diff --git a/docs/reliability.md b/docs/reliability.md
index 30423c8..0eae89f 100644
--- a/docs/reliability.md
+++ b/docs/reliability.md
@@ -19,10 +19,47 @@ and report the degradation — never hang and never degrade silently.**
   (<reason>)…` and sets `degraded: true` + `degradedReason` on the audit
   `gate_decision` event.
 
-Applied in: the gate's `begin_session` prompt selection
-(`proxymodel/plugins/gate.ts`, cap `MCPCTL_GATE_LLM_TIMEOUT_MS`, default 8s) and
-pagination's smart index (`llm/pagination.ts`, `MCPCTL_PAGINATION_LLM_TIMEOUT_MS`,
-default 10s). `read_prompts` is LLM-free by design.
+**One implementation:** [`util/degrade.ts`](../src/mcplocal/src/util/degrade.ts)'s
+`bounded()`. It cannot throw — the caller always gets a value or a reason — so
+the deterministic fallback is unconditional rather than something a `catch`
+block has to remember. `degradationNotice()` produces the `⚠ … unavailable
+(reason). hint` wording, and `degradationAudit()` the `degraded`/`degradedReason`
+payload, so every degradation reads the same whichever subsystem produced it.
+
+**Nothing optional is unbounded by construction.** The budget lives in
+`LLMProviderAdapter.complete()` (`proxymodel/llm-adapter.ts`), not at each call
+site, so a stage that passes no options is still bounded and a stage written
+next year inherits the guarantee. One budget spans the whole failover chain —
+a per-provider timeout would make the worst case N × timeout.
+
+| Knob | Default | Bounds |
+|---|---|---|
+| `MCPCTL_LLM_CALL_BUDGET_MS` | 20s | one `ctx.llm.complete()`, failover included |
+| `MCPCTL_LLM_PROVIDER_TIMEOUT_MS` | 10s | a single provider attempt inside that budget |
+| `MCPCTL_STAGE_LLM_BUDGET_MS` | 30s | all LLM work in one stage invocation |
+| `MCPCTL_GATE_LLM_TIMEOUT_MS` | 8s | the gate's `begin_session` prompt selection |
+| `MCPCTL_PAGINATION_LLM_TIMEOUT_MS` | 10s | pagination's smart index (`llm/pagination.ts`) |
+
+The **stage** budget exists because a per-call timeout multiplies rather than
+bounds when a stage loops: `summarize-tree` recurses to `maxDepth` (3) and loops
+per section at every level, so hundreds of sequential calls are reachable. One
+budget is shared across the whole recursion; when it is gone the stage switches
+to first-line excerpts and says so. A **warm cache is never budget-gated** — a
+cached summary costs nothing, so an exhausted budget must not degrade a result
+we already hold.
+
+`read_prompts` is LLM-free by design.
+
+### Why this is written down twice
+
+This document stated the principle while `proxymodel/stages/paginate.ts` awaited
+`ctx.llm.complete()` with no timeout at all. When a provider hung rather than
+erroring, the promise never settled, the tool call never returned, and the
+client waited out its own 1800s timeout — three such requests in production,
+misdiagnosed twice as an upstream "transport fault". The doc named the gate and
+`llm/pagination.ts` as the compliant sites, and the newer stages simply never
+joined the list. Naming **one** helper here, rather than a list of call sites,
+is what stops that drift recurring.
 
 Note: the gate's prompt-ranking uses the **heavy client provider's own model** —
 it deliberately does *not* force the project's vLLM model onto it (doing so made
diff --git a/src/mcplocal/src/proxymodel/executor.ts b/src/mcplocal/src/proxymodel/executor.ts
index 9b3f69d..6f8e208 100644
--- a/src/mcplocal/src/proxymodel/executor.ts
+++ b/src/mcplocal/src/proxymodel/executor.ts
@@ -6,6 +6,7 @@
 import type { StageContext, StageResult, StageLogger, Section, ContentType, LLMProvider, CacheProvider, SystemPromptFetcher } from './types.js';
 import type { ProxyModelDefinition } from './schema.js';
 import { getStage } from './stage-registry.js';
+import { createStageBudget, STAGE_LLM_BUDGET_MS } from './stage-budget.js';
 import type { AuditCollector } from '../audit/collector.js';
 
