Q: When being pursued for a debt outside of bankruptcy in NC, is the vehicle exemption doubled when married.
The vehicle is jointly owned with rights of survivorship.
The debtor spouse can exempt (protect from creditors) up to $3,500.00 equity in one motor vehicle. For a jointly owned vehicle, you take retail value (not trade in), subtract any outstanding liens, and divide the remainder by two. If there is any "wild card" exemption remaining, up to $5,000.00 of the debtor's "wild card" exemption may be used to protect any equity over $3,500.00. Example: if a paid off, jointly titled vehicle is worth $10,000.00, the debtor spouse can only use the vehicle exemption to protect $3,500.00 of the $5,000.00 value of his/her one half interest.
If the debtor spouse has not already spoken to an attorney about the debt, he or she needs to do so ASAP. Used car values have increased at least 40% over the last year, and over 25% just in the last 90-120 days. This means that creditors are now requesting that the Sheriff (in connection with a writ of execution) take jointly owned vehicles as well as vehicles with outstanding liens, and put the vehicles up for Sheriff auction, in an attempt to collect the excess value and apply it to the outstanding balance of a Judgment. In the old days, used car values were so low that creditors were much less aggressive. Do not use "trade in" value when assessing if property can be protected from creditors.
I have found that the vast majority of people with debt problems and judgments for debt have no concept or clue about the value of their property. Many are finding out only after being served with a Notice of Right to claim their exempt property, or a Writ of Execution, that much of their home equity and vehicles is NOT protected from creditors.
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