North Carolina General Statutes § 1C-1603 Procedure for setting aside exempt property

(a) Motion or Petition; Notice. -

(1) A judgment debtor may have his exempt property designated by motion after judgment has been entered against him.

(2) Repealed by Session Laws 1981 (Regular Session, 1982), c. 1224, s. 10.

(3) The clerk or district court judge may determine that particular property is not exempt even though there has been no proceeding to designate the exemption.

(4) After judgment, except as provided in G.S. 1C-1603(a)(3) or when exemptions have already been designated, the clerk may not issue an execution or writ of possession unless notice from the court has been served upon the judgment debtor advising the debtor of the debtor's rights. The judgment creditor shall cause the notice, which shall be accompanied by the form for the statement by the debtor under subsection (c) of this section, to be served on the debtor as provided in G.S. 1A-1, Rule 4(j)(1). If the judgment debtor cannot be served as provided above, the judgment creditor may serve the judgment debtor by mailing a copy of the notice to the judgment debtor at the debtor's last known address. Proof of service by certified or registered mail or personal service is as provided in G.S. 1A-1, Rule 4. The judgment creditor may prove service by mailing to last known address by filing a certificate that the notice was served indicating the circumstances warranting the use of such service and the date and address of service. The notice shall be substantially in the following form:

NORTH CAROLINA IN THE GENERAL COURT

____________________ COUNTY OF JUSTICE DISTRICT

COURT DIVISION

CvD

______________________________ ) NOTICE OF

Judgment Creditor ) PETITION (OR

) MOTION) TO SET

vs. ) OFF DEBTOR'S

______________________________ ) EXEMPT PROPERTY

GREETINGS:

You have been named as a "judgment debtor" in a proceeding initiated by a "judgment creditor". A "judgment debtor" is a person who a court has declared owes money to another, the "judgment creditor". The purpose of this proceeding is to make arrangements to collect that debt from you personally or from property you own.

It is important that you respond to this notice no later than 20 days after you receive it because you may lose valuable rights if you do nothing. You may wish to consider hiring an attorney to help you with this proceeding to make certain that you receive all the protections to which you are entitled under the North Carolina Constitution and laws.

NOTICE TO JUDGMENT DEBTOR:

THERE ARE CERTAIN EXEMPTIONS UNDER STATE AND FEDERAL LAW THAT YOU ARE ENTITLED TO CLAIM IN ADDITION TO THE EXEMPTIONS LISTED ON THE "SCHEDULE OF DEBTOR'S PROPERTY AND REQUEST TO SET ASIDE EXEMPT PROPERTY" THAT IS ENCLOSED WITH THIS NOTICE.

These exemptions may include social security benefits, unemployment benefits, workers' compensation benefits, and earnings for your personal services rendered within the last 60 days. There is available to you a prompt procedure for challenging an attachment or levy on your property.

(b) Contents of Motion or Petition. - The motion or petition must:

(1) Name the judgment debtor;

(2) Name the judgment creditors of the debtor insofar as they are known to the movant;

(3) If it is a motion to modify a previously allocated exemption, describe the change of condition (if the movant received notice of the exemption hearing) and the modification desired.

(1) The debtor's assets, including their location;

(2) The debtor's debts and the names and addresses of the debtor's creditors;

(3) The property that the debtor desires designated as exempt.

The form for the statement shall be substantially as follows:

NORTH CAROLINA IN THE GENERAL COURT

__________________ COUNTY OF JUSTICE DISTRICT

COURT DIVISION

CvD

Judgment Creditor ) SCHEDULE OF DEBTOR'S

) PROPERTY

vs. ) AND REQUEST TO

) SET ASIDE EXEMPT

Judgment Debtor ) PROPERTY

NOTICE TO JUDGMENT DEBTOR:

THERE ARE CERTAIN EXEMPTIONS UNDER STATE AND FEDERAL LAW THAT YOU ARE ENTITLED TO CLAIM IN ADDITION TO THE EXEMPTIONS LISTED BELOW.

I, ___________, being duly sworn do depose and say:

(fill in your name)

1. That I am a citizen and resident of ____________________________ County,

North Carolina;

2. That I was born on ____________________;

(date of birth)

3. That I am (married to __________________)

(spouse's name)

___________;

(not married)

4. That the following persons live in my household and are in substantial need of my support:

NAME RELATIONSHIP TO DEBTOR AGE

_________ __________________________________ ________

(Use additional space, as necessary)

5. That (I own) (I am purchasing) (I rent) (choose one; mark out the other choices) a (house) (trailer) (apartment) (choose one; mark out the other choices)

located at ________________________________________________________

which is my residence. (address, city, zip code)

6. That I (do) (do not) own any other real property. If other real property is owned, list that property on the following lines; if no other real property is owned, mark "not applicable" on the first line.

