08 Sep Notice of Rights in North Carolina – What You Need to Know
Many people are confused by the form that is served by the sheriff after a judgment is entered against them in North Carolina. The form has two parts: (1) the first part is titled “Notice of Right to Have Exemptions Designated,” often called a Notice of Rights, (2) which is followed by a form titled “Motion to Claim Exempt Property.” Why are these documents served on you, and what should you do with them?
While the forms may not be easy to understand, they are very important for protecting your property if a judgment is entered against you. North Carolina law allows its citizens to exempt certain property from collection, meaning the property designated as exempt cannot be touched by creditors. The catch is that you are required to file a motion with the court to claim your exemptions. A copy of the form “Motion to Claim Exempt Property” is provided with the Notice of Rights to make this process easier.
What Property Can You Exempt in a Notice of Rights?
North Carolina’s property exemptions usually cover most property owned by someone facing a judgment. North Carolina allows you to exempt:
- Up to $35,000 in equity in your primary residence
- Up to $3,500 in equity in a vehicle
- At least $5,000 worth of household goods
- Wages earned in the last 60 days (which may be held in a bank account)
- Depending on the amount of home equity claimed, up to $5,000 to be used as a “wildcard” to exempt anything you want
How Do You Designate Your Property as Exempt from Collection?
To claim these exemptions, you will need to fill out the “Motion to Claim Exempt Property” by listing your property in the appropriate space. Keep in mind that “equity” refers to the value of the property at issue minus any amount owed toward that property. For example, if you own a car worth $6,000, but you owe $3,000 on your car loan, the amount of equity you would need to claim as exempt is $3,000. North Carolina exemptions would completely cover the $3,000 in equity.
One very important asset that people frequently forget to claim as exempt is a bank account.
The “Motion to Claim Exempt Property” form does not designated a specific place to list bank accounts, so they are frequently overlooked, even though they are one of the easiest targets for judgment creditors to seize. Bank accounts can usually be claimed as exempt under the “wildcard” exemption, which is section number 8 on the “Motion to Claim Exempt Property” form. If the money held in a bank account came from wages earned in the last 60 days, the bank account may also be exempted, though there is no specific place to list wages on the “Motion to Claim Exempt Property” form.
Once filled out, the “Motion to Claim Exempt Property” form must be filed with the clerk of court in the county from which the Notice of Rights issued. You must also mail a copy of the completed form to the judgment creditor (the person or company who got the judgment against you) or the judgment creditor’s attorney.
Could Bankruptcy Help Your Situation?
If a judgment is entered against you and your receive a Notice of Right to Have Exemptions Designated and a Motion to Claim Exempt Property, you should also consider whether bankruptcy may be advisable to address the judgment and any other debts you may have.
When someone files a Chapter 7 or Chapter 13 bankruptcy, all collection activity stops immediately, including enforcement of a judgment. Under certain circumstances, a bankruptcy can also remove a judgment lien from any real property you own.
If you would like to get more information about how bankruptcy can address your debt, give us a call at (919) 246-4676. We offer free consultations to discuss your debt picture.