People are often surprised to learn that even if they don’t file for bankruptcy, their property may be protected (exempt) under their state’s exemption laws. Debtors have to be careful to follow the rules required to protect themselves from their creditors and timely file forms to claim protected property, but if they do there may be little judgment creditors can do to the debtor for non-payment: today.*
In North Carolina, bankruptcy debtors that have lived in NC for more than two years get the same protection under the NC state exemption laws from their judgment creditors in bankruptcy as they do out of bankruptcy. However since a judgment can stay alive for up to twenty (20) years in NC, a judgment creditor may just wait until the debtor accumulates more than their allowed exemption and then take the property. As home equity is paid down, as cars are paid off, as savings grow, as property is inherited, there is more risk that a judgment creditor will eventually find property they can take to satisfy their debt.
So even if there is nothing a creditor can do today to collect their debt, filing bankruptcy cuts off future rights of the creditor to take property as you get back on your feet. Bankruptcy not only protects your property today, but it protects your property tomorrow.
It should be mentioned that North Carolina is not a wage garnishment state, and people living in states that allow garnishment of wages may have different considerations.
see also:
Can A Creditor Garnish My Wages AND Take My Money In The Bank? By Karen Oakes, Southern Oregon Bankruptcy Attorney
Bankruptcy, exemptions and a fresh start By Cathy Moran, California Bankruptcy Lawyer
NC Bankruptcy Debtors To Get Higher Home Equity Protection By Susanne Robicsek, Charlotte North Carolina Bankruptcy Attorney
Should You File Bankruptcy If You Have No Assets? By Susanne Robicsek, Charlotte North Carolina Bankruptcy Attorney
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