What Happens When You Can't Pay a Civil Judgment in North Carolina?

North Carolina prohibits creditors from seeking wage garnishments for credit cards, car loans or other personal debts.

In North Carolina, the civil judgment awarded by a judge at the conclusion of a lawsuit gives the winner the right to use legal recourse to enforce the court's order and collect the award from the debtor. The court judgment does not, however, dictate the process for how the creditor should collect the money owed. A North Carolina civil judgment lasts for 10 years, and the creditor can renew it for 10 more years. Interest accrues on the judgment at the rate of 8 percent per year.


Designated Exemptions

Generally a creditor will serve the debtor with a legal document called a "Notice of Right to Have Exemptions Designated." The sheriff may deliver the document or the creditor may send it by certified mail. To protect your rights, you must file a response, usually within 20 days after receipt. Failure to file this document could subject your assets and property to seizure by the sheriff and eventually be auctioned for sale. Sometimes you can protect most or all of your assets and property from the claim of a creditor.


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Bank Garnishment

A creditor can place a lien on your bank account by obtaining a writ of garnishment, which orders the bank to place a hold on your accounts. This hold goes into effect from the moment the bank receives the court's order. The writ prohibits the bank from paying any checks drawn on your bank account. The statutes prevent you from taking money out of the account until satisfaction of the debt. If the account contains sufficient money to pay the amount of the garnishment, the institution can pay checks drawn on the account or allow you to withdraw money. Once the bank pays the garnishment, it can release the hold.



The creditor can obtain a court order called a writ of execution from the judge, which allows the sheriff to confiscate certain assets and auction the property off to pay your debt. The creditor will have to pay a fee. To have the sheriff seize and auction your vehicle would require the creditor to pay $300 to $1,000. The fees for real estate are about $750 to $1,500. Many debtors avoid this process by simply paying the debt or entering a payment plan with the creditor.


Real Estate Exemptions

Section 1C-1601 of the North Carolina General Statutes allow you to exempt a portion, up to $35,000 in value, from creditors for real estate that serves as your primary residence. This rule also applies if a dependent resides in the property and for burial plots. Unmarried debtors age 65 or older may exempt a value up to $60,000. However, you must have owned the property under title as a joint tenant with right of survivorship or as a tenant by the entirety.


Other Exemptions

You can exclude a single vehicle with a value of up to $3,000 from a creditor's claim. The law also allows you $5,000 of value and $1,000 per dependent (up to a maximum of $4,000) for furnishings, clothing appliances animals or crops held for household or personal use. You can keep up to $2,000 in value for professional tools and books. Certain retirement plans and disability, alimony and child support payments also receive protection from creditors.



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