Legal Question in Credit and Debt Law in California

If the corporation is and has been operated as a truly separate legal entity, including all corporate formalities followed, and with its own appropriate capitalization and separate finances, you should be able to keep your personal assets separate from any judgment enforcement against the corporation. That is one of the key reasons for incorporating, to obtain that protection. For a very small S corp, however, the plaintiff's attorney is sure to plead and try to prove that you really operated the corporation as a sole proprietorship. Subchapter S tax status, which permits you to pay taxes as if you were a sole proprietorship, often seduces the owner into running the business like a sole proprietorship, not maintaining the corporate formalities and not maintaining necessary walls between personal and corporate finances. If you fell into that trap, the plaintiff will be successful in what is called "piercing the corporate veil" and the court will treat you as a sole owner rather than the shareholder of a corporation. At that point a judgment could be entered against you personally and your personal assets would be subject to that judgment.

You do not state if you are the owner of the stock of the corporation or if you are personally named as a defendant in the lawsuit. A CEO is someone who runs the corporation and does not necessarily owns the corporation. If you own the corporation and are named also a defendant along with the corporation then whether or not the judgment will be obtained against you personally will depend on whether you kept the corporation and your personal finances and affairs separate. You need to keep separate accounts, pay yourself a salary as an employee and do not use corporate funds and property for noncorporate business purposes plus do all the required paperwork formalities and file all the returns required by the government. If you do business as if the corporation did not exist, except in name, then you will lose the protection over your personal assets that you intended to get when you incorporated the business.