Charging Orders Against LLC Interests in California: How to Reach a Debtor’s Ownership in an LLC

Your judgment debtor owns an LLC. Maybe they’re the sole member. Maybe distributions flow through it every quarter. But when you try to execute against that interest the way you would a bank account or wages, you hit a wall.

Under California Code of Civil Procedure § 699.720, an LLC membership interest is not subject to execution if the LLC itself is not a judgment debtor. You cannot levy it. You cannot garnish it. The sheriff cannot seize it.

The tool you need is a charging order.

What Is a Charging Order?

A charging order is a court order that creates a lien on a judgment debtor’s transferable interest in an LLC and directs the LLC to pay distributions to the judgment creditor instead of the debtor.

California Corporations Code § 17705.03 governs charging orders against LLC interests. Under this statute, “on application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment.” The charging order “constitutes a lien on a judgment debtor’s transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.”

A “transferable interest” is defined under Corporations Code § 17701.02 as “the right, as originally associated with a person’s capacity as a member, to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right.”

In practical terms, a charging order intercepts the money flowing from the LLC to the debtor. It does not give you control of the business. It does not make you a member. It redirects distributions.

The Charging Order Is the Exclusive Remedy

This is the critical point most attorneys miss.

You cannot use a writ of execution to seize an LLC membership interest. Code of Civil Procedure § 699.720 expressly provides that “the interest of a partner in a partnership or member in a limited liability company” is not subject to execution when the entity itself is not a judgment debtor.

The Court of Appeal confirmed this in Blizzard Energy, Inc. v. Schaefers (2021) 71 Cal.App.5th 832, holding that the charging order is the exclusive remedy for satisfying a judgment from a debtor’s transferable interest in an LLC. This protection exists to shield the other members and the entity from direct interference by a single member’s creditor.

If the LLC is not named in your judgment, a charging order is your only path in.

What a Charging Order Does — and What It Does Not Do

A charging order reaches only the debtor’s transferable interest — the right to receive distributions. It does not grant management rights, voting rights, or the ability to participate in LLC operations. The Court of Appeal addressed this directly in Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, holding that a charging order does not make the creditor a substitute member or give them any say in how the LLC is run.

This distinction matters. If the debtor controls the LLC and decides to stop making distributions, the charging order alone may not produce any money. The debtor can simply retain earnings inside the entity.

That is why the next step matters.

Appoint a Receiver to Add Real Leverage

Corporations Code § 17705.03 expressly authorizes the court to “appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.”

This is where a charging order becomes a true enforcement tool rather than a passive lien.

A receiver can demand an accounting of the LLC’s finances. A receiver can investigate whether distributions are being suppressed to avoid the charging order. A receiver can examine the LLC’s books, contracts, and cash flow. In cases where the debtor is the sole member or controls the entity, the appointment of a receiver transforms the dynamic entirely.

If you obtain a charging order and the debtor responds by halting distributions, a motion to appoint a receiver should follow. The combination of a charging order and a receivership is what creates leverage — particularly when the debtor believed their LLC structure would keep assets out of reach.

How to Obtain a Charging Order in California

The procedural framework is straightforward.

Step 1: Confirm the Debtor’s LLC Interest

Before filing, confirm that the judgment debtor holds a membership interest in an LLC. This information may come from a judgment debtor examination under CCP § 708.110, where the debtor can be compelled to disclose business interests under oath. It may also come from Secretary of State filings, discovery responses, or asset investigation.

Step 2: File the Application

The judgment creditor files an application with the court for a charging order under Corporations Code § 17705.03. You must demonstrate two things: (1) you hold a valid, unsatisfied money judgment against the LLC member, and (2) the judgment remains unsatisfied. See Hellman v. Anderson (1991) 233 Cal.App.3d 840.

Code of Civil Procedure § 708.310 provides the procedural basis: “if a money judgment is rendered against a partner or member but not against the partnership or limited liability company, the judgment debtor’s interest in the partnership or limited liability company may be applied toward the satisfaction of the judgment by an order charging the judgment debtor’s interest.”

Step 3: Serve the Notice of Motion

Under CCP § 708.320, you must serve the notice of motion on both the judgment debtor and the LLC (or all members). This step is critical because service of the notice of motion is what creates the lien. If you fail to serve both the debtor and the entity, you may not have a valid lien on the transferable interest.

Step 4: Obtain the Order and Enforce It

Once the court issues the charging order, the LLC is legally obligated to redirect distributions to the judgment creditor. If the debtor controls the LLC and begins suppressing distributions, move immediately for appointment of a receiver.

