§ 1C-1603. Procedure for setting aside exempt property.

NORTH CAROLINA STATUTES AND CODES

§ 1C-1603. Procedure for setting aside exempt property.

§ 1C‑1603. Procedurefor setting aside exempt property.

(a) Motion or Petition;Notice.

(1) A judgment debtormay have his exempt property designated by motion after judgment has beenentered against him.

(2) Repealed by SessionLaws 1981 (Regular Session, 1982), c. 1224, s. 10.

(3) The clerk ordistrict court judge may determine that particular property is not exempt eventhough 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 alreadybeen designated, the clerk may not issue an execution or writ of possessionunless notice from the court has been served upon the judgment debtor advisingthe 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 undersubsection (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 providedabove, the judgment creditor may serve the judgment debtor by mailing a copyof the notice to the judgment debtor at the debtor's last known address. Proofof service by certified or registered mail or personal service is as providedin G.S. 1A‑1, Rule 4. The judgment creditor may prove service by mailingto last known address by filing a certificate that the notice was servedindicating the circumstances warranting the use of such service and the dateand address of service. The notice shall be substantially in the following form:

NORTH CAROLINA INTHE GENERAL COURT

____________________ COUNTY OFJUSTICE DISTRICT

COURTDIVISION

CvD

______________________________ ) NOTICEOF

JudgmentCreditor ) PETITION(OR

) MOTION)TO SET

vs. ) OFFDEBTOR'S

______________________________ ) EXEMPTPROPERTY

GREETINGS:

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

It is important that yourespond to this notice no later than 20 days after you receive it because youmay lose valuable rights if you do nothing. You may wish to consider hiring anattorney to help you with this proceeding to make certain that you receive allthe protections to which you are entitled under the North Carolina Constitutionand laws.

NOTICE TO JUDGMENT DEBTOR:

THERE ARE CERTAIN EXEMPTIONS UNDER STATE AND FEDERAL LAW THAT YOU AREENTITLED TO CLAIM IN ADDITION TO THE EXEMPTIONS LISTED ON THE "SCHEDULE OFDEBTOR'S PROPERTY AND REQUEST TO SET ASIDE EXEMPT PROPERTY" THAT ISENCLOSED WITH THIS NOTICE.

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

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

(1) Name the judgmentdebtor;

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

(3) If it is a motion tomodify a previously allocated exemption, describe the change of condition (ifthe movant received notice of the exemption hearing) and the modificationdesired.

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

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

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

The form for the statement shallbe substantially as follows:

NORTH CAROLINA INTHE GENERAL COURT

__________________ COUNTY OFJUSTICE DISTRICT

COURTDIVISION

CvD

Judgment Creditor ) SCHEDULEOF DEBTOR'S

) PROPERTY

vs. ) ANDREQUEST TO

) SETASIDE EXEMPT

Judgment Debtor ) PROPERTY

NOTICE TO JUDGMENT DEBTOR:

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

I, ___________, being dulysworn do depose and say:

(fill in your name)

1. That I am a citizen andresident 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 personslive in my household and are in substantial need of my support:

NAME RELATIONSHIPTO DEBTOR AGE

_________ __________________________________ ________

(Use additional space, asnecessary)

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

locatedat ________________________________________________________

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

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

______________________________________________________________________

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

______________________________________________________________________

8. That I wish to claim myinterest in the following real or personal property, or in a cooperative thatowns property, that I use as a residence or my dependent uses as a residence. Ialso wish to claim my interest in the following burial plots for myself or mydependents. I understand that my total interest claimed in the residence andburial plots may not exceed $18,500, except that if I am unmarried and am 65years of age or older, I am entitled to claim a total exemption in theresidence and burial plots not to exceed $37,000 so long as the property waspreviously owned by me as a tenant by the entireties or as a joint tenant withrights of survivorship, and the former co‑owner of the property isdeceased.

I understand that I am notentitled to this exemption if I take the homestead exemption provided by theConstitution of North Carolina in other property. I understand that if I wishto claim more than one parcel exempt I must attach additional pages settingforth the following information for each parcel claimed exempt.

Property Location:

County _______ Township_____________________________________________

Street Address _______________________________________________________

Legal Description:

Number by which county taxassessor identifies property ______________________

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

Attach additional sheets ifnecessary.)

____________________________________________________________________

Record Owner(s)_________________________________________________________

______________________________________________________________________

Estimated Value:________________________________________________________

Lienholders:

(1) Name ____________________Current Balance _________________________

Address ___________________________________________________________

(2) Name ____________________Current Balance _________________________

Address ___________________________________________________________

(3) Name ____________________Current Balance _________________________

Address ___________________________________________________________

(4) If others, attachadditional pages.

If you are unmarried and 65years of age or older, specify which, if any, property listed above waspreviously owned by you as a tenant by the entireties or as a joint tenant withrights of survivorship and as to which the former co‑owner of theproperty is deceased:

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

Name of Insurer PolicyNumber Face Value Beneficiary(ies)

_____________ ___________ __________ ___________________

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

Item Purpose Personusing item

__________ __________ _________________________

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

Item EstimatedValue

__________ ________________________________

12. That I wish to claim thefollowing personal property consisting of household furnishings, householdgoods, wearing apparel, appliances, books, animals, crops or musicalinstruments as exempt from the claims of my creditors. I affirm, that theseitems of personal property are held primarily for my personal, family orhousehold use or for such use by my dependents.