 export interface ExecuteOptions {
@@ -87,6 +88,11 @@ export async function executePipeline(opts: ExecuteOptions): Promise<StageResult
       log: consoleLogger(stageSpec.type),
       getSystemPrompt: opts.getSystemPrompt ?? defaultFetcher,
       config: stageSpec.config ?? {},
+      budget: createStageBudget(
+        typeof stageSpec.config?.['budgetMs'] === 'number'
+          ? stageSpec.config['budgetMs']
+          : STAGE_LLM_BUDGET_MS,
+      ),
     };
 
     try {
@@ -109,6 +115,11 @@ export async function executePipeline(opts: ExecuteOptions): Promise<StageResult
           outputSize: result.content.length,
           sectionCount: result.sections?.length ?? 0,
           error: null,
+          // Surfaced by stages that fell back to a deterministic path (e.g. an
+          // exhausted LLM budget), so a degradation is visible in the trace
+          // rather than only in the response text.
+          degraded: result.metadata?.['degraded'] === true,
+          degradedReason: (result.metadata?.['degradedReason'] as string | undefined) ?? null,
         },
       });
     } catch (err) {
@@ -125,9 +136,15 @@ export async function executePipeline(opts: ExecuteOptions): Promise<StageResult
           outputSize: currentContent.length,
           sectionCount: 0,
           error: (err as Error).message,
+          degraded: true,
+          degradedReason: (err as Error).message,
         },
       });
       // Continue with previous content on error
+    } finally {
+      // Always clear the budget timer, on success or failure, so a long-lived
+      // mcplocal never accumulates them.
+      ctx.budget.dispose();
     }
   }
 
diff --git a/src/mcplocal/src/proxymodel/stage-budget.ts b/src/mcplocal/src/proxymodel/stage-budget.ts
new file mode 100644
index 0000000..8e648b9
--- /dev/null
+++ b/src/mcplocal/src/proxymodel/stage-budget.ts
@@ -0,0 +1,50 @@
+/**
+ * Wall-clock budget for ONE stage invocation's LLM work.
+ *
+ * A per-call timeout is not sufficient for a stage that calls the LLM in a
+ * loop. `summarize-tree` recurses (buildTree calls itself up to maxDepth, 3 by
+ * default) and loops per section at every level, then `groupSections` loops
+ * again — so a per-call cap multiplies instead of bounding, and a stage can
+ * issue hundreds of sequential calls.
+ *
+ * The stage shares ONE budget across every call it makes. Once it is gone the
+ * stage must switch to its deterministic path and report the degradation.
+ */
+export interface StageBudget {
+  remainingMs(): number;
+  exhausted(): boolean;
+  /** Aborted when the budget runs out; pass into ctx.llm.complete({ signal }). */
+  readonly signal: AbortSignal;
+  /** Total budget, for degradation messages. */
+  readonly totalMs: number;
+  dispose(): void;
+}
+
+export const STAGE_LLM_BUDGET_MS = Number(process.env['MCPCTL_STAGE_LLM_BUDGET_MS'] ?? '30000');
+
+export function createStageBudget(totalMs: number = STAGE_LLM_BUDGET_MS): StageBudget {
+  const controller = new AbortController();
+  const startedAt = Date.now();
+  const timer = setTimeout(() => { controller.abort(); }, totalMs);
+  // Node keeps the process alive for pending timers; a stage budget must not.
+  if (typeof timer.unref === 'function') timer.unref();
+
+  return {
+    totalMs,
+    signal: controller.signal,
+    remainingMs: (): number => Math.max(0, totalMs - (Date.now() - startedAt)),
+    exhausted: (): boolean => Date.now() - startedAt >= totalMs,
+    dispose: (): void => { clearTimeout(timer); },
+  };
+}
+
+/** Never-expiring budget, for tests and non-LLM call paths. */
+export function unlimitedStageBudget(): StageBudget {
+  return {
+    totalMs: Number.POSITIVE_INFINITY,
+    signal: new AbortController().signal,
+    remainingMs: (): number => Number.POSITIVE_INFINITY,
+    exhausted: (): boolean => false,
+    dispose: (): void => { /* nothing to clean up */ },
+  };
+}
diff --git a/src/mcplocal/src/proxymodel/stages/paginate.ts b/src/mcplocal/src/proxymodel/stages/paginate.ts
index 7b522e0..664f474 100644
--- a/src/mcplocal/src/proxymodel/stages/paginate.ts
+++ b/src/mcplocal/src/proxymodel/stages/paginate.ts
@@ -9,6 +9,7 @@
  *   previewChars: number (chars per page sent to LLM for title generation, default 300)
  */
 import type { StageHandler, StageContext, Section } from '../types.js';
+import { bounded, degradationNotice } from '../../util/degrade.js';
 
