In North Carolina, if a creditor sues a debtor to collect money owed, and the court enters a judgment against the debtor, the creditor may take steps to enforce the judgment by placing a lien on the debtor’s property or seizing the debtor’s nonexempt assets. A creditor seeking to enforce a judgment may also attempt to seize funds in bank accounts of the judgment debtor.
However, certain funds in a debtor’s bank account may be protected and not subject to seizure by a creditor. Under Federal and North Carolina state laws, income received from Social Security Disability, Supplemental Security Income, Veterans Benefits, federal retirement, and other types of federal programs may be exempt from seizure by creditors. This exemption protection may not apply to all such monies. Federal benefits may be subject to seizure or garnishment to satisfy certain debts such as child support, alimony, taxes, victim restitution, and funds owed to federal agencies.
Under North Carolina law, a creditor can usually seize money held in a joint bank account even if the creditor only has a judgment against one owner of the account. Any exempt funds that can be identified would be subject to exemption protection, but it can be very difficult to identify exempt funds if other income and funds have been added to the account.
Filing bankruptcy will stop a creditor from seizing funds in your bank account. Upon filing of a bankruptcy petition, the court automatically enters a protective order – -known as an automatic stay – which prohibits creditors from proceeding with any collection efforts.
If your creditors are threatening legal action, or you have already been sued, an experienced and knowledgeable bankruptcy attorney can help protect your interest and your assets. If you reside in Asheville or Western North Carolina, please call David R. Hillier for a free bankruptcy consultation.