The use of asset protection strategies may prevent a home, car or other property from being seized by creditors in North Carolina. These strategies can also be used to prevent the loss of property to tax authorities or for any other reason. In many cases, asset protection is achieved through joint ownership of an item, via the use of a trust or by filing for bankruptcy.
Take action before a claim is made
Generally speaking, ownership of an asset cannot be transferred to another person or to a trust once a claim is made. Therefore, it is important to create a trust for or gift an item that you don’t want to lose as soon as possible.
The potential benefits of filing for bankruptcy
Assets such as retirement plans may be exempt from being taken by creditors if you file for bankruptcy. You may also be entitled to retain equity in a home, personal items such as clothing or items that have more sentimental value than monetary value.
How your home’s title may protect it from creditor claims
Say that you share a home with a spouse who has a tenants-by-entirety title. Under this title, you and your spouse share an interest in the entire property as opposed to just a portion of it. Therefore, if a creditor has a claim against your spouse, the home cannot be seized because it would violate your ownership rights.
Filing for bankruptcy may mean that you aren’t subject to asset forfeiture laws while your case is pending. Depending on the outcome of your case, you may be able to resolve outstanding debt issues without selling your home or car. An attorney may provide more insight into the process of filing for bankruptcy.