Post-Judgement Proceedings In NC

Our clients are perennially surprised to learn that winning a judgment is not the end of the story in a civil case. In fact, a judgment is as good as the paper on which it’s written if you cannot collect on it. 

In North Carolina, the post-judgment collection process is complex, extensive, and fraught with frustrations. Judgment debtors (the party against whom you obtain the judgment) can relocate, dodge a judgment, drain their bank accounts and move their assets around so there is nothing to collect, or simply make themselves unreachable. In still other cases, the judgment debtor may be insolvent, offering nothing on which to collect. 

These can be extremely frustrating realities for judgment creditors (prevailing parties) who’ve fought long and hard to win a judgment, only to realize their efforts have been fruitless. As such, understanding the basics of judgment execution – how it works, the pitfalls judgment creditors can face, and the legal formalities they must abide – is critical to creating realistic expectations.

Step 1: Remember that Judgment Debtors Have Legally-Protected Rights

An individual’s right to use, enjoy, and retain his own property is sacred and spans all practice areas. As such, judgment debtors are entitled to designate certain property as exempt from a civil judgment. This means that you, the judgment creditor, are not permitted to levy this property to satisfy your judgment. 

All states have their own exemption laws that apply to a judgment debtor’s property located in that state. In North Carolina, the following is protectable:

• Up to $35,000 in a residence and burial plots (If the individual is unmarried and 65 or older, he or she may designate the same in an amount up to $60,000.)
• Up to $5,000 in personal property, including household goods and appliances, and an additional $1,000, but not to exceed $4,000, for dependents
• Up to $3,500 in a motor vehicle after deduction of valid liens or security interests
• Healthcare aids such as wheelchairs and hearing aids
• Up to $2,000 in professional books or tools
• Life insurance policies where the sole beneficiaries are the spouse and/or children
• Retirement accounts

However, the right to claim exemptions is not automatic: the judgment debtor has to formally claim them. When the judgment debtor is an individual (i.e., not a corporation), the law requires the judgment creditor to serve the debtor with a formal notice of his or her right to designate these exemptions. From the date of serving the notice, the judgment debtor has twenty days to designate exemptions. If he or she does not do so within the twenty-day period, the judgment creditor is free to execute the judgment and all property (with some exceptions) is subject to its reach.

The judgment creditor is entitled to challenge the exemptions by filing a Notice of Objection with the court in the county where the case was heard. However, there are narrow circumstances in which a judge will uphold a judgment creditor’s objections, for instance, if the judgment debtor designated more property than the law allows.

Step 2: File A Writ of Execution

Once the exemption period expires, the judgment creditor may file a formal document called a writ of execution in each county in which the judgment debtor is believed to own assets. In counties other than the county in which the judgment was entered, the judgment creditor must pay a small fee to “transcribe,” or transfer, the judgment to that county.  The clerk of court in each county in which the judgment has been transcribed will then issue the writ.  

The writ gives the sheriff in each county the authority to execute the judgment, which entails formally serving the writ of execution on the judgment debtor and locating and seizing non-exempt property. The sheriff may clear bank accounts, seize motor vehicles, place a lien on a home, and collect personal items and effects. Unlike other states, however, North Carolina does 

Unfortunately, it is not always easy to find property that is valuable enough to satisfy a judgment. Therefore, often the most efficient way to satisfy a judgment, aside from the judgment debtor writing a check, is to locate a non-exempt bank account with sufficient funds to satisfy the judgment.

Step 3: Observe the Legal Time Limits

A civil judgment is valid for up to ten years. However, keep in mind that your judgment may never be satisfied. If several other creditors are vying for the debtor’s property, any seizable assets will be subject to a priority battle. Not to mention, many corporate judgment debtors may dissolve their entities, file for bankruptcy, or transfer or hide assets, while individual debtors may dodge the judgment by relocating or hiding assets. 

Step 4: Analyze Risk before Litigating

Given these challenges, it is vital to engage a civil litigation attorney who will investigate a party’s financial situation before jumping into litigation. This will ensure you avoid throwing good money after bad by chasing a person or entity with shallow pockets. Once you win a judgment, a skilled attorney will take an active role in the collection by routinely investigating the status of the judgment debtor’s assets and liabilities. 

When hiring a litigator to handle your commercial litigation matters, inquire about the firm’s experience in enforcing judgments as part of your due diligence process. At Green Mistretta Law, we are committed to pursuing the best results for our clients and take pride in offering superior legal counsel, including in the post-judgment context. Give us a call or reach out online to learn more.