______________________________________________________________________

7. That the following persons are, so far as I am able to tell, all of the persons or companies to whom I owe money:

______________________________________________________________________

8. That I wish to claim my interest in the following real or personal property, or in a cooperative that owns property, that I use as a residence or my dependent uses as a residence. I also wish to claim my interest in the following burial plots for myself or my dependents. I understand that my total interest claimed in the residence and burial plots may not exceed $35,000, except that if I am unmarried and am 65 years of age or older, I am entitled to claim a total exemption in the residence and burial plots not to exceed $60,000 so long as the property was previously owned by me as a tenant by the entireties or as a joint tenant with rights of survivorship, and the former co-owner of the property is deceased.

I understand that I am not entitled to this exemption if I take the homestead exemption provided by the Constitution of North Carolina in other property. I understand that if I wish to claim more than one parcel exempt I must attach additional pages setting forth the following information for each parcel claimed exempt.

Property Location:

County _______ Township _____________________________________________

Street Address _______________________________________________________

Legal Description:

Number by which county tax assessor identifies property ______________________

Description (Attach a copy of your deed or other instrument of conveyance that describes the property and indicate here: ________ or describe the property in as much detail as possible.

Attach additional sheets if necessary.)

____________________________________________________________________

Record Owner(s) ________________________________________________________

______________________________________________________________________

Estimated Value: ________________________________________________________

Lienholders:

(1) Name ____________________ Current Balance _________________________

Address __________________________________________________________

(2) Name ____________________ Current Balance _________________________

Address __________________________________________________________

(3) Name ____________________ Current Balance _________________________

Address __________________________________________________________

(4) If others, attach additional pages.

If you are unmarried and 65 years of age or older, specify which, if any, property listed above was previously owned by you as a tenant by the entireties or as a joint tenant with rights of survivorship and as to which the former co-owner of the property is deceased:

9. That I wish to claim the following life insurance policies whose sole beneficiaries are (my wife) (my children) (my wife and children) as exempt:

Name of Insurer Policy Number Face Value Beneficiary(ies)

_____________ ___________ __________ ___________________

10. That I wish to claim the following items of health care aid necessary for (myself) (my dependents) to work or sustain health:

Item Purpose Person using item

__________ __________ _________________________

11. That I wish to claim the following implements, professional books, or tools (not to exceed $2,000), of my trade or the trade of my dependent. I understand that such property purchased within 90 days of this proceeding may not be exempt:

Item Estimated Value

__________ ________________________________

12. That I wish to claim the following personal property consisting of household furnishings, household goods, wearing apparel, appliances, books, animals, crops or musical instruments as exempt from the claims of my creditors. I affirm, that these items of personal property are held primarily for my personal, family or household use or for such use by my dependents.

I understand that I am entitled to personal property worth the sum of $5,000. I understand that I am also entitled to $1,000 for each person dependent on me for support, but not to exceed $4,000 for dependents. I further understand that I am entitled to this amount after deduction from the value of the property the amount of any valid lien or purchase money security interest and that property purchased within 90 days of this proceeding may not be exempt.

Item (or class) Amount of Lien Location Estimated

of Property or Security Value of

Interest Debtor's

Interest

__________ __________ ________ _______________

13. That I wish to claim my interest in the following motor vehicle as exempt from the claims of my creditors. I understand that I am entitled to my interest in a motor vehicle worth the sum of $3,500 after deduction of the amount of any valid liens or purchase money security interest. I understand that a motor vehicle purchased within 90 days of this proceeding may not be exempt.

Make and Year Name(s) of Name(s) of Estimated

Model of Title Owner Lien Holder(s) Value of

Motor Vehicle of Record of Record Debtor's

Interest

___________ ____ ____________ __________ _______________

14. That I wish to claim as exempt the following compensation that I received or to which I am entitled for the personal injury of myself or a person upon whom I was dependent for support, including compensation from a private disability policy or an annuity, or compensation that I received for the death of a person upon whom I was dependent for support. I understand that this compensation is not exempt from claims for funeral, legal, medical, dental, hospital or health care charges related to the accident or injury that resulted in the payment of the compensation to me. I understand that if I wish to claim more than one amount of compensation exempt, I must attach additional pages setting forth the following information for each amount of compensation claimed exempt.

