Charging Order: Exclusive Remedy
A Charging Order is an order issued by a Nevada Judge at the request of a judgment creditor, in an attempt to collect on a personal judgment.

The charging order works like a "garnishment" against distributions made from the LLC to you personally. These distributions are "personal income" to you and are subject to this charging order. In other words, any distributions due to you would be ordered to be sent to the creditor instead, until the judgment is paid in full. If the LLC does not make any distributions (and you control this), the creditor will not receive any payments. The LLC simply retains all of its funds and continues to invest and reinvest its cash without making any distributions.

A charging order does NOT give the creditor the right to become a member in the LLC and does NOT give him any right to interfere in the management or control of LLC. Becoming a member requires the unanimous consent of the existing membership AND the Management (If your Operating Agreement is drafted properly). The creditor only receives the right to any actual distributions paid to the member.

Per NRS 86.401 the creditor cannot seize the member's membership interest or the LLC property, since the LLC property does not legally belong to any individual member. If the LLC does not make any distributions, the judgment creditor will not receive any payments. The LLC simply retains all of its funds and continues to invest and reinvest its cash without making any distributions. Property transferred to the LLC is thus safe from a member's future creditors.

In other states creditors have become "creative" and tried actions such as foreclosure, in an attempt to control the management of the LLC and seize LLC assets. Nevada laws eliminate any "creditor creativity". Nevada has the toughest laws in the country with regard to creditors. In Nevada, a charging order against a membership interest in an LLC is the EXCLUSIVE remedy by which a judgment creditor of a member may satisfy a judgment. Recent case law also upholds this extremely powerful statute:

In re: Paladin Commerce Center, LLC, Debtor, General Electric Credit Equities, Inc. v. Barry Thalden (2004) The United States District (Bankruptcy) Court for the District of Nevada held that an assignee of the economic and membership rights in the debtor-Limited Liability Company did not obtain managerial and voting rights in the debtor- Limited Liability Company because the assignee failed to comply with the requirements of becoming a substituted member with voting and managerial rights as set out in the debtor- Limited Liability Company’s operating agreement. The district court affirmed the decision of the Bankruptcy Court, holding that the only method by which an assignee or transferee of a membership interest could obtain voting and management rights is pursuant to the Operating Agreement.