What Assets Are Exempt From Bankruptcy in North Carolina?
Filing for bankruptcy can be a powerful tool for individuals struggling with overwhelming debt. But one of the biggest concerns for anyone considering bankruptcy is whether they’ll be forced to give up everything they own. The good news is that bankruptcy laws provide certain protections, known as “exemptions,” that allow you to keep specific assets.
If you are filing for bankruptcy in North Carolina, it’s essential to know which properties are safeguarded by state law. Here’s what you should understand about bankruptcy exemptions in North Carolina and their relevance to your situation.
North Carolina Uses State-Specific Bankruptcy Exemptions
Unlike some states that allow debtors to choose between federal and state exemptions, North Carolina requires bankruptcy filers to use its own set of exemptions. These apply whether you’re filing for Chapter 7 (liquidation) or Chapter 13 (reorganization) bankruptcy.
However, to qualify for North Carolina’s exemptions, you must have lived in the state for at least 730 days (two years) before filing. If you haven’t met that requirement, a different state’s exemptions may apply based on where you lived previously.
Common Exempt Assets in North Carolina
Below are some of the most commonly used bankruptcy exemptions in North Carolina:
Homestead Exemption
North Carolina law allows you to exempt up to $35,000 in equity in your primary residence. If you’re 65 or older and your spouse is deceased, the exemption may increase to $60,000 in certain cases.
Motor Vehicle Exemption
You can protect up to $3,500 in equity in one motor vehicle. If your car is paid off and its value is under that amount, you’ll likely be able to keep it.
Personal Property Exemption
North Carolina law allows you to protect:
- Up to $5,000 in personal property like furniture, clothing, and electronics (plus an additional $1,000 per dependent, up to $4,000 total)
- $2,000 in professional tools, books, or equipment used for your trade
- Health aids such as wheelchairs, prosthetics, or prescription medical equipment (unlimited)
Wildcard Exemption
If you don’t use the full homestead exemption (or don’t own a home), you may use up to $5,000 as a “wildcard” exemption to protect any property of your choosing, such as savings or extra vehicle equity.
Wages and Benefits
Several types of income and benefits are exempt from bankruptcy in North Carolina, including:
- Earned but unpaid wages for work done 60 days prior to filing
- Social Security benefits
- Unemployment compensation
- Workers’ compensation
- Veterans’ benefits
- Child support and alimony (as long as they’re used for support)
Can Creditors Still Take My Property?
When you file for bankruptcy, the court appoints a trustee who evaluates your assets and exemptions. If you’ve correctly listed your exempt property, the trustee cannot liquidate those assets to pay creditors. However, any non-exempt assets could potentially be sold in a Chapter 7 case.
In Chapter 13, your exemptions determine how much you must repay unsecured creditors over the life of your repayment plan, so they still play a critical role.
Don’t Guess—Get Legal Help
Bankruptcy exemptions are complex, and applying them incorrectly could put your property at risk. What you don’t know could cost you—literally.
At Stephen E. Robertson Law Office, we help individuals and families in North Carolina navigate bankruptcy with confidence. We can evaluate your situation, explain your options, and protect the assets that matter most to you.
Contact Us Today
If you’re considering bankruptcy and want to understand what you can keep, contact Stephen E. Robertson Law Office for a consultation. We can guide you through the process with compassion, clarity, and a focus on your financial future.