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.
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.
Here are some of the more common exemptions in North Carolina. When reviewing them, you’ll want to keep these things in mind:
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).]
1C-1601 – Up to $3,500 of equity in a motor vehicle up to $3,500.
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).
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.
1-362 - Earned but unpaid wages received 6O days before filing for bankruptcy.
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.
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.
1C-1601 – Life insurance.
58-58-165 - Employee group life policy or proceeds.
58-24-85 - Fraternal benefit society benefits.
30-15 - Surviving spouse allowance up to $20,000.
59-55 - Business partnership property.
Add any applicable federal nonbankruptcy exemptions.
Some people can keep all assets, but that isn’t always true. Here’s what will happen to nonexempt property:
You’ll learn more about Chapter 7 and 13 in Which Type of Bankruptcy is Right for Me?
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.
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?