(a) amount of compensation

(b) method of payment: lump sum or installments

(If installments, state amount, frequency and duration of payments)

(d) location/source of compensation if received in lump or installments, including name and account number of any disability policy or annuity

(e) unpaid debts arising out of the injury or death giving rise to compensation

Name and Address Services Rendered Amount of Debt

________________ ________________ __________________________

15. That I wish to claim the following property as exempt because I claimed residential real or personal property as exempt that is worth less than $35,000 or I made no claim for a residential exemption under section (8) above. I understand that I am entitled to an exemption of up to $5,000 in any property only if I made no claim under section (8) above or a claim that was less than $35,000 under section (8) above. I understand that I am entitled to claim any unused amount that I was permitted to make under section (8) above up to a maximum of $5,000 in any property. (Examples: (a) if you claim $34,000 under section (8), $1,000 allowed here; (b) if you claim $30,000 under section (8), $5,000 allowed here; (c) if you claim $35,000 under section (8), no claim allowed here.) I further understand that the amount of my claim under this section is after the deduction from the value of this property of the amount of any valid lien or purchase money security interests and that tangible personal property purchased within 90 days of this proceeding may not be exempt.

PERSONAL PROPERTY:

Property Location Amount of Liens Value of

or Purchase Money Debtor's

Security Interests Interest

_____________

REAL PROPERTY (I understand that if I wish to claim more than one parcel exempt, I must attach additional pages setting forth the following information for each parcel claimed exempt):

Property Location

County _______ Township _____________________________________________

Street Address _______________________________________________________

Legal Description:

Number by which county tax assessor identifies property

____________________________________________________________________

Description (Attach a copy of your deed or other instrument of conveyance that describes the property and indicate here: _____ or describe the property in as much detail as possible.

Attach additional sheets if necessary.)

___________________________________________________________________

Record Owner(s):

______________________________________________________________________

Estimated Value:

Lienholders:

(1) Name ________ Current Balance _____________________________________

Address _______________________________________________________________

(2) Name ________ Current Balance _____________________________________

Address _______________________________________________________________

(3) Name ________ Current Balance _____________________________________

Address _______________________________________________________________

(4) If others, attach additional pages.

16. That I wish to claim as exempt the following retirement plans that I have that are individual retirement plans as described in the Internal Revenue Code or that are treated in the same manner as an individual retirement plan under the Internal Revenue Code, including individual retirement accounts and Roth retirement accounts as described in section 408(a) and section 408A of the Internal Revenue Code, individual retirement annuities as described in section 408(b) of the Internal Revenue Code, and accounts established as part of a trust described in section 408(c) of the Internal Revenue Code.

Type of Retirement Account Name of Account Account Number

______________________ ______________ ___________________

17. That I wish to claim as exempt the following funds I hold in a college savings plan, not to exceed $25,000. I understand that to qualify for this exemption, the college savings plan must qualify as a college savings plan under section 529 of the Internal Revenue Code, and the college savings plan must be for my child and must actually be used for my child's college or university expenses. I understand I may not exempt any funds I placed in this account within the preceding 12 months, except to the extent that any contributions were made in the ordinary course of my financial affairs and were consistent with my past pattern of contributions.

College Savings Plan Account Number Value Name(s) of Child(ren) Beneficiaries

_________________ _____________ ____ ____________________________

18. That I wish to claim as exempt the following retirement benefits to which I am entitled to under the retirement plans of other states and governmental units of other states. I understand that these benefits are exempt only to the extent these benefits are exempt under the laws of the state or governmental unit under which the benefit plan was established.

State/Government Unit Name of Retirement Plan Identifying Number

___________________ _____________________ _______________

19. That I wish to claim as exempt any alimony, support, separate maintenance, or child support payments or funds that I have received or that I am entitled to receive. I understand that these payments are exempt only to the extent that they are reasonably necessary for my support or for the support of a person dependent on me for support.

Type of Support Person Paying Support Amount & Location of Funds

______________ ___________________ ________________________

20. That the following is a complete listing of all of my assets that I have not claimed as exempt under any of the preceding paragraphs:

Item Location Estimated value

________ ________________ ___________________

This the ____ day of ____, ____

___________________

Judgment Debtor

Sworn to and Subscribed before me this ____ day of ____, ____.

________________________________

Notary Public _____________________________ My Commission Expires: ____

(d) Notice to Persons Affected. - If the judgment debtor moves to designate his exemptions, a copy of the motion and schedule must be served on the judgment creditor as provided in G.S. 1A-1, Rule 5.

