Failing to make loan payments on time typically results in collection activity such as letters and telephone calls. However, in North Carolina, ignoring your creditor's demands can lead to more serious consequences. A creditor may file a lawsuit in a North Carolina court to obtain a judgment against you for the full debt amount. In some cases, a creditor with a valid judgment can force the sale of your home.
Judgment Collection
North Carolina law governs the types of property a creditor may take after obtaining a valid judgment for debt. Unlike many states, North Carolina does not permit wage garnishment by private lenders for things such as car loans and credit card payments. However, wage garnishment is permissible for the collection of unpaid taxes, alimony and child support. North Carolina also permits the seizure and liquidation of several types of personal property, including clothing, jewelry, vehicles and real estate.
Standard Exemption
Although North Carolina permits the seizure and sale of your home to pay a judgment, it applies monetary restrictions that affect the creditor's right to take your home. The first $35,000 of your interest in your real estate property is exempt from collection. This means that if you do not carry a mortgage on your home, and the creditor forces liquidation, you can keep the first $35,000 from the sale. If you carry a mortgage and have less than $35,000 in equity, the lender stands to gain nothing, and will not likely force the sale of your home.
Special Exemption
North Carolina provides a special exemption for single debtors over the age of 65. If you are unmarried and over 65, you can claim an exemption of $60,000 in real estate. To qualify for this exemption, you must have held title to your home in joint tenancy with survivorship rights or in tenancy by the entireties with another owner, and the other owner must be deceased.
Considerations
Even if a real estate exemption prevents a creditor from selling your home, the creditor may place a judgment lien on your real estate. This prevents you from selling or transferring your home without paying your judgment debt. If you enter into a contract to sell your home, the judgment creditor must receive sufficient proceeds from the sale to pay off your judgment debt before you receive any profits from the sale. This lien remains in place for 10 years or until you pay your judgment debt.
0 comments:
Post a Comment