After receiving the exemption forms (by sheriff or by certified mail- but if you refuse certified mail the papers can be served by regular mail), a defendant has 20 days to fill out the Motion to Claim Exempt Property, mail or deliver it to the clerk's office, and send a copy to the plaintiff’s lawyer. If a defendant does not return the form in the 20-day period, exemptions are waived.
Statutory exemptions in North Carolina are set up based on different types of property. In some cases the type of property is totally exempt and in other, limits are set for the amount of each type of property that can be exempt. (In addition to the exemptions described here, there are other state and federal exemptions that you may be entitled to claim, such as 60 days worth of Social Security benefits, unemployment benefits, workers' compensation benefits, and earnings for your personal services.)
Exemption limits are based on the “equity value” of your interest in each item of property. To determine your equity value in an item, follow these steps:
1. Determine the fair market value of your interest in the item. “Fair market value” means what you could sell the item for (at the flea market, for example). If you co-own the item with someone else, only the fair market value of your share of the property is counted.
2. Determine the amount owed (lien pay-off) to each creditor who has a security interest in the item.
3.Subtract #2 from #1.
For example: You have a truck that has a value of $5,000. You owe the bank $3,000. You have a $2,000 equity value in the truck.
What Property Can Be Exempt? Under the statutory exemptions in North Carolina, each debtor can exempt:
#5. Up to $35,000 in land, house, mobile home or other property used as a residence, or burial plots. (Additional protections may apply to real property or mobile homes owned by married persons and unmarried persons who are 65 years of age or older.)
#6 Up to $5,000 in clothes, household furnishings and goods, appliances, books, animals, crops, and musical instruments which are used primarily for personal, family, or household use. (This amount increases $1,000 for each dependent of the debtor up to a maximum of four (4) dependents.)
If you want to try to exempt funds in a bank account earned from personal services, add some language like this: “This account contains only earnings from my personal services, which personal services were performed within the last 60 days. These earnings are necessary for my support and/or the support of my family and should be exempt. All future money entering this account will also come from personal services.” GS 1-362
#7 Up to $3,500 in one automobile.
#8 Up to $5,000 in any property (this amount is reduced by the amount of exemption claimed for residence or burial plot).
#9 Items of health care aid necessary for you or your dependents to work or sustain health.
#10 Up to $2,000 in books, tools, or other implements used in the trade of a debtor or dependent of the debtor.
#11 Life insurance policies listing a spouse and/or children as beneficiaries.
#12 Compensation for personal injury or for the death of a person upon whom you depend for support (unless the judgment is for services related to the compensated injury).
#13 Individual retirement accounts, including individual retirement annuities and Roth retirement accounts.
#14 Funds up to $25,000 in college savings plans under certain conditions.
#15 Other state or governmental retirement accounts.
#16 Alimony, support, separate maintenance, and child support payments necessary for your support.
What Property Is Not Protected? Exemptions don't apply to the following:
▸ all of your property, if you fail to claim your exemptions on time!
▸ the value of property in excess of the exemption amounts allowed.
▸ personal property purchased less than 90 days before the judgment collection proceedings begin.
▸ claims of the Federal government or its agencies, to the extent that federal law so provides.
▸ claims of the State or its subdivisions for taxes, appearance bonds, or fiduciary bonds.
▸ claims for liens placed by law against specific property.
▸ if a creditor takes a security interest in connection with the purchase of an item, the item is not exempt from a judgment for the property by that creditor.
▸ orders for child support, alimony, or property distribution related to divorce or alimony.
▸ property owned by debtors who do not reside in North Carolina.
▸ judgments against corporations.
Tips For Protecting Your Exemption Rights
1. Notify the Clerk of Court and judgment creditor(s) if you change addresses after a judgment is entered. If you cannot be located for personal service by the Sheriff or by certified mail, service of the exemption notice can be made by regular mail to your “last known” address, whether or not you actually receive it.
2. Carefully read all mail and Court notices you receive. Your 20-day time limit for claiming exemptions begins on the day after you are served with the exemption notice.
3. Read and follow the instructions stated on the Motion form. Complete each section of the Motion. Make sure you list all of your property, including your share of property owned with others. You can attach additional pages if necessary. Values should be based on what you reasonably believe you could sell the item for, at a flea market, for example. If an item has no equity value (see above), you should list the item with a “$0" value.
4. Make sure to follow instructions at the end of the Motion for signing, dating, and serving your Motion. One copy of the Motion must be filed with the Court, and a copy must also be sent to the creditor - all within the 20 day time limit.
5. If you need help completing the exemption motion, if you own property in excess of exemption limits, or if the creditor objects to your exemptions, promptly contact an attorney or your local Legal Aid of North Carolina office for assistance.
This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.