 const handler: StageHandler = async (content, ctx) => {
   const pageSize = (ctx.config.pageSize as number | undefined) ?? 8000;
@@ -24,7 +25,7 @@ const handler: StageHandler = async (content, ctx) => {
     return { content };
   }
 
-  const titles = await generatePageTitles(pages, ctx);
+  const { titles, degradedReason } = await generatePageTitles(pages, ctx);
 
   const sections: Section[] = pages.map((page, i) => ({
     id: `page-${i + 1}`,
@@ -36,65 +37,104 @@ const handler: StageHandler = async (content, ctx) => {
     `[${s.id}] ${s.title} (${pages[i]!.length} chars)`,
   ).join('\n');
 
+  // Loud, not silent: if the titles are numbered because the LLM was slow or
+  // down, say so rather than letting the model assume the pages are unnamed.
+  const notice = degradedReason === null
+    ? ''
+    : degradationNotice('Smart page titles', degradedReason, 'Pages are numbered instead.');
+
   return {
     // No navigation hint here — the caller (content-pipeline / router) appends
     // the authoritative _resultId/_section instruction once sections are stored.
-    content: `Content split into ${sections.length} pages (${content.length} total chars):\n${toc}`,
+    content: `${notice}Content split into ${sections.length} pages (${content.length} total chars):\n${toc}`,
     sections,
+    ...(degradedReason === null ? {} : { metadata: { degraded: true, degradedReason } }),
   };
 };
 
 /**
- * Generate descriptive titles for each page using LLM.
- * Falls back to generic "Page N" titles if LLM is unavailable or fails.
+ * Generate descriptive titles for each page using the LLM.
+ *
+ * Returns a degradation reason instead of throwing: the deterministic
+ * "Page N" fallback is unconditional. Before this was bounded, a provider that
+ * hung (rather than erroring) left the awaited promise unsettled forever — the
+ * tool call never returned and the client waited out its own 1800s timeout.
  */
-async function generatePageTitles(pages: string[], ctx: StageContext): Promise<string[]> {
+async function generatePageTitles(
+  pages: string[],
+  ctx: StageContext,
+): Promise<{ titles: string[]; degradedReason: string | null }> {
   const fallback = pages.map((_, i) => `Page ${i + 1}`);
 
+  // No LLM configured is a deliberate choice, not a degradation — numbered
+  // pages are the expected output there, so don't warn about them.
   if (!ctx.llm.available()) {
-    return fallback;
+    return { titles: fallback, degradedReason: null };
   }
 
   const previewChars = (ctx.config.previewChars as number | undefined) ?? 300;
   const cacheKey = `paginate-titles:${ctx.cache.hash(ctx.originalContent)}:${pages.length}`;
 
-  try {
-    const cached = await ctx.cache.getOrCompute(cacheKey, async () => {
-      const previews = pages.map((page, i) => {
-        const preview = page.slice(0, previewChars).trim();
-        return `--- Page ${i + 1} (${page.length} chars) ---\n${preview}`;
-      }).join('\n\n');
+  // Read the cache BEFORE consulting the budget — a warm cache costs nothing,
+  // so an exhausted budget must not degrade a result we already hold.
+  const cached = await ctx.cache.get(cacheKey);
+  if (cached !== null) {
+    try {
+      return { titles: JSON.parse(cached) as string[], degradedReason: null };
+    } catch {
+      // Corrupt entry — fall through and recompute.
+    }
+  }
 
