Introduction
Suing a Limited Liability Company (LLC) can be a strategic legal move—but what happens if you sue an LLC with no money? Whether you’re dealing with unpaid invoices, injuries, or broken agreements, it’s crucial to understand your rights and the possible outcomes. In this guide, we’ll explain what happens if you sue an LLC that’s broke, how to proceed, and what options are available—even if the business has closed or filed for bankruptcy.
What Is an LLC and How Does It Protect Its Owners?
An LLC is a popular business structure that protects its owners (also called members) from being personally liable for business debts and lawsuits. This separation is known as the corporate veil. So, if the LLC gets sued or goes bankrupt, the owner’s personal home, car, and savings are generally protected.
Why Would Someone Sue an LLC?
People sue LLCs for many reasons. Common scenarios include:
- Can you sue an LLC for breach of contract? Yes, if the LLC fails to meet terms in a signed agreement.
- Suing an LLC for personal injury: If you were hurt on their property or due to their negligence.
- Can you sue an LLC for negligence? Yes, especially in injury, damage, or professional responsibility cases.
- Suing an LLC contractor: If you hired an LLC and they didn’t complete the work properly.
- Can you sue an LLC in small claims court? Yes, for smaller claims (usually under $10,000, depending on your state).
- Can I sue an LLC that is out of business? You can, but collecting may be difficult if the company has no remaining assets.
What Happens If You Sue an LLC With No Money?
1. You Can Still Win the Case
Even if the LLC has no money, the court can still rule in your favor and issue a judgment against the business. However, a judgment doesn’t mean immediate payment.
2. You May Not Be Able to Collect
If the LLC is truly broke—with no assets, bank accounts, or income—you may not be able to collect right away. It becomes an uncollectible judgment, meaning you won the case, but there’s nothing to take.
3. You Can Collect in the Future
Judgments usually remain valid for years (often 5–20 years). If the LLC ever gets funds, acquires assets, or reopens, you may be able to collect your judgment later.
4. Can You Sue an LLC Owner?
Generally, you cannot sue the individual LLC owner unless you can prove:
- Fraud
- Commingling of business and personal funds
- The LLC was undercapitalized or misused
This process is called piercing the corporate veil and it’s difficult but possible with strong evidence.
What Happens If the LLC Files for Bankruptcy?
If the LLC has too much debt and no income, it might file for bankruptcy. Here’s what happens next:
Chapter 7 (Liquidation)
The LLC shuts down and assets are sold off. Creditors are paid in order of priority. If no assets exist, you may not recover anything.
Chapter 11 (Reorganization)
The LLC keeps operating under court supervision and creates a payment plan. You might get paid over time, depending on available funds.
Suing an LLC in Specific Scenarios
Can You Sue an LLC in Small Claims Court?
Yes, you can sue an LLC in small claims court for smaller amounts. It’s cheaper and faster than regular court, but limits how much you can claim.
How to Sue an LLC in Florida
To sue an LLC in Florida, follow these steps:
- Verify the LLC’s registered agent via the Florida Division of Corporations.
- File your complaint in the proper court (small claims or civil court).
- Serve legal notice (called “service of process”) to the registered agent.
- Prepare for trial and gather evidence.
- If you win, you may need to enforce the judgment.
Tip: Florida has strong corporate protections, so piercing the corporate veil requires significant proof.
Table: Outcomes of Suing an LLC With No Money
| Situation | Likely Outcome |
|---|---|
| Win the lawsuit | You receive a court judgment |
| LLC has no assets | Judgment remains unpaid unless assets appear later |
| LLC reopens or earns income later | You may collect if the judgment is still valid |
| LLC files Chapter 7 bankruptcy | You may receive nothing if there are no assets |
| LLC files Chapter 11 bankruptcy | Partial payment over time possible under reorganization plan |
| You can pierce the corporate veil | May collect from owner personally (rare but possible) |
| You settle out of court | Faster resolution with partial payment |
| You sell your judgment to a third party | Immediate payout, but usually for a smaller amount |
What If You Can’t Collect Anything?
Even if the LLC has no money now, don’t give up. You have other options:
1. Negotiate a Settlement
Many businesses are open to negotiating a reduced payment or setting up a payment plan to avoid court or bankruptcy.
2. Renew Your Judgment
Most states let you renew a judgment if it hasn’t been collected. This extends your ability to enforce it if the LLC becomes profitable later.
3. Assign Your Judgment
You can sell or assign your court judgment to a collection agency or third party. You won’t get the full amount but can get something now.
Can I Sue an LLC That Is Out of Business?
Yes, you can sue an LLC that is out of business, but be aware:
- If the business has been properly dissolved and has no assets, collection will be nearly impossible.
- If it shut down improperly, you might be able to go after the members personally (with legal help).
- You can sue to force them to disclose remaining assets.
Frequently Asked Questions (FAQs)
What happens if you lose a lawsuit and can’t pay in Texas?
In Texas, if you lose a lawsuit and can’t pay, the court may issue a judgment lien on your property or garnish your bank account, but wages are usually protected. Texas laws favor debtors more than some other states. Still, the judgment remains until paid or discharged through bankruptcy.
What happens if you lose a lawsuit and can’t pay in Canada?
In Canada, if you can’t pay a judgment, the court may allow the creditor to seize property, freeze bank accounts, or garnish wages, depending on the province. The creditor can also report the debt to credit agencies, which affects your credit score. Some debts may be discharged in bankruptcy.
Final Thoughts
Suing an LLC with no money can be frustrating—but it’s not always a dead end. Even if you win and can’t collect immediately, your judgment may still be valid for years. Keep in mind:
- Can you sue an LLC for breach of contract or personal injury? Yes.
- Can you sue an LLC in small claims court or in Florida? Absolutely.
- Can you sue an LLC owner personally? Only in rare cases.
- Is it worth suing an LLC contractor or business with no money? Sometimes yes—especially if they may recover financially later.
Before you sue, always consult with a business attorney. A professional can help you determine if the LLC is truly judgment-proof or if legal options like piercing the corporate veil apply in your case.