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

Item (or class) Amountof Lien Location Estimated

of Property orSecurity Value of

Interest Debtor's

Interest

__________ __________ ________ _______________

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

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

Model of TitleOwner Lien Holder(s) Value of

Motor Vehicle ofRecord of Record Debtor's

Interest

___________ ____ ____________ __________ _______________

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

(a) amount of compensation____________________________________________

(b) method of payment: lumpsum or installments ___________________________

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

______________________________________________________________________

(c) name and relationship todebtor of person(s) injured or killed giving rise to compensation___________________________________________________________

(d) location/source ofcompensation if received in lump or installments, including name and accountnumber of any disability policy or annuity _____________________

______________________________________________________________________

(e) unpaid debts arising outof the injury or death giving rise to compensation______________________________________________________________________

Name and Address ServicesRendered Amount of Debt

________________ ________________ __________________________

15. That I wish to claim thefollowing property as exempt because I claimed residential real or personalproperty as exempt that is worth less than $18,500 or I made no claim for aresidential exemption under section (8) above. I understand that I am entitledto an exemption of up to $5,000 in any property only if I made no claim undersection (8) above or a claim that was less than $18,500 under section (8)above. I understand that I am entitled to claim any unused amount that I waspermitted to make under section (8) above up to a maximum of $5,000 in anyproperty. (Examples: (a) if you claim $17,500 under section (8), $1,000 allowedhere; (b) if you claim $13,500 under section (8), $5,000 allowed here; (c) ifyou claim $18,500 under section (8), no claim allowed here.) I furtherunderstand that the amount of my claim under this section is after thededuction from the value of this property of the amount of any valid lien orpurchase money security interests and that tangible personal property purchasedwithin 90 days of this proceeding may not be exempt.

PERSONAL PROPERTY:

Property Location Amountof Liens Value of

or Purchase Money Debtor's

Security Interests Interest

_____________ ________________ __________________________

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

Property Location

County _______ Township_____________________________________________

Street Address_______________________________________________________

Legal Description:

Number by which county taxassessor identifies property

____________________________________________________________________

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

Attach additional sheets ifnecessary.)

____________________________________________________________________

Record Owner(s):

______________________________________________________________________

Estimated Value:

Lienholders:

(1) Name ________ CurrentBalance _____________________________________

Address_______________________________________________________________

(2) Name ________ CurrentBalance _____________________________________

Address_______________________________________________________________

(3) Name ________ CurrentBalance _____________________________________

Address_______________________________________________________________

(4) If others, attachadditional pages.

16. That I wish to claim asexempt the following retirement plans that I have that are individualretirement plans as described in the Internal Revenue Code or that are treatedin the same manner as an individual retirement plan under the Internal Revenue Code,including individual retirement accounts and Roth retirement accounts asdescribed in section 408(a) and section 408A of the Internal Revenue Code,individual retirement annuities as described in section 408(b) of the InternalRevenue Code, and accounts established as part of a trust described in section408(c) of the Internal Revenue Code.

Type of Retirement Account Nameof Account Account Number

______________________ ______________ ___________________

17. That I wish to claim asexempt 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 savingsplan must qualify as a college savings plan under section 529 of the InternalRevenue Code, and the college savings plan must be for my child and mustactually be used for my child's college or university expenses. I understand Imay not exempt any funds I placed in this account within the preceding 12months, except to the extent that any contributions were made in the ordinarycourse of my financial affairs and were consistent with my past pattern ofcontributions.

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

_________________ _____________ ____ ____________________________

18. That I wish to claim asexempt the following retirement benefits to which I am entitled to under theretirement plans of other states and governmental units of other states. Iunderstand that these benefits are exempt only to the extent these benefits areexempt under the laws of the state or governmental unit under which the benefitplan was established.

State/Government Unit Nameof Retirement Plan Identifying Number

___________________ _____________________ _______________

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

Type of Support PersonPaying Support Amount & Location of Funds

______________ ___________________ ________________________

20. That the following is acomplete listing of all of my assets that I have not claimed as exempt underany 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 MyCommission Expires:

(d) Notice to PersonsAffected. If the judgment debtor moves to designate his exemptions, a copy ofthe motion and schedule must be served on the judgment creditor as provided inG.S. 1A‑1, Rule 5.

(e) Procedure forSetting Aside Exempt Property.

(1) When served with thenotice provided in G.S. 1C‑1603(a)(4), the judgment debtor may eitherfile a motion to designate his exemptions with a schedule of assets or mayrequest, in writing, a hearing before the clerk to claim exemptions.

(2) If the judgmentdebtor does not file a motion to designate exemptions with a schedule of assetswithin 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 afterservice of the notice of rights and appear at the requested hearing, thejudgment debtor has waived the exemptions provided in this Article and inSections 1 and 2 of Article X of the North Carolina Constitution. Upon requestof the judgment creditor, the clerk shall issue a writ of execution or writ ofpossession.

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

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

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

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

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

(8) The district courtjudge must determine the value of the property. The district court judge or theclerk, upon order of the judge, may appoint a qualified person to examine theproperty and report its value to the judge. Compensation of that person must beadvanced by the person requesting the valuation and is a court cost havingpriority over the claims.

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

(10) Where the orderdesignating exemptions indicates excess value in exempt property, the clerk, inan execution, may order the sale of property having excess value andappropriate distribution of the proceeds.

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

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

(f) Notation of Orderon Judgment Docket. A notation of the order setting aside exempt propertymust be entered by the clerk of court on the judgment docket opposite thejudgment that was the subject of the enforcement proceeding. If real propertylocated in a county other than the county in which the judgment was rendered isdesignated 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 thecounty where the property is located. The clerk of the county where the land islocated shall enter a notation of the designation of exempt property on thejudgment docket. If a judgment is docketed in a county where real property islocated after that real property has been designated as exempt, the transcriptof judgment must indicate that the exemptions have been designated. The clerkin the county receiving the transcript must enter the notation of designationof exempt property as well as docket the judgment.

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

(h) Repealed by SessionLaws 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.)