-      const DEFAULT_PROMPT = `Generate exactly {{pageCount}} short descriptive titles (max 60 chars each) for the following {{pageCount}} pages. Return ONLY a JSON array of {{pageCount}} strings. No markdown, no explanation.`;
-      const template = await ctx.getSystemPrompt('llm-paginate-titles', DEFAULT_PROMPT);
-      const prompt = template.replaceAll('{{pageCount}}', String(pages.length));
+  if (ctx.budget.exhausted()) {
+    return {
+      titles: fallback,
+      degradedReason: `stage LLM budget of ${String(ctx.budget.totalMs)}ms exhausted`,
+    };
+  }
 
-      const result = await ctx.llm.complete(
-        `${prompt}\n\n${previews}`,
-        { maxTokens: pages.length * 30 },
-      );
+  const previews = pages.map((page, i) => {
+    const preview = page.slice(0, previewChars).trim();
+    return `--- Page ${i + 1} (${page.length} chars) ---\n${preview}`;
+  }).join('\n\n');
 
-      // Parse JSON array from response, pad/truncate to match page count
+  const DEFAULT_PROMPT = `Generate exactly {{pageCount}} short descriptive titles (max 60 chars each) for the following {{pageCount}} pages. Return ONLY a JSON array of {{pageCount}} strings. No markdown, no explanation.`;
+  const template = await ctx.getSystemPrompt('llm-paginate-titles', DEFAULT_PROMPT);
+  const prompt = template.replaceAll('{{pageCount}}', String(pages.length));
+
+  const outcome = await bounded(
+    async (signal) => {
+      const result = await ctx.llm.complete(`${prompt}\n\n${previews}`, {
+        maxTokens: pages.length * 30,
+        budgetMs: ctx.budget.remainingMs(),
+        signal,
+      });
       const match = result.match(/\[[\s\S]*\]/);
       if (!match) throw new Error('No JSON array in response');
       const raw = JSON.parse(match[0]) as string[];
       if (!Array.isArray(raw) || raw.length === 0) {
         throw new Error('Empty or invalid title array');
       }
-      // Pad with generic titles if model returned fewer, truncate if more
-      const titles = pages.map((_, i) =>
+      return pages.map((_, i) =>
         (i < raw.length && typeof raw[i] === 'string' && raw[i]!.trim())
           ? raw[i]!.trim().slice(0, 80)
           : `Page ${i + 1}`,
       );
-      return JSON.stringify(titles);
-    });
+    },
+    {
+      label: 'paginate',
+      operation: 'Smart page titles',
+      timeoutMs: ctx.budget.remainingMs(),
+      signal: ctx.budget.signal,
+      fallback: 'to numbered pages',
+    },
+  );
 
-    return JSON.parse(cached) as string[];
-  } catch (err) {
-    ctx.log.warn(`Smart page titles failed, using generic: ${(err as Error).message}`);
-    return fallback;
+  if (outcome.degraded) {
+    return { titles: fallback, degradedReason: outcome.reason };
   }
+  await ctx.cache.set(cacheKey, JSON.stringify(outcome.value));
+  return { titles: outcome.value, degradedReason: null };
 }
 
 function splitPages(content: string, pageSize: number): string[] {
diff --git a/src/mcplocal/src/proxymodel/stages/summarize-tree.ts b/src/mcplocal/src/proxymodel/stages/summarize-tree.ts
index b75e419..312de5f 100644
--- a/src/mcplocal/src/proxymodel/stages/summarize-tree.ts
+++ b/src/mcplocal/src/proxymodel/stages/summarize-tree.ts
@@ -14,11 +14,13 @@
  */
 import type { StageHandler, Section } from '../types.js';
 import { detectContentType } from '../content-type.js';
+import { bounded, degradationNotice } from '../../util/degrade.js';
 
 const handler: StageHandler = async (content, ctx) => {
   const maxTokens = (ctx.config.maxSummaryTokens as number | undefined) ?? 200;
   const maxGroup = (ctx.config.maxGroupSize as number | undefined) ?? 5;
   const maxDepth = (ctx.config.maxDepth as number | undefined) ?? 3;
+  const deg = createDegradeSink();
 
   // If content is small, just return it unchanged
   if (content.length < 2000) {
@@ -37,7 +39,16 @@ const handler: StageHandler = async (content, ctx) => {
       return { content };
     }
 
