New Mexico Charging Order Protection Limits

What charging order protection does

A charging order limits a personal judgment creditor of an LLC member to receiving distributions from the LLC if and when the LLC makes them. The creditor cannot vote, cannot force distributions, cannot manage the LLC, and cannot seize LLC assets. It is the primary mechanism for LLC asset protection.

The single-member problem

The critical question for asset protection is whether a state extends charging order protection to single-member LLCs. Many states do not — the reasoning being that a sole member has total control over distributions, making the charging order remedy inadequate for creditors.

Wyoming explicitly extends charging order protection to single-member LLCs under § 17-29-503(a), making it the exclusive remedy even for sole-member entities. New Mexico's statute does not have this explicit single-member protection, and the case law is thin. This creates uncertainty.

NM vs Wyoming charging order comparison

When NM protection is sufficient

• Multi-member LLCs (stronger protection by default)
• Low-value holdings where asset protection is not the primary concern
• Subsidiary entities under a Wyoming parent (parent provides the protection layer)
• Budget-first buyers accepting the risk tradeoff

When NM protection is NOT sufficient

• Single-member LLCs where asset protection is a priority
• High-value asset holdings
• Scenarios where creditor litigation is foreseeable
• Clients advised by attorneys to maximize charging order protection