E&O Insurance

[Ray Miller]

A corp. will afford you some protection and some tax advantage. How ever you will need a good lawyer to keep you out of the law suit, if you are named along with your corp. At the get go, you will need to hire two law firms, one to try and keep you out of it as a individual and one to protect your corp. However you own corp. may decide to sue you or keep you in the suit. Remember you are dealing with two law firms now and each one is working for an individual. Reguardless that you own the corp.

All this cost you money/legal fees from the get go. If it is a large suit, the lawyers will request up front fee's which they draw from you need to replace ever week, month or what ever you agreement says. In my case in the larger law suit, they required $100,000 each up front for myself and my corp. with replacement every week. If you don't have an insurance company or a rich wife. You will not get a lawyer to work for you, then you are no doubt looking at a default judgement. Then you just hand them the keys to you home and your business.

Corp and Insurance is, I figure double protection. And maybe it a young lawyer who is educated to the real world and only goes after one and not both.

 

[Ray Miller]

Any one can sue/file against any one, any time, any where. In state court and federal cout.

It's these cost that kill you up front, proving that you should not be listed or sued in the lawsuit. Righ or wrong, you need to defend, and a man that acts as his or her lawyer is a fool, in large case that are beyound small claims cout.

By the way in most lawsuits you only have 30 days to answer a filing, before a default is issued. So its a horse race from the get go.

No, defence = default judgement = Sheriff or Marshall ends up at your home or business, taking what you have for the judgement.

 

[Travis McGee]

You can always use the legal defense best known to man in cases like these file CHAPTER 7 ON BOTH BUSINESS AND PERSONAL if need be, I would not give them the key to either/or. I could start another business new name etc.., I have personally seen business names change and big corps who file (ENRON for example) but the keys no way..

 

[KYLECODY]

chapter 7... what would stop someone from taking all their immediate assets(savings,stocks,etc) and diverting them to a trusted source or cashing everything out and claiming it was lost gambling?? or some similar excuse..and then claim bk?? Im guessing unless youre worth 0.5 million+ it might be smarter to go bk, then spend $ on defense and court.....and its my understanding that if you have a trust set up its pretty much shielded from any lawsuit..

 

[jtrotta]

Ray

good answer, but you didn't answer the question; Ifn you were originally a Corp. and have now changed to an LLC - why, did your attorney advise you it offers better protection :question:


Ifn you would read my response on page 1 - that is a direct taking as to how the LLC legislation was written and it's intent. The scales of Justice tip in many directions, with the end result more often going in the opposite direction from which you intend -always a classic view from the judge


h34r:

 

[Ray Miller]

Went with an LLC this time at the advise of the attorney and acountents for the new venture of Auction, Real Estate & Appraisal. Both said it would be the best for me. At this point I don't really remember the reasons. Thats why I seek council. Mr. Joyce Hall once told me when I was shoeing horses in his barn. "Always hire the best lawyers, the best acountents and employee's you can. Use their knowledge and skills. Don't try to do it all yourself or to remember it all."

The originial Corp. died. The man that sued us, made it very plain at the time of the law suit, to everyone in the industry. That if they bought or used our product he would also join them in the suit. Killed a 500M market in North Ameirica. It has never recovered. There were several major articles in the different trade publication about the court battle. People still talk about it today. We manged only to get four systems out after the law suit was filed and they were sold to Vets and Vets schools for research. Before the suit was filied I had sold 15 systems in three months at $35,000 to $40,000 each and was headed to a nice net work of systmes across N. America. Those people that bought systems were contacted by the man filing the lawsuit, were told not to use the systems or he would sue them. We ended up giving them back their money, so they would not be brought into the fight/lawsuit and cost more money.

They call these types of law suits "Slap Lawsuits" they are designed to put you out of business. Very common in big business. I have been interview several times over the years for Public Raido programs and Articles on the What, when, where and how of it. They are created for one purpose only; to put you out of business, someone else to walk away with your profits. Most companies never survive. My manufactue did, because they had other branchs for similar products, of course AT&T Capital did, because they had deep pockets and there own lawyers. Because I was a small business, just starting up, I was crippled by the lawsuit.

A very costly education; in that Lawyers are not always right when they advise you that you don't need an insurance policy yet. I found out that you should always protect yourself several ways; by using legal council, insurance, some form of corp. Even with that it dose not always work. They can still come after you right or wrong. The finial answer is the Judge and it takes money to get in front of him.

So as stated above, I make sure I am covered, no small print left unread and the lawyer reads the entire insurance policy. Thats how I found out my privite family auto policy would not cover me, going out and doing appraisals. It's just that one time that can wreck you for life. When things like this happen you find out just how short life can.

 

[Travis McGee]

Ray,
Did you file BK? WOW!! Big case huh, my business is not worth today what yours was, but it really does make since to have insurance. I would not be suprised if E&O becomes mandatory just like auto insurance. In most states it is against the law to operate a vehicle without Insurance. I would not be surprised if in the near future appraisers are not allowed to appraise without proof of Insurance. It will become part of the renewal process 14 hours continue education certificate and proof of insurance even before you can renew your license. Just like going to the license branch.

 

[Stone]

Man Ray, that is rough. Congratulations to you for not just folding up and going to work for $7.00 per hour somewhere. I am not sure that I could be self-employed after what you went through. :blink:

 

[xm39hnu]

Some notes on bankruptcy:
When going to Ch 7, value your chattel assets at market value, with a 10-day exposure time. The courts will routinely accept 10 cents on the dollar for most things, higher for tools and guns, much lower for furniture and appliances. Cars and houses have easily determinable values. Get an appraisal for a house; specify the court-required exposure time in the appraisal order (ask your attorney what it is in your state). Use NADA for a car's value; do this <before> you file.

If the house shows equity, now'd be a good time to get one of those cash-out refi's for 120% of the value (The extra % goes against total assets). You can refinance a car, too, if the 120% home loan doesn't quite cover it.

Qualified IRA's are not includable in the bankruptcy estate in Tennessee; your state may vary.

Florida used to exempt the primary residence; don't know if it still does. If it does, you can cash out your equity in everything, buy an expensive FLA home, establish residence in Florida, and file BK there! Reaffirm the recent equity loans so you can keep the property. When you've been discharged, sell the FLA property, pay off the equity loans, and move back where you came from.

After filing BK, the automatic stay forces the lawsuit proceedings to halt. Be sure to list the lawsuit and the judgement sought in the bankruptcy filing under liabilities. Ask your attorney how to do it.

You can banrupt tax debts, too. Return must have been filed for three years and debt alleged owed for at least two years. Student loans are also dischargeable if they've been owed for at least seven years. (See the bankruptcy code under dischargability of debts, and priority of creditors.)

This info is based on experience, but is over ten years old. Bankruptcy laws will have changed, as will the customs of local courts. Check with an attorney before relying on what I've posted. Read your state's Ch7 bankruptcy laws for yourself, and ferret out recent decisions on issues near and dear to you.

 

[Steve Forstner]

I guess my question would be: If you are working for the LLC/Corp as an employee, does the LLC/Corp need to have an appraisal license?

Steve