Oklahoma Charging Order

IncSmart Oklahoma (Small Business and Startups) - The best state to create a business for protection from personal creditors is Oklahoma.  Oklahoma does not permit an LLC owner’s personal creditors to foreclose on the owner’s LLC ownership interest or get a court to order the LLC dissolved and its assets sold for damages.  Oklahoma law regulates charging orders for creditors. 

This protection from personal creditors is reasons people form LLCs.  The LLC also protects the business and its owners from exposure to any debts or personal liability the other LLC members/owners may incur that are unrelated to the LLC’s business.  The LLC is not liable for Members Debts.  In Oklahoma, a charging order is the only legal procedure that personal creditors of a Oklahoma LLC member can use to get at a member/debtor’s LLC ownership interest. A charging order directs the LLC to pay to the creditor any distributions of income or profit that would otherwise be distributed to the LLC member.  To obtain a charging order, the creditor must have a judgment against the LLC member personally. After the judgment is entered, the creditor can apply to the court for a charging order. Since a creditor with a charging order cannot participate in the LLC’s management, it cannot order the LLC to make a distribution or that the LLC be sold to pay off the debt. Creditors who obtain charging orders against LLCs end up with nothing because they can’t order any distributions and the LLC can choose not to make any.