Notice of Rights to Have Exemptions Designated/Motion to Claim
If you have received this form (Notice of Rights to Have Exemptions Designated) then immediate attention is needed. Under North Carolina law, after a creditor receives a judgment against you, it must first send you this form and provide you with a statutory time period response. In North Carolina, you have 20 days from receipt of this document to file it with the Clerk of Court or otherwise you have waived your exemptions. By waiving your exemptions, then the creditor can levy (i.e. take) all your property.What is it exemption?
An exemption is roughly the same thing as a protection. When a creditor is attempting to levy your property to satisfy a judgment, you may protect (exempt) certain property from that collection. The North Carolina General Assembly has allowed robust exemptions as to your property. Please note: the term “properties” is generic and can be anything, not just a plot of land. While some examples of specific exemptions are listed below, your exemptions in North Carolina for many everyday items include household goods, retirement accounts, and wages. The key, however, is that these exemptions are only claimed by filing that form (Motion to Claim Exemptions) that you have received and submitting it to the Clerk of Court within 20 days. Please note that there are many exemptions in North Carolina, not all of which are listed or referenced here. For an extensive list for the most protection you can have under the law, you should consult with an experienced attorney. If you wish for one of our attorneys to assist you, please contact us at your earliest convenience.What if you have too much property?
The fact of the matter is that most people in North Carolina have average amounts of property, immune from collection assuming they file this form. Frankly, most people’s property in North Carolina is protected or exempted. Occasionally, however, you may find yourself having exposed equity in property. What is exposed equity? Exposed equity is when the value of a piece of property exceeds the loan amount on that property plus the exemption. For example: let us say that you have a car worth $10,000. There is a loan against the car for $5000 and North Carolina’s auto exemption is $3500. By adding the loan amount and the exemption amount, the debtor’s cushion is $8500. Unfortunately, since the automobile is worth $10,000, then the difference of $1500 is exposed and thus, subject to the creditor selling the car. Please note: in order to have clear title, the creditor still would have to pay off the loan, pay the debtor his or her $3500, but then be able to keep the $1500 equity to satisfy the judgment or portion thereof.
If a debtor has exposed equity in any property, the debtor should consider consulting with an experienced attorney to understand the risks and opportunities in order to save that property. The attorneys at Arnold & Smith, PLLC, have helped debtors save their property whether by debt settlement negotiations or even by filing a Chapter 13 bankruptcy, which allows the debtor to make payments in lieu of losing the property.Under North Carolina law, a judgment debtor may currently (2014) exempt as follows:
SELECT NC EXEMPTIONS (N.C.G.S. §1C-1601)
- Residence (“Homestead Exemption”): $35,000.00 equity per individual debtor, $70,000.00 for joint debtors (Equity= Current value minus loan payoff)
- Automobile: $3,500.00 equity
- Wildcard: $5,000.00 per debtor (only to the extent the Homestead exemption, supra, is not fully used)
- Household Goods: $5,000.00 per debtor, plus $1000.00 for each dependent not to exceed $4000.00 total for dependents
- Tools of the trade: $2,000.00
- Life Insurance (beneficiary: spouse and/or dependents)- may be 100% exempt
- IRA, Pension & 401k- may be 100% exempt
- Earnings in the last 60 days necessary for support of family