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How do LLCs provide asset protection?


LLCs provide inside-out and outside-in asset protection.  This means that a creditor of the LLC cannot come after you individually and that one of your individual creditors cannot easily access the assets in the LLC.  In NC, anyone going after the individual owner’s interest in the LLC only has one remedy called a “charging order” (note – some other states allow liens on LLC interests and then foreclosure on those interests).  A charging order says that if the owner who was liable was going to receive a distribution, the creditor with the charging order would get the distribution instead.  But note- the solution to this is simply not to make distribution.  Thus, the creditor of the member receives nothing!!