North Carolina Bankruptcy Exemptions

You can protect property in a North Carolina bankruptcy using North Carolina's exemption laws.

February 6, 2019

You won’t lose everything when filing for bankruptcy in North Carolina. You’ll be able to use North Carolina’s bankruptcy exemptions to protect property you’ll need to work and live, such as your home, personal items, and a retirement account.

North Carolina Exemptions v. Federal Bankruptcy Exemptions

Some states allow residents to choose between the state and the federal bankruptcy exemptions, but that option isn’t available in North Carolina. You’ll use North Carolina’s state exemptions and, if helpful, the federal nonbankruptcy exemptions.

Common North Carolina Bankruptcy Exemptions

Here are some of the more common exemptions in North Carolina. When reviewing them, you’ll want to keep these things in mind:

  • Joint filing. Unless otherwise noted, when spouses file together in North Carolina, each spouse can claim the full amount of the exemption (informally called “doubling”) as long as each spouse has an ownership interest in the property.
  • List and verify your exemptions. You must claim an exemption by listing it in the official bankruptcy forms. You might qualify for exemptions not included in this article, or be required to meet qualification requirements. Consulting with a local bankruptcy attorney is the best way to ensure that you’re protecting your assets.
  • Legal citations. You’ll find each of the statutes in the North Carolina General Statutes or the federal law.
  • North Carolina’s 90-day rule. In most instances, you can exempt property only if it was purchased more than 90 days before the bankruptcy filing or collection action.

North Carolina Homestead Exemption

1C-1601 – Equity in real or personal property used as a residence, including a co-op, mobile home or burial plot, up to $35,000 or up to $60,000 if the filer is 65 or older. Tenancies by the entirety exempt without limit as to debts of one spouse. [In re Crouch, 33 B.R. 271 (E.D. N.C. 1983).]

North Carolina Motor Vehicle Exemption

1C-1601 – Up to $3,500 of equity in a motor vehicle up to $3,500.

North Carolina Wildcard Exemption

1C-1601(a)(2) - Up to $5,000 of any unused portion of the homestead or burial plot exemptions.

Const. Art. X, § 1 - Up to $500 of any personal property (not real estate).

Other North Carolina Exemptions

Personal Property

1C-1601 - Health aids; clothing, household goods, furnishings, appliances, books, animals, musical instruments and crops up to $4,000 total ($1,000 per dependent up to $4,000 total); personal injury and wrongful death recoveries for a person you depended upon; college savings accounts established under 26 U.S.C. § 529 up to $25,000.

1C-1601 - Burial plot up to $18,500, in lieu of homestead.

Wages

1-362 - Earned but unpaid wages received 6O days before filing for bankruptcy.

Pensions

11 U.S.C. § 522 - Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).

11 U.S.C. § 522(b)(3)(C)(n); 1C-1601(a)(9) - IRAS and Roth IRAs maximum (amount changes, including inherited IRAs (most states don't exempt inherited IRAs).

1C-1601 - Retirement benefits from another state to the extent that they are exempt in that state; Roth IRAs and IRAs.

58-86-90 - Firefighters and rescue squad workers.

120-4.29 - Legislators.

128-31 - Municipal, city, and county employees.

135-9 & 135-95 - Teachers and state employees.

143-166.30 - Law enforcement officers.

Public Benefits

15B-17 - Crime victims' compensation.

96-17 – Unemployment compensation.

97-21 - Workers' compensation.

108A-36 – Public assistance under work first program.

111-18 - Aid to blind.

Tools of Trade

1C-1601 - Tools, books, and implements of trade up to $2,000.

Insurance

1C-1601 – Life insurance.

58-58-165 - Employee group life policy or proceeds.

58-24-85 - Fraternal benefit society benefits.

Other

30-15 - Surviving spouse allowance up to $20,000.

59-55 - Business partnership property.

Add any applicable federal nonbankruptcy exemptions.

Nonexempt Property—Property You Can’t Protect With a North Carolina Exemption

Some people can keep all assets, but that isn’t always true. Here’s what will happen to nonexempt property:

  • In a Chapter 7 bankruptcy, the bankruptcy trustee appointed to administer your case will sell nonexempt property and distribute the proceeds to creditors. Find out more about the bankruptcy process and the Chapter 7 documents you'll need at each stage.
  • In a Chapter 13 bankruptcy, it works differently. You can keep everything you own, but you’ll pay creditors the value of the nonexempt property, your disposable income, or your nondischargeable debt (support obligations, most taxes, and the like), whichever is more, through your Chapter 13 repayment plan.

You’ll learn more about Chapter 7 and 13 in Which Type of Bankruptcy is Right for Me?

Exemptions, Collection Actions, and Wages

State exemptions are used for more than just bankruptcy. You can use them to protect your property and wages in a collection action. Here is North Carolina’s wage exemption (wage exemptions can’t be used in bankruptcy):

32-09.1-.03 - The greater of the following: 40 times the federal minimum wage, 75% of disposable weekly earnings, or per court order.

Confirming North Carolina Exemptions

This list includes the majority of bankruptcy exemptions available in North Carolina. However, doesn’t include all exemptions. Also, states often create qualification requirements for specific exemptions, and North Carolina might have changed the amounts since this list was last updated. Check the North Carolina General Statutes or with a local bankruptcy lawyer.

To learn more about bankruptcy exemptions, the state exemption system, and the homestead exemption rules, read Bankruptcy Exemptions – What Can I Keep When I File for Bankruptcy?

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