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Comment by oh_sigh | Hacker News Reader

Does that work for individuals? I wonder if I can sell my credit card debt to someone else, and then have him deal with the consequences of not paying the bills.

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Even regardless of the Texas two-step, these corporate/LLC shenanigans don't really work well for individuals. That's what makes this dynamic especially galling. As an individual you can certainly create the entities, but in the event of any significant suit it's very likely the corporate veil will get pierced based on reasons of you being personally involved in operating the company, undercapitalization, or lacking complete separation from your personal activities. It only works when you can hire patsies to do all the actual work, while remaining at arms length from the details. Technically those patsies can themselves be held individually liable for their own negligent/harmful actions performed for the LLC, but the point is that they're mostly judgement proof or members of the attorneys' guild, so lawyers leave them alone.

(also nit about the article - the terms are "limited liability company" or "corporation", generally not both)

You need to spinoff the other human being. That means it's your child. A bit insensitive IMHO.

Not much more seriously how about selling your debts to a company you just create for the occasion ? Sounds much more "the Texan way" to me.

i have heard of people who earn no income. they formed a corporation that owns all of their property. the person does not have a job, but the corporation is hired. the corporation pays for everything. this seems like something that would allow for that kind protection from debt

Theoretically it stands to reason that the person might be able to avoid being personally liable for any debt. But it’s worth remembering that collecting a debt from an entity is often far less cumbersome than collecting against an individual. For example, the LLC has no homestead; none of a corporation’s profits are protected wages.

Yes, unless something like the Texas Two-step divestment scheme is also available to that hypothetical entity. Then the entity which owes the debt would no longer be the one with the revenue/assets.

I truly wish I could get a good explanation from someone wise vis a vis why this wouldn’t just be a fraudulent transfer but yes, I hear what you are saying and it seems true, assuming you get over that hurdle (which everyone with sufficient lawyers seems to be able to do).

> That means it's your child. A bit insensitive IMHO.

Other way around - give your child all your assets, then retain the liabilities and declare bankruptcy. Then hope your child is willing to support you long term, since you no longer have any assets. Also works with your wife.

You can't just give your wife to your child!

No but my wife gave birth to my children !

Aha who's laughing now ?

You give all of your assets to your child, but only in a conservatorship that dissolves after your death. Then you don't have to hope the child is willing to support you.

> Does that work for individuals?

It does. You can't spin off your liabilities, but you can get rid of all your assets, then declare bankruptcy and get rid of your liabilities.

A contractor did that to me: He gave all his money to his wife, declared bankruptcy, I got none of the money he owed me, and he lived off of his wife's money.

You can, for example, place your house in an irrevocable charitable trust, with a rule that you can live there rent free till you die. Things like that - you need to get creative, but you can move all your assets to places that are not "yours" but that you still benefit from.

Google "Transferring Property Before Filing for Bankruptcy" - it's important to get the timing right, if your transfer the property too close to the bankruptcy they can take it back.

You're the wrong king of person. This sort of thing is only available to people of the type "corporation" and their relatives.

Yes, but you would have to sell it for negative money. The name of this service is “debt consolidation.”

> Does that work for individuals?

Could a lawyer comment on Texas two-stepping a trust?

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