Indiana asset protection: one of the few states where your personal creditor can move to dissolve the whole LLC

Most states let a member’s personal creditor reach only the distribution stream of an LLC, and no further. Indiana lets that creditor go further than almost anywhere. Because Indiana’s charging order is not the exclusive remedy, a creditor who wins a judgment against you personally can foreclose your membership interest and, under a 2005 appellate decision, ask a court to judicially dissolve the entire company. That is the rare outcome the charging order is supposed to prevent: one member’s personal debt unwinding a business the other members built.

There is a qualification, and it runs the wrong way. The Indiana legislature tried to fix this in 2013, adding exclusive-remedy and no-foreclosure language to the statute, and the fix was amended out before passage. So the weakness is not an accident of an old statute nobody updated. It is a weakness the legislature looked at and left in place. The rest of Indiana’s protection picture follows from that: the entity gives little, the homestead gives little, and the real shield for a married owner is how the couple holds the home. Take the pieces in order.

The charging order, and why it is not the wall you think

Start with what a personal creditor gets against your Indiana LLC stake. The general mechanics are on the charging order protection page. Indiana’s version is on the weak end.

Indiana’s charging order is not the exclusive remedy, so a member’s personal creditor can also foreclose the membership interest and pursue other collection routes the statute does not foreclose.

IC 23-18-6-7 lets a court charge a member’s interest with the judgment, and the creditor holding a charging order gets only the rights of an assignee, meaning the distributions the member would have received. That much is ordinary. What Indiana’s statute does not do is say the charging order is the creditor’s only remedy, and it does not bar foreclosure of the interest. In the states this site rates strong, that exclusivity language is exactly what stops a creditor from taking the interest itself. Indiana has none of it. A creditor can seek to foreclose the charged interest, forcing a sale, and the buyer steps into the economic rights. The protection is thin because the statute leaves the other doors open.

Brant v. Krilich and the dissolution remedy

Here is the part that puts Indiana in a small group of states, and it is the reason to lead with alarm.

Under Brant v. Krilich, because the charging order is not exclusive, a member’s personal creditor may pursue foreclosure of the interest and even judicial dissolution of the entire LLC.

In Brant v. Krilich, 835 N.E.2d 582 (Ind. Ct. App. 2005), the court read the non-exclusive statute to mean what it says: a judgment creditor of a member is not limited to the charging order. The creditor may foreclose the interest, and the court contemplated judicial dissolution as an available route to reach the value locked inside the company. That is the remedy other states’ exclusivity language exists to prevent, because it means a creditor of one member can move to liquidate a company owned by several. Indiana’s own courts still cite Brant as good law; a 2024 Court of Appeals decision, Andrew Nemeth Properties v. Panzica, notes how sparse Indiana LLC case law is and treats Brant as the governing reading. The single-member owner is the most exposed of all, because there are no co-owners whose interests a court might hesitate to disturb, and the single-member LLC page covers why that soft spot is real everywhere and sharper here.

The veil, and the formalities trap inside it

To reach you directly rather than through your interest, a creditor has to pierce the veil, and Indiana applies a familiar test with one wrinkle that catches LLC owners.

Indiana pierces the veil only when the entity was a mere instrumentality and the misuse would work a fraud or injustice, and it requires a causal link between the two.

Under Aronson v. Price, 644 N.E.2d 864 (Ind. 1994), a creditor must prove the company was so ignored, controlled, or manipulated that it was merely the instrumentality of another, and that the misuse of the form would constitute a fraud or promote injustice. Indiana courts weigh eight factors, including undercapitalization, commingling of assets, payment of personal obligations from company funds, and failure to observe formalities, and they require a causal connection between those factors and the injustice claimed. The same test applies to LLCs as to corporations, which is the wrinkle. One of the eight factors is failure to observe corporate formalities, and courts import it into LLC cases even though the LLC form is built to need fewer formalities than a corporation. The owner who skipped a written operating agreement, ran personal and company money through one account, and never documented decisions because an LLC supposedly does not require it has handed a creditor factor after factor. The piercing the veil page covers the doctrine; the Indiana lesson is that the entity’s informality, its selling point, becomes the evidence against it when a creditor argues the form was a sham.