When a Charging Order Works Best

Charging orders are most effective when the LLC generates regular distributions — rental income from investment properties, profits from operating businesses, or returns from passive investments. If money is flowing through the entity, a charging order captures it.

They are also effective as leverage even when distributions are irregular. A debtor who knows their LLC income is now subject to a court order — and that a receiver could be appointed to scrutinize the entity’s finances — often becomes more willing to negotiate.

When a Charging Order Is Not Enough

A charging order is a passive remedy unless paired with a receivership or other enforcement tools. If the debtor’s LLC holds assets but makes no distributions, the charging order alone will not produce money.

In those situations, consider whether additional remedies are available:

• If the debtor receives income outside the LLC — such as 1099 payments, commissions, or rents — an assignment order under CCP § 708.510 may intercept those payments directly.
• If the debtor has identifiable bank accounts, a bank levy can seize funds on deposit.
• If the debtor owns real property, recording an abstract of judgment creates a lien that attaches to that property and prevents sale or refinance without satisfying the judgment.
• If the debtor operates a cash business, a keeper levy or till tap may disrupt operations and force resolution.
• If the debtor’s assets are located in California but the judgment was entered elsewhere, domesticating the judgment is the necessary first step before any of these remedies become available.

Charging orders work best as part of a coordinated enforcement strategy — not in isolation. The goal is to cut off every avenue the debtor uses to receive or access money until the judgment is resolved.

A Note on Priority

Courts have clarified that a charging order does not by itself establish priority among competing creditors. In MDQ, LLC v. Gilbert, Kelly, Crowley & Jennett LLP (2019) 32 Cal.App.5th 702, the Court of Appeal explained that a charging order “is simply the mechanism by which a judgment creditor may enforce its judgment against an LLC member.” Priority disputes among multiple creditors holding charging orders or other liens require separate analysis.

If you suspect other creditors are pursuing the same debtor, move quickly. Delay benefits competing claimants.

Final Thoughts

Debtors who park assets inside an LLC believe they are protected. They usually are not — but only if you use the right tool and follow through.

A charging order on its own is passive. Paired with a receiver, it becomes one of the most disruptive remedies available. If you have a judgment and the debtor’s money moves through an LLC, contact our office. We handle these motions regularly and can evaluate whether a charging order — or a different approach — makes sense for your case.

Many people assume that the only way to collect against someone’s income is through a wage garnishment. That assumption is understandable — and increasingly wrong. In California, wage garnishment is limited to W-2 employees. It does not apply to independent contractors, self-employed individuals, business owners, or anyone whose income is paid outside of payroll. In today’s economy, a growing number of judgment debtors earn money through consulting work, commissions, rental income, business receivables, or other non-wage payment streams that never appear on a paycheck. When a debtor does not receive W-2 wages, wage garnishment is simply not available. That does not mean the income is protected. It means a different enforcement tool is required. In California, that tool is the assignment order.

What an Assignment Order Does Under California Law

An assignment order allows the court, on noticed motion after judgment, to require a judgment debtor to assign to the judgment creditor all or part of a right to payment that is due, will become due, or is contingent in the future. The authority for issuing an assignment order comes directly from California Code of Civil Procedure section 708.510. What makes an assignment order different from many other post-judgment remedies is where it operates. Rather than attempting to seize money after it reaches the debtor’s possession, an assignment order directs a third party to redirect the payment stream earned by the debtor to the judgment creditor. In practical terms, the court orders that money owed to the debtor by someone else be paid toward satisfaction of the judgment instead. The creditor is no longer dependent on the debtor voluntarily turning over funds or leaving money untouched in a bank account long enough to levy it through a bank levy. Assignment orders are designed to intercept income before the judgment debtor can receive it, hide it, spend it, or move it elsewhere.

Types of Income That Can Be Reached With an Assignment Order

Although assignment orders are often discussed in connection with 1099 independent contractors, their reach extends well beyond that category. Courts routinely issue assignment orders against non-wage income streams such as consulting fees, commissions, royalties, rental income, accounts receivable, business distributions, and other contractual rights to payment. The statute is intentionally broad and is not limited to payments that are fixed, regular, or guaranteed. If a judgment debtor has a legally enforceable right to receive money from another party — whether immediately or in the future — that right can generally be assigned. This includes income that is irregular, variable, or contingent, so long as the debtor has a recognizable right to payment. This breadth is what makes assignment orders particularly effective in cases where debtors structure their income to avoid traditional wage garnishment.