-    const summary = await cachedSummarize(ctx, ctx.originalContent, maxTokens);
+    const summary = await cachedSummarize(ctx, ctx.originalContent, maxTokens, deg);
+    if (summary === null) {
+      // Budget gone or the LLM failed: return the content untouched rather
+      // than a summary we could not produce. Previously this path had no
+      // try/catch at all, so a failure escaped the stage entirely.
+      return {
+        content: degradationNotice('Smart summaries', deg.reason ?? 'unavailable', 'Content is unsummarised.') + content,
+        metadata: { degraded: true, degradedReason: deg.reason },
+      };
+    }
     return {
       content: summary + '\n\nSection "full" holds the complete content.',
       sections: [{ id: 'full', title: 'Full Content', content: ctx.originalContent }],
@@ -45,7 +56,7 @@ const handler: StageHandler = async (content, ctx) => {
   }
 
   // Build the summary tree
-  const tree = await buildTree(sections, ctx, { maxTokens, maxGroup, maxDepth, depth: 0 });
+  const tree = await buildTree(sections, ctx, { maxTokens, maxGroup, maxDepth, depth: 0, deg });
 
   // Format top-level ToC
   const toc = tree.map((s) => {
@@ -55,9 +66,20 @@ const handler: StageHandler = async (content, ctx) => {
     return `[${s.id}] ${s.title}${childHint}`;
   }).join('\n');
 
+  // One reason, plus how many summaries it cost — the recursion can hit the
+  // same exhausted budget dozens of times.
+  const notice = deg.reason === null
+    ? ''
+    : degradationNotice(
+        'Smart summaries',
+        deg.reason,
+        `Showing first-line excerpts for ${String(deg.count)} of ${String(tree.length)} sections.`,
+      );
+
   return {
-    content: `${tree.length} sections:\n${toc}`,
+    content: `${notice}${tree.length} sections:\n${toc}`,
     sections: tree,
+    ...(deg.reason === null ? {} : { metadata: { degraded: true, degradedReason: deg.reason } }),
   };
 };
 
@@ -66,6 +88,8 @@ interface TreeOpts {
   maxGroup: number;
   maxDepth: number;
   depth: number;
+  /** Shared across the whole recursion — one budget, one reported reason. */
+  deg: DegradeSink;
 }
 
 async function buildTree(
@@ -84,7 +108,8 @@ async function buildTree(
       summary = structuralSummary(section.content, contentType);
     } else if (ctx.llm.available()) {
       // LLM summary for prose/code
-      summary = await cachedSummarize(ctx, section.content, opts.maxTokens);
+      summary = await cachedSummarize(ctx, section.content, opts.maxTokens, opts.deg)
+        ?? (section.content.split('\n')[0] ?? '').slice(0, 200);
     } else {
       // No LLM — use first line as summary
       summary = (section.content.split('\n')[0] ?? '').slice(0, 200);
@@ -125,18 +150,68 @@ async function cachedSummarize(
   ctx: import('../types.js').StageContext,
   content: string,
   maxTokens: number,
-): Promise<string> {
+  deg: DegradeSink,
+): Promise<string | null> {
   const key = `summary:${ctx.cache.hash(content)}:${maxTokens}`;
-  return ctx.cache.getOrCompute(key, async () => {
-    const DEFAULT_PROMPT = `Summarize the following in about {{maxTokens}} tokens. Preserve all items marked MUST, REQUIRED, or CRITICAL verbatim. Be specific — mention names, IDs, counts, key values.`;
-    const template = await ctx.getSystemPrompt('llm-summarize', DEFAULT_PROMPT);
-    const prompt = template.replaceAll('{{maxTokens}}', String(maxTokens));
 
