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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
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Experience:  JD, MBA
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We opened a small business in 2006, we are incorporated in ...

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We opened a small business in 2006, we are incorporated in the State of NC. In the 4th quarter of last year, our sales all but dried up. We are in the process of trying to get the business moving ahead and getting a cash infusion by sell some inventory, but that is taking some time. My concern is I have 3 credit cards that were personally guaranteed by me. The total on all three is approximately $75,000. I have been trying to make payment arrangements with them, but they are beginning to shut me out since I can't really give them any kind of a date when I can start paying (I don't want to make a commitment I can't keep). My husband and I own a home (no mortgage), that is assessed at $97,000. What are my options so we don't lose the house?
Submitted: 9 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 9 years ago.

Hello and thank you for allowing me to address your legal question.

If you are sued by the credit card company and it is given a judgment against you, then your house is exempt up to $18,500 of equity. Below is the applicable North Carolina law and link.

§ 1C-1601. What property exempt; waiver; exceptions.

(a) Exempt property. – Each individual, resident of this State, who is a debtor is entitled to retain free of the enforcement of the claims of creditors:

(1) The debtor's aggregate interest, not to exceed eighteen thousand five hundred dollars ($18,500) in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence […].

The above means that if your home is worth $97,000 and you owe $78,500 in a mortgage, then your house cannot be sold to get at the equity. However, if your mortgage is for only $70,000, then the judgment creditor may sell the house in order to get at the equity (though the first $18,500 of equity would still be exempt).

However, if you and your husband own your house as a “tenancy by the entirety,” and the credit card debt is in your name alone, then the house cannot be sold no matter how much equity you have. Below is the applicable source for that opinion:

'In North Carolina a tenancy by the entirety is not subject to levy under execution on a judgment rendered against either the husband or the wife alone. Neither the husband nor the wife has such an interest in an estate by the entirety as can be sold under execution to satisfy a judgment against him or her alone.' Grabenhofer v. Garrett, 131 S.E.2d 675, 260 N.C. 118 (N.C., 1963).

A tenancy by the entirety is assumed when a husband and wife buy property together. In order to be sure that you have a tenancy by the entirety, you should consult with a local real estate attorney who can review your deed and any other relevant documents.

If the information that I provided was helpful, please remember to ACCEPT my post as that is the only way I will receive credit and compensation for my answer. Thank you and good luck!

DISCLAIMER: Please understand that the complexities of most legal problems cannot be sufficiently addressed in this setting. Accordingly, my post is intended as general information only, and should neither be construed as specific legal advice, nor as an adequate substitute for the retention of legal counsel.

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