1.0Arizona LLC Lawhttps://www.keytlaw.com/azllclawRichard Keythttps://www.keytlaw.com/azllclaw/author/1llclawyer/rich600338<blockquote class="wp-embedded-content" data-secret="DiKy3SE7Hf"><a href="https://www.keytlaw.com/azllclaw/2017/11/co-charging-order/">Court Rules FDCPA Overrules Colorado LLC Charging Order Statute</a></blockquote><iframe sandbox="allow-scripts" security="restricted" src="https://www.keytlaw.com/azllclaw/2017/11/co-charging-order/embed/#?secret=DiKy3SE7Hf" width="600" height="338" title="“Court Rules FDCPA Overrules Colorado LLC Charging Order Statute” — Arizona LLC Law" data-secret="DiKy3SE7Hf" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"></iframe><script type="text/javascript"> /* <![CDATA[ */ /*! This file is auto-generated */ !function(d,l){"use strict";l.querySelector&&d.addEventListener&&"undefined"!=typeof URL&&(d.wp=d.wp||{},d.wp.receiveEmbedMessage||(d.wp.receiveEmbedMessage=function(e){var t=e.data;if((t||t.secret||t.message||t.value)&&!/[^a-zA-Z0-9]/.test(t.secret)){for(var s,r,n,a=l.querySelectorAll('iframe[data-secret="'+t.secret+'"]'),o=l.querySelectorAll('blockquote[data-secret="'+t.secret+'"]'),c=new RegExp("^https?:$","i"),i=0;i<o.length;i++)o[i].style.display="none";for(i=0;i<a.length;i++)s=a[i],e.source===s.contentWindow&&(s.removeAttribute("style"),"height"===t.message?(1e3<(r=parseInt(t.value,10))?r=1e3:~~r<200&&(r=200),s.height=r):"link"===t.message&&(r=new URL(s.getAttribute("src")),n=new URL(t.value),c.test(n.protocol))&&n.host===r.host&&l.activeElement===s&&(d.top.location.href=t.value))}},d.addEventListener("message",d.wp.receiveEmbedMessage,!1),l.addEventListener("DOMContentLoaded",function(){for(var e,t,s=l.querySelectorAll("iframe.wp-embedded-content"),r=0;r<s.length;r++)(t=(e=s[r]).getAttribute("data-secret"))||(t=Math.random().toString(36).substring(2,12),e.src+="#?secret="+t,e.setAttribute("data-secret",t)),e.contentWindow.postMessage({message:"ready",secret:t},"*")},!1)))}(window,document); //# sourceURL=https://www.keytlaw.com/azllclaw/wp-includes/js/wp-embed.min.js /* ]]> */ </script> In a criminal case opinion called U.S. vs. Wilhite issued by a Colorado federal District Court on November 17, 2017, the court ruled that a federal law called the Fair Debt Collection Practice Act (FDCPA) preempted Colorado’s limited liability company charging order statute Michael David Wilhite owed the U.S. money.  He owned a membership interest in a Colorado LLC that transferred $200,000 that could have been distributed to Wilhite to Yahab Foundation.  Wilhite argued that there was a six year statute of limitations on collection of the debt and the Colorado LLC charging order statute prohibited the federal government from garnishing the $200,000 paid to the Yahab Foundation. The court ruled that: (i) the twenty year federal statute of limitations on collecting a criminal restitution obligation overruled the six year state statute of limitations of the FDCPA and (ii) the FDCPA overruled Colorado’s LLC charging order statute Colorado Revised Statutes Title 7 Corporations and Associations § 7-80-703. The Court said: “the Court likewise rejects Mr. Wilhite’s argument that Colorado law requiring the issuance of a charging order before levying interest in an LLC limits the Government’s ability to collect Mr. Wilhite’s restitution here.” The Court ruled that the federal government could levy on the $200,000 distribution made to Yahab Foundation by an LLC in which the debtor owned a membership interest. Bottom Line You want your LLC to be formed in a state like Arizona that has the charging order as the sole remedy of a creditor who gets a judgment against a member of the LLC, but if the creditor is the federal government collecting taxes, the state’s LLC charging order law will probably be overruled to allow the U.S. to collect money or property. Arizona’s [...]