-    return ctx.llm.complete(
-      `${prompt}\n\n${content}`,
-      { maxTokens },
-    );
-  });
+  // Read the cache BEFORE consulting the budget: a warm entry costs nothing,
+  // so an exhausted budget must never degrade a summary we already hold.
+  const cached = await ctx.cache.get(key);
+  if (cached !== null) return cached;
+
+  if (ctx.budget.exhausted()) {
+    deg.note(`stage LLM budget of ${String(ctx.budget.totalMs)}ms exhausted`);
+    return null;
+  }
+
+  const DEFAULT_PROMPT = `Summarize the following in about {{maxTokens}} tokens. Preserve all items marked MUST, REQUIRED, or CRITICAL verbatim. Be specific — mention names, IDs, counts, key values.`;
+  const template = await ctx.getSystemPrompt('llm-summarize', DEFAULT_PROMPT);
+  const prompt = template.replaceAll('{{maxTokens}}', String(maxTokens));
+
+  const outcome = await bounded(
+    (signal) => ctx.llm.complete(`${prompt}\n\n${content}`, {
+      maxTokens,
+      budgetMs: ctx.budget.remainingMs(),
+      signal,
+    }),
+    {
+      label: 'summarize-tree',
+      operation: 'Smart summaries',
+      timeoutMs: ctx.budget.remainingMs(),
+      signal: ctx.budget.signal,
+      fallback: 'to first-line excerpts',
+    },
+  );
+
+  if (outcome.degraded) {
+    deg.note(outcome.reason);
+    return null;
+  }
+  await ctx.cache.set(key, outcome.value);
+  return outcome.value;
+}
+
+/**
+ * Collects the first degradation reason and a count.
+ *
+ * buildTree recurses and loops, so one exhausted budget can produce dozens of
+ * identical reasons; the user needs the reason once plus how many summaries it
+ * cost them.
+ */
+export interface DegradeSink {
+  note(reason: string): void;
+  readonly reason: string | null;
+  readonly count: number;
+}
+
+export function createDegradeSink(): DegradeSink {
+  let reason: string | null = null;
+  let count = 0;
+  return {
+    note(r: string): void { reason ??= r; count++; },
+    get reason(): string | null { return reason; },
+    get count(): number { return count; },
+  };
 }
 
 function structuralSummary(content: string, type: string): string {
@@ -267,9 +342,10 @@ async function groupSections(
 
     const groupContent = chunk.map((s) => `[${s.id}] ${s.title}`).join('\n');
     const groupId = `group-${Math.floor(i / opts.maxGroup) + 1}`;
+    const genericTitle = `Group ${Math.floor(i / opts.maxGroup) + 1} (${chunk.length} sections)`;
     const groupTitle = ctx.llm.available()
-      ? await cachedSummarize(ctx, groupContent, 50)
-      : `Group ${Math.floor(i / opts.maxGroup) + 1} (${chunk.length} sections)`;
+      ? (await cachedSummarize(ctx, groupContent, 50, opts.deg) ?? genericTitle)
+      : genericTitle;
 
     groups.push({
       id: groupId,
diff --git a/src/mcplocal/src/proxymodel/types.ts b/src/mcplocal/src/proxymodel/types.ts
index da3b8a8..4ad62c1 100644
--- a/src/mcplocal/src/proxymodel/types.ts
+++ b/src/mcplocal/src/proxymodel/types.ts
@@ -10,6 +10,8 @@
  *   SessionController — method-level hooks with per-session state
  */
 
+import type { StageBudget } from './stage-budget.js';
+
 /** Fetches a system prompt by name, falling back to the provided default. */
 export type SystemPromptFetcher = (name: string, fallback: string) => Promise<string>;
 
@@ -48,6 +50,13 @@ export interface StageContext {
 
   /** Stage-specific configuration from the proxymodel YAML */
   config: Record<string, unknown>;
+
+  /**
+   * Shared wall-clock budget for this stage's LLM work. A stage that calls the
+   * LLM in a loop must check this between calls and fall back deterministically
+   * once it is gone — a per-call timeout alone multiplies rather than bounds.
+   */
+  budget: StageBudget;
 }
 
 export interface StageResult {
diff --git a/src/mcplocal/tests/proxymodel-stages.test.ts b/src/mcplocal/tests/proxymodel-stages.test.ts
index d58a8b7..f11b076 100644
--- a/src/mcplocal/tests/proxymodel-stages.test.ts
+++ b/src/mcplocal/tests/proxymodel-stages.test.ts
@@ -5,6 +5,7 @@ import paginate from '../src/proxymodel/stages/paginate.js';
 import sectionSplit from '../src/proxymodel/stages/section-split.js';
 import summarizeTree from '../src/proxymodel/stages/summarize-tree.js';
 import { BUILT_IN_STAGES } from '../src/proxymodel/stages/index.js';
+import { unlimitedStageBudget } from '../src/proxymodel/stage-budget.js';
 
