Motion to Claim Exempt Property

When a creditor obtains a judgment against you, it's more than just another bill. Right on the heels of the judgment's entry comes the execution, where the creditor sends the sheriff to seize your property. The specifics of judgment execution vary from state to state, but there's typically a procedure available for you to designate certain property as exempt from your creditor's claims.

What Property Is Exempt

Exemptions vary from state to state. You can expect a homestead exemption, which may be anywhere from a few thousand dollars to unlimited. You'll be allowed a certain amount of equity in a motor vehicle, along with an allowance for personal property, health care aids and tools of the trade. If you don't have enough property to exceed the exemptions allowed in your state, you're said to be "judgment-proof"; the creditor can't take any of your property because it's all exempt. You can probably find your state's list of exemptions in its code of statutes under the section covering enforcement of judgments. Go to your legislature's Internet homepage and type "exempt property" into the search engine for the statute index.

Claiming Exemptions

Your exemptions aren't automatic. You must file a motion to designate your exempt property with the court. In some jurisdictions, such as North Carolina, the creditor is required to notify you of your right to claim exempt property and provide you with a copy of a form motion before proceeding with execution. Don't try to draft your motion from scratch; many states make fillable forms available for free online. Fill it out in clear print, paying close attention to the instructions, and file it with the court within the time allowable by state law. Make sure to mail a filed copy to the creditor or the creditor's attorney of record, and remember to keep one for yourself.

Creditor's Remedies

Just because you list certain property as exempt and claim a value that places it below the exemption threshold doesn't mean the creditor can't eventually come after it. Your state's judgment and execution code probably contains a procedure for the creditor to object to your motion. You may be required to appear at a proceeding to determine the validity of your claimed exemptions as well as to uncover assets the creditor thinks you might be hiding. Underreporting the value of assets you claim as exempt won't necessarily protect them from execution. Remember also that when you sign a motion to claim exempt property and file it with the court, you're swearing that everything you're saying is true.

Avoiding Execution

Transferring non-exempt assets around and putting property in friends' and relatives' names may seem like a good way to avoid a judgment execution, but it's fraught with danger. For starters, fraudulent transfer provisions in state and federal law will enable the creditor to rope the assets back into your estate. Furthermore, the people you pick to help hide your assets might be incurring judgments themselves, subjecting the assets to seizure. Finally, if you represent to the court that your listed assets are all you own, and you're actually hiding something, you're committing a crime.