How Assignment Orders Are Obtained in Practice

Assignment orders are a stand-alone post-judgment remedy. Unlike levies and garnishments, they do not require issuance of a writ of execution. After judgment is entered, the creditor brings a noticed motion requesting an assignment order. The focus of the motion is straightforward: identifying one or more streams of non-wage income and establishing that issuance of the assignment order is necessary to enforce the judgment. Evidence supporting an assignment order often comes from judgment-debtor examinations, discovery responses, bank records, contracts, invoices, business filings, or other documentation showing how the debtor is paid. Courts do not require mathematical precision. What matters is demonstrating that a real, assignable right to payment exists. If the court is satisfied that assignable income streams are present, it may order assignment of all or a portion of those payments until the judgment is satisfied.

Restraining Orders and Accountings

In addition to directing assignment of payment rights, the court has authority to issue orders preventing the judgment debtor from interfering with the assigned income. This may include restraining orders prohibiting the transfer, diversion, or concealment of assigned payment rights while the assignment is in effect. Courts may also require the debtor to provide an accounting of the assigned payment streams. In practice, this ensures transparency and allows the court to maintain supervision over how the income is generated and redirected, particularly where payments are ongoing or fluctuate over time. These additional orders reinforce court control over the payment stream and further limit the debtor’s ability to evade enforcement.

Assignment Orders in Civil and Family Law Cases

Assignment orders are not limited to traditional civil judgments. Although they are most commonly discussed in civil enforcement contexts, the statute authorizing assignment orders is not restricted to civil cases. Courts have authority to issue assignment orders in family law matters as well, including cases involving support obligations, equalization payments, and other family law judgments. While some practitioners — and occasionally some courts — assume assignment orders are unavailable in family law proceedings, the statutory language is clear. Assignment orders are a post-judgment enforcement remedy available whenever a judgment debtor has assignable rights to payment, regardless of whether the underlying judgment arises from civil litigation or family law.

If you are trying to collect a California judgment and the debtor does not receive W-2 wages, an assignment order may be the most effective enforcement tool available. Our firm focuses on judgment enforcement and routinely uses assignment orders to intercept non-wage income streams such as independent-contractor payments, business receivables, commissions, and rental income. If you would like to evaluate whether an assignment order is appropriate in your case, we invite you to contact our office to discuss your enforcement options.

I am often asked if attorney fees can be added to a judgment in California. The answer is not a straightforward yes or no. While, in most cases, adding attorney fees for post-judgment work is not allowed, there are exceptions to this rule. In this blog post, we will explore the circumstances in which attorney fees can be added to a judgment in California and provide guidance on the recovery process.

WHEN CAN YOU ADD ATTORNEY FEES?

Contractual Attorney Fees: When it comes to adding attorney fees to a judgment, the existence of an express provision in the underlying agreement is crucial. If the original judgment includes a specific provision for the award of attorney fees, then it is possible to add attorney fees for post-judgment work. This provision may be found in the contract between the parties, the governing statute of the case, or in the court’s order after a trial.

Statutory Attorney Fees: Another avenue for recovering attorney fees lies in certain statutes. In specific cases, statutes in California allow for the award of attorney fees. For instance, in claims involving unfair business practices or particular types of employment disputes, attorney fees may be granted.

CONDITIONS FOR ADDING AUTHORIZED POST JUDGMENT ATTORNEY FEES

Recovering Attorney Fees for Post-Judgment Work: To recover attorney fees for post-judgment work, it is essential to meet certain conditions:

1. Necessity of Work: The work performed must be necessary to enforce the judgment. This includes activities such as collections, enforcement actions, or other legal proceedings related to the judgment.
2. Reasonable and Necessary Work: The work performed must be reasonable and necessary in relation to the enforcement efforts. This means that the attorney fees should be incurred for activities directly related to the collection and enforcement process.
3. Reasonable Fees: The fees charged by the attorney must be reasonable. The court will assess the reasonableness of the fees based on factors such as the complexity of the case, the attorney’s experience, and prevailing market rates.

Filing a Motion for Attorney Fees: If the conditions mentioned above are satisfied, a noticed motion needs to be filed and served on the judgment debtor. The motion should explicitly request the court to award attorney fees for post-judgment work. It is crucial to follow the proper procedures and provide sufficient documentation to support the claim for attorney fees.

Navigating the complexities of recovering attorney fees for post-judgment work can be challenging. Contact us today to explore your options for enforcing your judgment.