 function mockCtx(original: string, config: Record<string, unknown> = {}, llmAvailable = false): StageContext {
   const llmResponses: string[] = [];
@@ -48,6 +49,7 @@ function mockCtx(original: string, config: Record<string, unknown> = {}, llmAvai
     cache: mockCache,
     log: mockLog,
     getSystemPrompt: async (_name: string, fallback: string) => fallback,
+    budget: unlimitedStageBudget(),
     config,
   };
 }
diff --git a/src/mcplocal/tests/proxymodel-types.test.ts b/src/mcplocal/tests/proxymodel-types.test.ts
index 2983475..7febbba 100644
--- a/src/mcplocal/tests/proxymodel-types.test.ts
+++ b/src/mcplocal/tests/proxymodel-types.test.ts
@@ -12,6 +12,7 @@ import type {
   SessionContext,
   ContentType,
 } from '../src/proxymodel/index.js';
+import { unlimitedStageBudget } from '../src/proxymodel/stage-budget.js';
 
 describe('ProxyModel type contract', () => {
   it('StageHandler can be implemented as a simple function', async () => {
@@ -137,6 +138,7 @@ function createMockContext(original: string): StageContext {
     cache: mockCache,
     log: mockLog,
     getSystemPrompt: async (_name: string, fallback: string) => fallback,
+    budget: unlimitedStageBudget(),
     config: {},
   };
 }
diff --git a/src/mcplocal/tests/stage-budget.test.ts b/src/mcplocal/tests/stage-budget.test.ts
new file mode 100644
index 0000000..9e96177
--- /dev/null
+++ b/src/mcplocal/tests/stage-budget.test.ts
@@ -0,0 +1,122 @@
+import { describe, it, expect, vi, afterEach } from 'vitest';
+import { createStageBudget, unlimitedStageBudget, STAGE_LLM_BUDGET_MS } from '../src/proxymodel/stage-budget.js';
+import { getStage } from '../src/proxymodel/stage-registry.js';
+import '../src/proxymodel/stages/index.js';
+import type { StageContext, LLMProvider, CacheProvider, StageLogger } from '../src/proxymodel/types.js';
+
+afterEach(() => { vi.restoreAllMocks(); });
+
+function ctxWith(llm: LLMProvider, original: string, budgetMs: number): StageContext {
+  const store = new Map<string, string>();
+  const cache: CacheProvider = {
+    async getOrCompute(k, c) {
+      if (store.has(k)) return store.get(k)!;
+      const v = await c(); store.set(k, v); return v;
+    },
+    hash: (c) => c.slice(0, 8),
+    async get(k) { return store.get(k) ?? null; },
+    async set(k, v) { store.set(k, v); },
+  };
+  const log: StageLogger = { debug: vi.fn(), info: vi.fn(), warn: vi.fn(), error: vi.fn() };
+  return {
+    contentType: 'toolResult', sourceName: 'test/tool', projectName: 'test', sessionId: 's1',
+    originalContent: original, llm, cache, log,
+    getSystemPrompt: async (_n, f) => f,
+    config: {},
+    budget: createStageBudget(budgetMs),
+  };
+}
+
+/** Never settles and ignores the signal — the shape that caused the outage. */
+const hangingLlm: LLMProvider = {
+  complete: () => new Promise<string>(() => { /* never */ }),
+  available: () => true,
+};
+
+describe('StageBudget', () => {
+  it('reports remaining time and expires', async () => {
+    const b = createStageBudget(60);
+    expect(b.exhausted()).toBe(false);
+    expect(b.remainingMs()).toBeGreaterThan(0);
+    await new Promise((r) => setTimeout(r, 90));
+    expect(b.exhausted()).toBe(true);
+    expect(b.remainingMs()).toBe(0);
+    expect(b.signal.aborted).toBe(true);
+    b.dispose();
+  });
+
+  it('unlimited budget never expires', () => {
+    const b = unlimitedStageBudget();
+    expect(b.exhausted()).toBe(false);
+    expect(b.remainingMs()).toBe(Number.POSITIVE_INFINITY);
+    b.dispose();
+  });
+
+  it('defaults to the documented 30s', () => {
