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Home » Judgment Collection » Your Professional Corporation At Risk: How One Creditor Attorney Attacks The P.A.

Your Professional Corporation At Risk: How One Creditor Attorney Attacks The P.A.

ByJon Alper February 9, 2010May 22, 2020

A judgment creditor can levy upon a debtor’s stock in a corporation. After gaining possession of the stock the creditor can take all the assets of the corporation, such as bank accounts and accounts receivable, and the creditor can close the corporate business. This past week I consulted with a professional who owned his own professional business in the form of a professional corporation; a P.A. The professional owner was concerned that an existing creditor could close his P.A.’s business cut off his income.

I consulted a creditor collection attorney who practices in another city about the practicalities of a creditor levying on the stock of a professional corporation. The creditor attorney agreed that P.A. stock is subject to levy, but he explained that there are often practical obstacles to his levy upon the stock of a debtor’s professional business and the garnishment of the P.A. receivables. For example, it is difficult to garnish receivables of a medical P.A. because of HIPAA privacy regulations which protect patient identity. A creditor would find it difficult to collect medical receivables without breaching patient confidentiality. The same privacy issues are involved when a creditor levies upon an attorney’s stock in his professional corporation. A creditor’s inspection of the law firm billing records and files would impinge upon attorney-client privileges.

In practice, this creditor attorney often attacks professional debtors with a motion for appointment of receiver over the professional’s stock and practice. The receiver has the task of dealing with confidentiality issues. The receivership accomplishes one of the creditor’s goals which is interference with the debtor’s professional practice and receivable collections, and this puts substantial collection pressure upon the debtor to negotiate a settlement.

Professionals who form practices as a professional liability company are better protected because a creditor’s collection remedy is limited to a charging lien on profit distributions. The creditor cannot levy upon LLC membership interests.

Last updated on May 22, 2020

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  • Home
  • Learn More
    • Asset Protection
      • Asset Protection Guide
      • Annuities
      • Asset Protection Trust
      • Bank Account Protection
      • Car Accidents
      • Doctors
      • Equity Stripping
      • Exemptions
      • Florida Residency
      • Fraudulent Transfers
      • Homestead Law
      • How Attorneys Help
      • Strategies
      • Tenants By Entireties
      • UTMA Accounts
    • Business Planning
      • Business Entities
      • LLCs
      • LLC Operating Agreement
      • Real Estate Investors
    • Offshore Planning
      • Nevis LLC
      • Offshore Bank Accounts
      • Offshore Planning
      • Offshore Trusts
    • Judgment Collection
      • Judgment Collection
      • Bitcoin and Cryptocurrency
      • Deficiency Judgments
      • Fact Information Sheet
      • Head of Household
      • IRS Tax Debt
      • Not Paying Judgments
      • Statute of Limitations
      • Wage Garnishment
      • Writ of Garnishment
    • Wills and Trusts
      • Avoiding Probate
      • Estate Planning
      • Gun Trusts
      • Inheritance Tax
      • Irrevocable Trusts
      • Last Will and Testament
      • Living Trusts
      • Living Will
      • LGBT Estate Planning
      • Power of Attorney
      • Probate
      • Special Needs Trust
      • Trust Administration
    • Bankruptcy
      • Attorney Fees
      • Chapter 7 Bankruptcy
      • Chapter 13 Bankruptcy
      • Dealing With Creditors
      • Involuntary Bankruptcy
      • Moral Issues
      • Orlando Bankruptcy
      • Student Loans
    • Real Estate
      • Lady Bird Deed
      • Land Trusts
      • Quit Claim Deed
      • Warranty Deed
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      • Adult Adoption
      • Grandparent and Relative Adoption
      • Private Adoption
      • Readoption
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      • Stepparent Adoption
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