Reverse piercing, where a creditor of the owner tries to reach the company’s assets, runs the other way and helps the owner here. The states that clearly recognize it are California, Delaware, Virginia, and North Carolina. Indiana is not among them, and no Indiana appellate decision squarely adopts outsider reverse piercing, so an Indiana LLC’s assets are not exposed to that theory the way they would be in those states. It is one place Indiana’s thin case law works in the owner’s favor.

Two homesteads, and only one protects you from a creditor

This is the seam most advisors miss, and it changes what actually shields an Indiana home.

Indiana’s property-tax homestead deduction and its judgment homestead exemption are different things, and only the judgment exemption, capped near $22,750 per person, matters to a creditor.

Search for the Indiana homestead and you will find the property-tax homestead deduction, worth tens of thousands off a home’s assessed value for the annual tax bill. That number does nothing when a creditor comes for the house. The exemption that matters against a judgment is a separate statute, IC 34-55-10-2, and it protects only the equity in a residence up to an amount the Department of Financial Institutions adjusts every six years. The current figure, effective since March 2022 and running through 2026, is $22,750 per person, doubling to $45,500 for a married couple, with the next adjustment due by March 1, 2028. Confirm the current amount before relying on a precise number. That is among the lowest judgment homestead exemptions in the country; next-door Ohio protects six figures per person. So the Indiana owner who assumes the home is shielded by a large homestead is conflating the property-tax deduction with the creditor exemption, and the creditor exemption is small.

Because the entity gives little and the homestead gives little, the marital home’s real protection comes from titling.

For a married couple, tenancy by the entireties, not the homestead, protects the Indiana home against a creditor of only one spouse.

Indiana recognizes tenancy by the entireties in real property, and property held that way is beyond the reach of a creditor of just one spouse, though not a creditor of both on a joint debt. That is the load-bearing protection for a married Indiana homeowner: it does the work the thin homestead cannot. The limit is that Indiana does not extend entireties to personal property, so a jointly held LLC membership interest is not entireties property the way it can be in Virginia. The full doctrine, including what happens on sale and the federal-tax-lien exception under United States v. Craft, is on the entireties page. The through-line for Indiana is that the plan cannot rely on the entity or the exemption dollars; for a married couple it relies on how the home is held, and for anyone it relies on keeping personal exposure away from an interest a creditor can foreclose.

The bottom line

Indiana’s charging order is weak and non-exclusive under IC 23-18-6-7, so a member’s personal creditor can foreclose the interest rather than being limited to distributions.

Under Brant v. Krilich, that non-exclusivity lets a creditor pursue judicial dissolution of the whole LLC, and the 2013 legislative fix that would have barred this was stripped out before passage.

Veil piercing follows Aronson v. Price and requires a mere-instrumentality showing plus fraud or injustice, but the corporate-formalities factor is imported into LLC cases, so the entity’s informality becomes evidence against it.

The judgment homestead exemption is about $22,750 per person, one of the lowest in the country, and it is not the property-tax homestead deduction that search results surface.

For a married couple the real shield is tenancy by the entireties in the home, because the entity and the homestead both give little, so the plan is a genuine multi-member structure, a clean operating agreement, and entireties titling on the residence.

What this page does not cover

This page is about how creditors reach you in Indiana. What Indiana’s law lets your operating agreement do, and the trap that the Business Flexibility Act’s flexibility only takes effect in writing, is on the governance page. Indiana’s series LLC, the county income-tax layer, and the absence of any real estate transfer tax are on the structure and cost page. The formation fee and the biennial report that is not annual are on the filing page.

Last verified August 2026.