Lien & Garnishment Laws in North Carolina

North Carolina law permits creditors to take certain legal actions against residents who owe outstanding debts. If you're sued for a debt and your creditor wins a judgment against you, the creditor can then take steps to garnish your bank account or place a lien on your personal property. If you've been served with notice of a pending creditor lawsuit, you need to understand how the process works and what your rights are.

Wage Garnishment

North Carolina is one of four states that does not permit creditors to garnish your wages for unpaid consumer debt. This protection applies to credit card debt, medical debt, payday loans or other personal debts. According to Chapter 1 of the North Carolina General Statutes, wage garnishment is permitted for debts relating to unpaid state or federal taxes, student loans, child support, alimony, and expenses for ambulance services in certain North Carolina counties. The maximum amount that can be garnished for these debts is the lesser of 25 percent of your net income or the amount by which your net income exceeds 30 times the federal minimum wage.

Bank Account Garnishment

North Carolina does permit garnishment of your bank account for unpaid debt. To enforce a garnishment of your bank account, your creditor must first obtain a judgment against you in civil court. Claims of $5,000 or less are heard in small claims court while claims up to $10,000 are heard in district court. Larger claims are handled in superior court. Once a judgment is entered against you, the creditor must seek a writ of garnishment against you. If you wish to exempt certain funds in your bank account, you must file an exemption claim within 20 days of receiving notice of a pending garnishment.

Liens on Personal Property

In addition to garnishing your bank account, your creditor may also seek to place a lien on your home or other property. In the state of North Carolina, a judgment lien is automatically placed on any real estate you own when a civil judgment is entered against you. Under Chapter 1-234 of the North Carolina General Statutes, the lien can remain in place for up to ten years. If you owe a contractor money for home repairs or home improvements, the contractor can place a mechanic's lien on your property without having to first seek a judgment.

Exemptions

North Carolina law offers some protection to judgment debtors in the form of property exemptions. Under Article 16 of the North Carolina General Statutes, you can exempt up to $35,000 in home equity value or double this amount if you're married. This means that if a creditor attempts to force the sale of your home by placing a lien on your property, your home equity value is protected up to these amounts. Under federal law, you can also claim an exemption if your bank account includes certain types of income, including Social Security benefits, Supplemental Security Income, student assistance or veterans' benefits. State law also protects child support or alimony payments you receive, worker's compensation benefits and unemployment.