QUESTION

Can a court take a trademark or trademarked brand for debt collection?

Asked on Aug 05th, 2019 on Business Law - Illinois
More details to this question:
So I went into business for myself 2-3 years ago. Everything went terribly wrong. Now I have personal debts and debts related to the failed business attempt. So now, at this point, I'm getting ready to trademark my brand which is a new business. So, my question is, can a court take a trademark or trademarked brand in relation to debts not incurred by the trademarked business?
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1 ANSWER

Appellate Practice Attorney serving New York, NY
Yes, assuming that you personally own the trademark.  Any non-exampt assets can be used to satisfy a judgment, although the procedures where the asset is intangivle, such as a trademark, are generally a little more complicated.  Indeed, intellectual property is often used as collateral for a loan. Generally, a judgmetn creditor (unless you have a contract which allows it, the people to whom you owe money could not do anyting with your trademark until they sued you and obtained a judgment against you) would go throught the appropriate process to haveyour asset (whether it be a trademark, a car, a parcel of real property, etc.) to be auctioned off.  The proceeds of the auction would be used to pay various fees, like the fees of the auctioneer, and the judgment.  If there is anything left over, it would go to you.  The same process would apply to any business entity you owned, so that if you caused a corporation you owned to own the trademark, the judgment creditor would cause the stock of the corporation to be auctioned off.   All of this really doesn't mean much at this point, since the trademark probably has no value yet.
Answered on Aug 05th, 2019 at 3:43 PM

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