North Carolina Bankruptcy Exemptions
When you file for Chapter 7 bankruptcy, you might be required to give up certain non-exempt assets to pay back your creditors. It is important to know the limitations of what can be protected in a Chapter 7 case.
For over 20 years, the board-certified bankruptcy specialist attorneys at Sasser Law Firm have helped clients facing bankruptcy in North Carolina. We have handled more than 9,000 cases for individuals and businesses. Our attorneys have experience and dedication in the field of bankruptcy.
What Are Bankruptcy Exemptions?
Filing for bankruptcy allows an individual or business to resolve some debts. A person or entity filing for Chapter 7 bankruptcy may result in the liquidation of assets. For individuals, bankruptcy exemptions allow those who have filed for Chapter 7 bankruptcy to protect certain assets from being liquidated. A corporate entity is not entitled to claim exemptions.
Bankruptcy exemptions are available to individuals filing Chapter 7 or Chapter 13 bankruptcy. In Chapter 13 bankruptcy there is no risk of loss of assets but the claim of exemptions may impact the amount of the repayment plan. Exemptions may vary depending on certain factors, such as whether someone is married or has dependents. It’s important to note that although bankruptcy code exemptions also exist, an individual may only use state exemptions in North Carolina if they have lived in North Carolina for at least two years. If the individual has not lived in North Carolina for at least two years, then it may be necessary to claim the exemptions of the state they were living in two years ago or the Bankruptcy Code exemptions.
How to Know If You Can Use North Carolina’s Bankruptcy Exemptions
You can file for bankruptcy in North Carolina after living here or having your primary assets here for the greater part of the prior 180 days. However, you cannot use the state’s bankruptcy exemptions until you have lived in North Carolina for at least two years when filing. If you don’t meet this requirement, you will use your last state’s bankruptcy exemptions or the Bankruptcy Code exemptions.
Bankruptcy Exemptions in North Carolina
Some of the North Carolina exemptions that those filing for bankruptcy often use include:
- Homestead exemption – This exemption protects a residence with less than $35,000 of equity. The homestead amount can double if a married couple files jointly and both spouses are on the deed. The exemption increases to $60,000 if a debtor is 65 or older or their spouse has died. A debtor who does not use the homestead exemption may be able to exempt up to $35,000 in equity of burial plots.
- Motor-vehicle exemption – You can protect up to $3,500 in equity of one personal motor vehicle. However, the exemption does not apply to vehicles purchased within 90 days of filing for bankruptcy.
- Wages – Any wages you earn for work done two months before filing for bankruptcy that you need to support yourself or your family.
- Personal property – You can exempt up to $5,000 of household goods under this exemption, including clothing, jewelry, electronics, furnishings, appliances, and books. You can also exempt up to $1,000 for each dependent in your household, up to $4,000 total beyond the $5,000 limit. However, this exemption does not apply to personal property purchased 90 days before filing for bankruptcy.
- Tools related to trade – You can exempt up to $2,000 worth of books, tools, or other equipment you need to do your job. This exemption does not apply to items purchased in the 90 days before filing.
- Retirement accounts – Many retirement plans and pensions are protected from creditors.
- Insurance – Life insurance policies where your spouse or children are the beneficiaries are generally protected when you file for bankruptcy.
- Public benefits – Most types of public benefits are fully exempt in bankruptcy proceedings. This includes unemployment benefits, future Social Security benefits, workers’ compensation benefits, veterans benefits, and crime victims’ compensation.
- Personal injury and wrongful death compensation – In most cases, the money you receive from a personal injury or wrongful death settlement is protected from your creditors. However, there are some exceptions to this rule. Talk to a bankruptcy lawyer if you have received any money from a personal injury or wrongful death claim.
- College savings accounts – Up to $25,000 of qualified college savings accounts may be protected, with a few exceptions.
- Alimony and child support – If you receive child support or alimony payments that you need for support, this money is usually protected from your creditors in bankruptcy proceedings.
- “Wildcard” exemption – If you have not maxed out your homestead or burial plots exemption, you can exempt up to $5,000 in personal property.
Talk to an Experienced Bankruptcy Attorney in North Carolina Today
Understanding North Carolina’s bankruptcy exemptions are an important part of filing Chapter 7 bankruptcy and can also be important in Chapter 13 bankruptcy in some instances. Sasser Law Firm has helped clients make the most of bankruptcy exemptions. We provide personalized, compassionate representation. Contact Sasser Law Firm today for a confidential consultation.