a corporation can be subject to a wage deduction, whether you own the corporation or not. Your interest in the corporation is also an asset that can be seized.
    Answer Applies to: Illinois
    Replied: 7/15/2015
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Yes your corporate distributions can be attached, and in many situations, the creditor can just seize the corporate shares to collect. State laws called exemptions limit garnishment from wages to 25% of the gross, but there is no protection under Nevada law for corporate distributions. See NRS 21.090 for the specifics.
    Answer Applies to: Nevada
    Replied: 7/15/2015
    Garner Law Office
    Garner Law Office | Daniel Garner
    If you have a judgment against you personally, any income or bank accounts in your name would be subject to garnishment up to the limits specified by state law. From what you have described, you are an employee of the C corporation and would have W-2 earnings. Those earnings would be subject to garnishment. The judgment creditor would not be able to reach into your corporation and take the commissions it receives, however, without taking further legal action against the corporation itself. You would not be able to stop paying yourself, however, just to avoid paying your judgment, or else the creditor could judicially "pierce the corporate veil" to get at the earnings that the corporation would normally have to pay you. If you are having difficulty making your payments, the direct approach with the creditor law firm may be the best way to get some relief.
    Answer Applies to: Oregon
    Replied: 7/15/2015
    Stacy Joel Safion, Esq.
    Stacy Joel Safion, Esq. | Stacy Joel Safion
    If you are paid a salary or draw probably yes. They could also levy on your interest in the corporation as well as any payout of profits that would go to you.
    Answer Applies to: California
    Replied: 7/15/2015
    Law Office of Joshua R.I. Cohen
    Law Office of Joshua R.I. Cohen | Joshua Cohen
    If the judgment is against you personally, only your personal pay can be garnished. The company cannot be touched. Call the law firm and explain what is going on. They may agree to a lower payment.
    Answer Applies to: Connecticut
    Replied: 7/15/2015
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