+    expect(STAGE_LLM_BUDGET_MS).toBe(30_000);
+  });
+});
+
+describe('paginate under a hung LLM', () => {
+  it('returns numbered pages within the budget instead of hanging', async () => {
+    vi.spyOn(console, 'error').mockImplementation(() => { /* quiet */ });
+    const handler = getStage('paginate')!;
+    const content = 'x'.repeat(30_000);
+    const ctx = ctxWith(hangingLlm, content, 200);
+
+    const start = Date.now();
+    const result = await handler(content, ctx);
+    const elapsed = Date.now() - start;
+
+    // The whole point: this used to never return at all.
+    expect(elapsed).toBeLessThan(3000);
+    expect(result.content).toContain('⚠ Smart page titles unavailable');
+    expect(result.content).toContain('page-1');
+    expect(result.metadata?.['degraded']).toBe(true);
+    ctx.budget.dispose();
+  });
+
+  it('serves a warm cache even with an exhausted budget', async () => {
+    const handler = getStage('paginate')!;
+    const content = 'y'.repeat(30_000);
+
+    // Warm the cache with a working LLM and a generous budget.
+    const good: LLMProvider = {
+      complete: async () => '["Alpha","Beta","Gamma","Delta"]',
+      available: () => true,
+    };
+    const warm = ctxWith(good, content, 5000);
+    await handler(content, warm);
+
+    // Same cache, no budget left: the cached titles must still be used.
+    const cold: StageContext = { ...warm, llm: hangingLlm, budget: createStageBudget(1) };
+    await new Promise((r) => setTimeout(r, 10));
+    const result = await handler(content, cold);
+
+    expect(result.content).toContain('Alpha');
+    expect(result.content).not.toContain('⚠');
+    warm.budget.dispose();
+    cold.budget.dispose();
+  });
+});
+
+describe('summarize-tree under a hung LLM', () => {
+  it('bounds the whole recursion, not each call', async () => {
+    vi.spyOn(console, 'error').mockImplementation(() => { /* quiet */ });
+    const handler = getStage('summarize-tree')!;
+    // Many sections: pre-fix, a per-call timeout would multiply across the
+    // sequential loop AND the recursion (maxDepth 3).
+    const sections = Array.from({ length: 20 }, (_, i) =>
+      `## Section ${i + 1}\n${'prose '.repeat(400)}`).join('\n\n');
+    const ctx = ctxWith(hangingLlm, sections, 300);
+
+    const start = Date.now();
+    const result = await handler(sections, ctx);
+    const elapsed = Date.now() - start;
+
+    expect(elapsed).toBeLessThan(5000);
+    expect(result.content).toContain('⚠ Smart summaries unavailable');
+    expect(result.metadata?.['degraded']).toBe(true);
+    ctx.budget.dispose();
+  });
+});
diff --git a/src/mcplocal/tests/system-prompt-fetching.test.ts b/src/mcplocal/tests/system-prompt-fetching.test.ts
index 545b34b..8730a38 100644
--- a/src/mcplocal/tests/system-prompt-fetching.test.ts
+++ b/src/mcplocal/tests/system-prompt-fetching.test.ts
@@ -2,6 +2,7 @@ import { describe, it, expect, vi } from 'vitest';
 import type { StageContext, LLMProvider, CacheProvider, StageLogger, SystemPromptFetcher } from '../src/proxymodel/types.js';
 import paginate from '../src/proxymodel/stages/paginate.js';
 import summarizeTree from '../src/proxymodel/stages/summarize-tree.js';
+import { unlimitedStageBudget } from '../src/proxymodel/stage-budget.js';
 
 function mockCtx(
   original: string,
@@ -50,6 +51,7 @@ function mockCtx(
     cache: mockCache,
     log: mockLog,
     getSystemPrompt: opts.getSystemPrompt ?? (async (_name, fallback) => fallback),
+    budget: unlimitedStageBudget(),
     config,
   };
 }