What it means
A personal creditor of an LLC member cannot seize the member's stake. Under §605.0503, the court issues a charging order — a lien that redirects to the creditor the distributions the company would otherwise pay the debtor member. For a multi-member LLC that is the sole and exclusive remedy, and foreclosure is expressly unavailable.
Single-member LLCs are different. If the creditor shows a charging order will not satisfy the judgment within a reasonable time, the court may order a foreclosure sale — and the buyer takes the member's entire interest, becomes the member, and the debtor is out.
- A charging order is a lien on the transferable interest: the company pays the creditor what it would have distributed to the debtor (§605.0503(1)).
- For multi-member LLCs it is the sole and exclusive remedy — foreclosure is not available (§605.0503(3), (6)).
- The creditor gets a transferee's economics only: no vote, no management, no records.
- Single-member exception: if distributions will not satisfy the judgment in a reasonable time, the court may order foreclosure (§605.0503(4)).
- The foreclosure buyer of a single-member interest takes the entire interest and becomes the member; the debtor ceases to be one (§605.0503(5)).
How it plays out
Charging orders surface in probate when a decedent — or an heir — carries judgments. A member's personal creditor is left waiting on distributions the other members control. The single-member rule cuts the other way: many of the one-owner LLCs we administer hold rental property, and a creditor who forecloses takes the whole company. Which side of that line an LLC sits on changes the leverage in creditor negotiations, in both directions.
Questions people ask
