Consumer: Protect Your Property if a Judgment is Entered against You

If a judgment for money owed has been entered against you, the creditor with the judgment can attempt to use your property to pay or enforce the judgment.

To protect your property from being used to pay the judgment, the following steps must be followed:

1. The creditor with a judgment must give you notice of your right to protect your property. The creditor with a judgment must give you a Notice of Right to Have Exemptions Designated. This document allows you to protect some of your property from being used to pay the judgment.

2. You must complete the Motion to Claim Exempt (Statutory Exemptions).

3. You must file the Motion within 20 days from receiving it.

4. You must send a copy of the Motion to Claim Exempt Property (Statutory Exemptions) to the judgment creditor.

5. Note: The Legal Aid office that represents the county where the judgment was entered can help you complete the motion or request to the court to protect your property. Contact them as soon as you receive the papers.

What is a Judgment?

A judgment is a decree or order of the court. A judgment in which an award of money damages is ordered (a money judgment) has the following effect on the party against whom the judgment was entered.

• Judgment can become a lien on land. 

• Judgment accrues interest.

• Judgment can be enforced by execution.

• Judgment can affect your credit.

A judgment is filed with the court and becomes a public record. Thus, a judgment is available to the public. For example, landlords and creditors or lenders routinely check for judgments before doing business with a person. A judgment is an indicator of your ability to maintain your financial obligations.
 

1. Judgment can become a lien on land.  If you are buying or own a house with land, the judgment becomes a lien on the property. This means it must be paid off before you sell or the creditor can force a sale to pay the judgment.

2. Judgment accrues interest.  In North Carolina a judgment accrues 8% interest from the time it is entered.

3. Judgment can be enforced by execution/through Court process.  A creditor with a judgment can attempt to use some of your property to pay the judgment. However, the creditor MUST use the Court system before getting access to your property. To do so, the creditor must file with the Clerk of court and send you the "Notice of Right to Have Exemptions Designated." This form will give you an opportunity to protect your property from the creditor.

4. A money judgment affects your credit.  A judgment can make borrowing more expensive. If you have a judgment or several judgments and attempt to buy a car, the cost of borrowing to buy the car may be more expensive.  

• Note: If you receive papers such as Notice of Right to Have Exemptions Designated, you must contact the Legal Services Program that represents the county where the judgment was obtained as soon as you receive the papers if you need help in completing the papers. You must complete and file exemptions within 20 days from receiving notice or your property can be taken by the sheriff and sold to pay the judgment.

Important reminders:

• If you owe money or cannot pay a judgment, you cannot go to jail.

• You cannot transfer, sell or dispose of property to avoid enforcement of judgment.

• Wages can be withheld for limited types of debts such as: payment of child support or alimony; payment of fraudulently obtained public assistance; payment of certain debts to public hospitals.

• A judgment will be effective for 10 years after rendered by the court and may be renewed.
   

To find other Legal Aid of North Carolina materials, including any materials mentioned in this document, go to LawhelpNC.org/. If you need legal help please go to legalaidnc.org/.