Charging Order Protection Attorneys
Owners of both limited liability companies (LLCs) and corporations enjoy the limited liability factor of their businesses. Whatever debts or liabilities are created by the business entities become the responsibility of the company, not its owners. For instance, if either an LLC or corporation defaults on a business loan, the owners are not personally liable for picking up the tab.
Should you, personally, face a lawsuit for a personal injury or another such incident where a plaintiff is seeking damages, your business can be in trouble if it’s a corporation. A plaintiff can seek your stake or ownership in a corporation as compensation for such a lawsuit, which in one fell swoop can dismantle what you’ve worked for years to create.
An LLC, however, is different. Due to a legal mechanism known as a charging order protection, your ownership in your company may not be able to be sought as compensation if you are personally sued. That means that even if you are personally wiped clean from a particularly harsh judgement, you will have your business available to do with as you please.
For more information on this topic and how it may apply to your situation in a particular state, reach out to our charging order protection attorneys at The Presser Law Firm, P.A. Contact us online or call (561) 953-1050 for help.
You Business May Be Protected Depending Upon Your State’s Laws
With certain nuances applicable to various states, your LLC or limited partnership can be protected from a plaintiff’s compensation in a personal lawsuit judgement against you. In other states, however, a charging order could cost you your interest in your company.
Generally speaking, there are three types of charging orders and each state falls into one or the other. The states with the strongest charging orders (such as Arizona, Wyoming, and Texas) are those that name the LLC owner’s interest in their company as the only remedy a creditor can attach to a judgement where an interest in the LLC is sought. This means a successful plaintiff will only get the LLC member’s interest in the distribution of profits, but is unlikely to assume management, ownership, or get voting rights.
States with more relaxed charging orders allow creditors to foreclose on a charging order, but getting either the foreclosure or charging order are the only ways a creditor can take an LLC member’s interest in a judgement. Finally, there are other states that do not limit a creditor’s right to seek an interest in an LLC. It’s possible in this last scenario that the creditor could force the dissolution of the LLC entirely.
|States||LLC Creditor Remedy||LP Creditor Remedy|
|Alabama||§10A-5A-5.03 Charging Order Exclusive||§10A-9A-7.03 Charging Order Exclusive|
|Alaska||§10.50.380 Charging Order Exclusive||§32.11.340 Charging Order Exclusive|
|Arizona||§29-655 Charging Order Exclusive||§29-341 Charging Order Exclusive|
|Arkansas||§4-32-705 Charging Order||§4-47-703 Charging Order and Foreclosure|
|California||§17705.03 Charging Order and Foreclosure||§15907.03 Charging Order and Foreclosure|
|Colorado||§7-80-703 Charging Order and Foreclosure||§7-64-504 Charging Order and Foreclosure|
|Connecticut||§34-259b Charging Order Exclusive Remedy||§34-349 Charging Order and Foreclosure|
|Delaware||§18-703 Charging Order Exclusive Remedy||§17-703 Charging Order Exclusive Remedy|
|District of Columbia||§29-805.03 Charging Order and Foreclosure||§29-707.03 Charging Order and Foreclosure|
|Florida||§605.0503 Single-Member: Charging Order and Foreclosure Multi-Member: Charging Order Exclusive Remedy||§620.1703 Charging Order|