(e) Procedure for Setting Aside Exempt Property. -

(1) When served with the notice provided in G.S. 1C-1603(a)(4), the judgment debtor may either file a motion to designate his exemptions with a schedule of assets or may request, in writing, a hearing before the clerk to claim exemptions.

(2) If the judgment debtor does not file a motion to designate exemptions with a schedule of assets within 20 days after notice of his rights was served in accordance with G.S. 1C-1603(a)(4) or if he does not request a hearing before the clerk within 20 days after service of the notice of rights and appear at the requested hearing, the judgment debtor has waived the exemptions provided in this Article and in Sections 1 and 2 of Article X of the North Carolina Constitution. Upon request of the judgment creditor, the clerk shall issue a writ of execution or writ of possession.

(3) If the judgment debtor moves to designate his exemptions by filing a motion and schedule of assets, the judgment creditor is served as provided in G.S. 1C-1603(d).

(4) If the judgment debtor requests a hearing before the clerk to claim exemptions, the clerk sets a hearing date and gives notice of the hearing to the judgment debtor and judgment creditor. At the hearing, the judgment debtor may claim his exemptions.

(5) The judgment creditor has 10 days from the date served with a motion and schedule of assets or from the date of a hearing to claim exemptions to file an objection to the judgment debtor's schedule of exemptions.

(6) If the judgment creditor files no objection to the schedule filed by the judgment debtor or claimed at the requested hearing, the clerk shall enter an order designating the property allowed by law and scheduled by the judgment debtor as exempt property. Upon request of the judgment creditor, the clerk shall issue an execution or writ of possession except for exempt property.

(7) If the judgment creditor objects to the schedule filed or claimed by the judgment debtor, the clerk must place the motion for hearing by the district court judge, without a jury, at the next civil session.

(8) The district court judge must determine the value of the property. The district court judge or the clerk, upon order of the judge, may appoint a qualified person to examine the property and report its value to the judge. Compensation of that person must be advanced by the person requesting the valuation and is a court cost having priority over the claims.

(9) The district court judge must enter an order designating exempt property. Supplemental reports and orders may be filed and entered as necessary to implement the order.

(10) Where the order designating exemptions indicates excess value in exempt property, the clerk, in an execution, may order the sale of property having excess value and appropriate distribution of the proceeds.

(11) The clerk or district court judge may permit a particular item of property having value in excess of the allowable exemption to be retained by the judgment debtor upon his making available to judgment creditors money or property not otherwise available to them in an amount equivalent to the excess value. Priorities of judgment creditors are the same in the substituted property as they were in the original property.

(12) Appeal from a designation of exempt property by the clerk is to the district court judge. A party has 10 days from the date of entry of an order to appeal. Appeal from a designation of exempt property by a district court judge is to the Court of Appeals. Decisions of the Court of Appeals with regard to questions of valuation of property are final as provided in G.S. 7A-28. Other questions may be appealed as provided in G.S. 7A-30 and 7A-31.

(f) Notation of Order on Judgment Docket. - A notation of the order setting aside exempt property must be entered by the clerk of court on the judgment docket opposite the judgment that was the subject of the enforcement proceeding. If real property located in a county other than the county in which the judgment was rendered is designated as exempt and the judgment has already been docketed in that county, the clerk must send a notice of the designation of exempt property to the county where the property is located. The clerk of the county where the land is located shall enter a notation of the designation of exempt property on the judgment docket. If a judgment is docketed in a county where real property is located after that real property has been designated as exempt, the transcript of judgment must indicate that the exemptions have been designated. The clerk in the county receiving the transcript must enter the notation of designation of exempt property as well as docket the judgment.

(g) Modification. - The debtor's exemption may be modified by motion in the original exemption proceeding by anyone who did not receive notice of the exemption hearing. Also, the debtor's exemption may be modified upon a change of circumstances, by motion in the original exemption proceeding, made by the debtor or anyone interested. A substantial change in value may constitute changed circumstances. Modification may include the substitution of different property for the exempt property.

(h) Repealed by Session Laws 1981 (Regular Session, 1982), c. 1224, s. 14. (1981, c. 490, s. 1; 1981 (Reg. Sess., 1982), c. 1224, ss. 9-14, 18, 19; 1991, c. 607, s. 1; 1999-456, s. 59; 2005-401, ss. 2, 3; 2011-326, s. 1.)

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Last modified: March 23, 2014