|Georgia||§14-11-504 Charging Order and Garnishment||§14-9-703 Charging Order and Garnishment|
|Hawaii||§428-504 Charging Order and Foreclosure||§425E-703 Charging Order and Foreclosure|
|Idaho||§30-25-503 Charging Order and Foreclosure||§30-24-703 Charging Order and Foreclosure|
|Illinois||§180/30-20 Charging Order and Foreclosure||§215/703 Charging Order|
|Indiana||§IC-23-18-6-7 Charging Order||§IC-23-4-1-28 Charging Order and Foreclosure|
|Iowa||§489.503 Charging Order and Foreclosure||§488.703 Charging Order and Foreclosure|
|Kansas||§17-76-113 Charging Order Exclusive||§56-1a403 Charging Order Exclusive|
|Kentucky||§275.260 Charging Order and Foreclosure||§362.2-703 Charging Order and Foreclosure|
|Louisiana||La. R.S. 12:1331 Charging Order||No Statute No Charging Order|
|Maine||31§1573 Charging Order Exclusive||31§1383 Charging Order and Foreclosure|
|Maryland||§4A-607 Charging Order and Foreclosure||§10-705 Charging Order|
|Massachusetts||§XXII-156C-40 Charging Order||§XV-109-41 Charging Order|
|Michigan||§450.4507 Charging Order Exclusive||§449.1703 Charging Order|
|Minnesota||§322C.0503 Charging Order and Foreclosure||§321.0703 Charging Order and Foreclosure|
|Mississippi||§79-29-705 Charging Order Exclusive Remedy||§79-14-703 Charging Order and Foreclosure|
|Missouri||§347.119 Charging Order||§359.421 Charging Order|
|Montana||§35-8-705 Charging Order and Foreclosure||§35-12-1103 Charging Order and Foreclosure|
|Nebraska||§21-142 Charging Order and Foreclosure||§67-430 Charging Order and Foreclosure|
|Nevada||§86.401 Charging Order Exclusive||§88.535 Charging Order Exclusive|
|New Hampshire||§304-C:126 Single-Member: Charging Order and Foreclosure Multi-Member: Charging Order Exclusive Remedy||§304-B:41 Charging Order|
|New Jersey||§42:2C-43 Charging Order||§42:2A-48 Charging Order|
|New Mexico||§53-19-35 Charging Order||§54-2A-703 Charging Order and Foreclosure|
|New York||LLC L§607 Charging Order||§8-A-121-703 Charging Order|
|North Carolina||§57D-5-03 Charging Order Exclusive Remedy||§59-703 Charging Order|
|North Dakota||§10-32.1-45 Charging Order Exclusive||§45-10.2-64 Charging Order Exclusive|
|Ohio||§1705.19 Charging Order Exclusive Remedy||§1782.41 Charging Order|
|Oklahoma||§18-441-605 Charging Order and Foreclosure||§54-500-703A Charging Order and Foreclosure|
|Oregon||§63.259 Charging Order||§70.295 Charging Order|
|Pennsylvania||§8853 Charging Order and Foreclosure||§8673 Charging Order and Foreclosure|
|Rhode Island||§7-16-37 Charging Order||§7-13-41 Charging Order|
|South Carolina||§33-44-504 Charging Order and Foreclosure||§33-42-1230 Charging Order|
|South Dakota||§47-34A-504 Charging Order||§48-7-703 Charging Order|
|Tennessee||§48-218-105 Charging Order Exclusive||§61-3-703 Charging Order Exclusive|
|Texas||§3-101.112 Charging Order Exclusive Remedy||§4-153.256 Charging Order Exclusive Remedy|
|Utah||§48-3a-503 Charging Order and Foreclosure||§48-2e-703 Charging Order and Foreclosure|
|Vermont||11 V.S.A §4074 Charging Order and Foreclosure||11 V.S.A §3463 Charging Order|
|Virginia||§13.1-1041.1 Charging Order Exclusive Remedy||§50-73.46:1 Charging Order Exclusive Remedy|
|Washington||§25.15.256 Charging Order and Foreclosure||§25.10.556 Charging Order and Foreclosure|
|West Virginia||§31B-5-504 Charging Order and Foreclosure||§47B-5-4 Charging Order and Foreclosure|
|Wisconsin||§183.0705 Charging Order||§179.63 Charging Order|
|Wyoming||§17-29-503 Charging Order Exclusive||§17-21-504 Charging Order and Foreclosure|
DISCLAIMER: These codes may not be the most current version. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
Updated as of September 28, 2018
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